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Irinia Varyushina


A.1      Legislation

International arbitration in Russia continues to be governed by Law on International Commercial Arbitration[1]. Certain issues concerning international commercial arbitration such as requirements to arbitral institutions for administering disputes in Russia, resolving corporate disputes, are governed by the Law on Arbitration in Russia (“Law on Domestic Arbitration.”)[2]

In March 2019 certain important changes to the Law on Domestic Arbitration, which also apply to international commercial arbitration proceedings seated in Russia took effect.[3] The changes clarified the rules[4] for obtaining a license by arbitral institutions in order to administer arbitrations in Russia. Now foreign arbitral institutions do not need to establish a branch in Russian to get permission from the government. The branch is needed only if foreign institution intends to administer Russian domestic disputes or certain types of corporate disputes.

Also, the procedure for arbitration of certain types of corporate disputes were simplified. Russian law stipulates that arbitrable corporate disputes may be referred to arbitration under certain conditions that include (for different types of corporate disputes different set of conditions apply): (1) the dispute is administered by a licensed arbitral institution (PAI); (2) an arbitration agreement is entered into between all shareholders/participants, the legal entity itself and any relevant third party; (3) the proceedings are subject to special rules for resolving corporate disputes deposited with Russian authorities; (4) Russian seat.

Changes to Russian arbitration laws effective as of March 2019, arguably, removed conditions (2) and (3) from disputes out of shareholders’ agreements and condition (2) from disputes out of claims of legal entity’s participants for invalidation of transactions entered into by a legal entity and/or applying the consequences of their invalidity.

On 10 December 2019 the Plenary Session of the Russian Supreme Court passed Resolution No. 53 “On the carrying out of functions by courts of the Russian Federation regarding the assistance and control over arbitration proceedings and international commercial arbitration” (Plenary Session Resolution”). The most interesting provisions of the Plenary Session Resolution include:

A.1.1 Clarification that the Kiev Agreement does not apply to arbitration courts

The problem arose because the Kiev Agreement originally applied to the enforcement of arbitral awards in certain CIS countries as those were not parties to the New York Convention at the time.[5] The highest court instances in Russia issued several clarifications on the subject[6] but the confusion remained.[7] To avoid similar practice, the Plenary Session Resolution again explained to lower courts that the provisions of the Kiev Agreement and the Minsk Convention[8] do not govern issues of the recognition and enforcement of foreign arbitral awards.

A.1.2 Clarifying that the place of arbitration is not the same as the location of the arbitral institution or the hearing venue

Insofar as for a long time the only example of an arbitration court was the ICAC, judges gathered information on arbitral proceedings based on the functional traditions of the ICAC. These traditions included holding hearings at the location of the ICAC, thanks to which the place of arbitration, location of the arbitral institution and the venue of the hearings always coincided. Therefore, judges sometimes viewed holding a hearing in a place other than the place of arbitration or the location of an arbitral institution as a violation of the arbitration agreement.[9] In the notorious “Singapore Arbitration Case” the courts found that the hearing of the Russia-Singapore Arbitration to resolve the dispute took place in Moscow, and the award of the Russia-Singapore Arbitration was actually signed in Moscow, and therefore the courts drew the conclusion that they should apply the procedure for enforcing arbitral awards seated in Russia, and not the procedure for enforcing foreign arbitral awards.[10] Therefore, to avoid further misunderstandings in this matter, the Plenary Session Resolution states: “The place of arbitration does not have to be the same as the location of the arbitral institution under whose rules the arbitration proceedings are held, or the venue of the hearing in the case.”[11]

A.1.3 Clarifying the position of courts on alternative and asymmetrical arbitration clauses

In the Sony Ericsson case,[12] arbitrazh (state commercial) courts deemed invalid a dispute resolution clause, because it provided only one party with the ability to choose whether to apply to a state court or the ICC. However, it was unclear from the wording of the final court act[13] in the case whether the entire clause was invalid, or only that part which granted additional procedural rights to one party in comparison to the other party. To avoid further doubts about this, the Plenary Session Resolution states: “A dispute resolution agreement that secures the right of only one party to choose (an asymmetrical agreement), is invalid to the extent that it deprives the other party of the right to choose between the same means of resolving a dispute. In this case, each party to an agreement has the right to use any means of dispute resolution among those stipulated in the alternative agreement concluded by the parties.”[14]

A.1.4 Non-conformity with arbitration procedure or legislation must be substantial

An important innovation of the Plenary Session Resolution is the fact that the Supreme Court indicated that not every violation of arbitration procedure or the law constitutes grounds for the setting aside of an arbitral award, or for a refusal to enforce it; only substantial ones, that is, “if the violation committed led to a substantial violation of the rights of one of the parties, causing an infringement of the right to a fair consideration of the dispute.”[15]  Also, the party must have filed objections against such non-conformity without an unjustifiable delay, as stipulated in article 4 of the RF Law on International Commercial Arbitration.

This provision should help prevent the setting aside of awards on formal grounds when a violation of procedure in arbitration proceedings has taken place but such violation is not substantial.

A.1.5 The failure to challenge, with a state court, a decision of an arbitral tribunal on having jurisdiction, does not prevent the filing of an objection against jurisdiction in the course of setting aside of an arbitral award or at the stage of resolving the matter of its enforcement

In connection with the fact that legislation on arbitration has enabled to separately challenge a positive decision of an arbitral tribunal on having jurisdiction, and has set a deadline for such an appeal,[16] a question has arisen: was the party that disagreed with such decision required to file an appeal with a state court, or could such party, following the issuance of an arbitral award on the merits, file an appeal for the setting aside of the award (or object to the enforcement of such award), citing the lack of jurisdiction?

Additional complications arose in connection with the fact that a party that applies to a state court with a motion to set aside a separate decision of an arbitral tribunal on having jurisdiction, in essence, is deprived of the ability to challenge a decision of a court of first instance, in connection with an explicit provision[17] of the Code of Arbitrazh Procedure and, therefore, was bound by the prejudicial effect of the decision of the court of first instance.

The Plenary Session Resolution explained that applying to a court for the challenge of a separate decision that the arbitral tribunal has jurisdiction is a right, not an obligation of the parties, and “a party that does not apply to a court to dismiss a separate ruling of an arbitral tribunal on having jurisdiction, is not deprived of the right to submit objections against the jurisdiction of an arbitral tribunal that it had put forward earlier during the arbitration proceedings as part of the proceedings to set aside the arbitral award or the proceedings to issue a writ of execution in respect of the arbitral award.”[18]

 A.2     Institutions, Rules and Infrastructure

Since 1 November 2017 only arbitral institutions that have obtained the “license”[19] from the Ministry of Justice can administer arbitrations seated in Russia. As of February 2020, there are the following licensed arbitral institutions: the ICAC[20] and the MAC[21] at the Russian Chamber of Commerce and Industry, Arbitration Center at Russian Union of Industrialists and Entrepreneurs,[22] Russian Arbitration Center at the Russian Institute of Modern Arbitration (RAC) [23] and National Centre of Sports Arbitration at Sports Arbitration Chamber ANO.[24] As regards foreign arbitral institutions, Hong Kong International Arbitration Centre (HKIAC) and Vienna International Arbitral Centre (VIAC) have obtained the status of permanent arbitral institutions and can administer international arbitration proceedings seated in Russia.[25] With regard to the consequences of administering Russia-seated arbitrations by foreign arbitral institutions without the status of permanent arbitral institutions in Russia, there is an express provision in the law that for the purposes of the Russian arbitration laws the awards issued in such arbitrations are considered as awards issued in ad hoc arbitrations. However, the law also provides that persons that have not obtained the status described above, are forbidden from performing separate functions related to administering of arbitration (including appointment of arbitrators, deciding challenges, acceptance of arbitration costs and fees, etc) in ad hoc arbitrations. The law provides that in case of violation of this prohibition, the award is considered to be rendered with violation of the arbitral procedure. The latter rule creates a risk that if an “unlicensed” foreign arbitral institution administers arbitrations in Russia, the award will not be enforced or will be set aside by Russian courts.

At the beginning of 2020, the Russian arbitration community was hit with a corruption scandal related to RAC, where RAC was accused of a lack of independence due to its close links to the Russian government and state-controlled entities, such as Gazprombank and Rosatom.[26] While RAC made a general statement denying the allegations,[27] nothing has been commented on by them on the merits of accusations.


B.1      Excessive Amount of Penalties Awarded by Arbitrators as Grounds for Setting Aside an Arbitral Award[28]

Russian court set aside an ICAC award[29] inter alia because the amount of the penalties (USD 2.1 million) awarded by the arbitral tribunal was excessive. The dispute in arbitration arose out of the failure of Uzbekistan Airways, an award debtor, to pay for the jet fuel supplied by the award creditor, BB Energy (GULF) DMCC. The parties agreed on penalties of 0.05 per day for the first 15 calendar days of the delay and 0.4 per day for subsequent days of the delay. At that, as argued by the award creditor, the amount of the penalties was suggested by the award debtor. The courts[30] setting aside the ICAC award reasoned that the penalty rate was excessive and multiple times exceed the reasonable rate, including the refinancing rate of the Bank of Russia. The courts refused arguments that both parties were foreign legal entities and the practice of awarding penalties at their place of incorporation could differ from that in Russia.

The courts also disputed the assessment of evidence performed by the tribunal.

The above case demonstrates that Russian courts continue to review awards on the merits despite the explicit provisions of procedural codes to the contrary. Whereas the courts, in this case, could have been influenced by the debtor’s arguments of no losses on the creditor’s part, there is a tendency to compare the penalties rate in the contract to the refinancing rate of the Bank of Russia. Thus, in February 2020 Arbitrazh Court of Moscow enforced a VIAC arbitral award noting that the amount of the penalties was below the refinancing rate of the Bank of Russia and thus could not violate the public policy of the Russian Federation and the rights and lawful interests of the debtor.[31]

B.2 Russian courts amend an arbitration clause based on a material change in circumstances accepting the arguments that the clause became unenforceable due to sanctions[32]

Russian company’s claims arose due to a US company’s failure to pay for logistics services rendered by the claimant based on three orders, which the parties signed in December 2016, April 2017 and September 2017 under a General Services Agreement concluded in August 2012.

The General Services Agreement had an arbitration clause providing for ICC arbitration under English law. As regards applicable law, the Agreement stipulated that the claimant was to comply with applicable laws, rules, provisions or decrees in the country of any jurisdiction of performing part of the works insofar as those were compatible with US laws.

As on 26 January 2018, OFAC included the Russian company in the SDN List,[33] as a result, the respondent, as a US entity, was banned from interacting with the claimant and failed to respond to the claimant’s request to amend the dispute resolution clause so that disputes are to be resolved by the Arbitrazh (state commercial) Court of Moscow under Russian procedural rules. The claimant then filed its claims with Arbitrazh Court of Moscow requesting to (1) amend the dispute resolution and applicable law provisions and (2) resolve the dispute on the merits.

The Arbitrazh Court of Moscow the court granted the claims for amending DR and applicable law provisions. [34] The court based its decision on article 451 of the Russian Civil Code,[35] finding that the claimant was substantially deprived of what it had been entitled at the time of signing the contract as it failed to get payment under a substantial part of orders for services. The court further reasoned that the parties could not foresee the issuance of US President’s Order No. 13661 at the time of concluding General Services Agreement, and both the Agreement and the orders would not have been entered into. The court found that the balance of parties’ interests could be reinstated only by amending the contract as only in this case the claimant would be able to defend its rights breached by the respondent. The court of appeal upheld[36] the judgment and ruled that the arbitration clause was unenforceable because of US imposing sanctions on the claimant and respondent’s refusal as a US entity in compliance with US sanctions to discharge its obligations undertaken under the orders (including its failure to respond to claimant’s letters of claim). The court added that due to the US sanctions, the ICC award would not be enforceable anywhere except Russia due to the blocking of banking transactions in favor of claimant that go through correspondent accounts of banks under the control of the US Federal Reserve System.

The above case is important in that it clarifies that Russian courts about similar claims by or against sanctioned entities will tend to find they have jurisdiction and resolve disputes on the merits. The position is in line with a draft law[37] submitted to the Russian parliament, which introduces measures to protect the rights of sanctioned companies and individuals. This measure provides for the exclusive jurisdiction of Russian courts over claims against such persons as well as a possibility of such persons filing claims with Russian courts for termination of foreign proceedings initiated against such entities.

B.3      Partial LMAA arbitral awards enforced by Russian courts[38]

The applicant sought recognition and enforcement of a third partial final award issued in LMAA arbitration proceedings whereby the tribunal resolved certain issues, including that the owners had a right and lawfully seized the vessel from the charterers and were entitled to terminate the Charter party; that the charterers shall return or take all measures to enable the return of the vessel and shall bear all requisite costs, including costs relating to the award. The debtor argued, inter alia, that the partial award was provisional and had not become final and binding for the parties.

However, the applicant submitted an expert opinion on clarifying the nature of partial final awards. According to the expert the English seated tribunal was entitled to issue partial final awards that relate to various issues resolved in the course of the arbitration and that such awards are final and binding and do not differ from ordinary arbitral awards. The expert expressly stated that none of the partial final awards could be qualified as provisional (that is, a separate award on a certain issue that may be changed in the final award) as the LMAA rules do not provide for the issuance of such decisions.

The trial court granted the enforcement and the courts of higher levels agreed with the findings of the first level court.[39] The courts refused to accept arguments that arbitration proceedings regarding the vessel in dispute and arising out of the charter party have not finished and no final award was issued.

B.4      Russian courts refuse enforcement of a foreign arbitral award as the applicant fails to substantiate the existence of the debt [40]

A creditor filed a claim based on an arbitral award issued by the so-called Helsinki International Arbitration Court in the bankruptcy proceedings of the debtor. Lower courts refused to include the claims into the register of creditors, and the cassation court agreed. At that, the courts noted that the creditor filed its claim to arbitration on 15 February 2018, that is, after the initiation of bankruptcy proceedings by a Russian court (12 April 2017) and as at the time the hearing took place and the award was issued (19 September 2018 and 21 September 2018 respectively) the debtor was in supervision proceedings. Therefore the courts were to ensure that the rights of creditors are not breached by the award because the protection of the rights of third parties, according to courts, is an element of public policy of a state.

The court agreed that where a claim is filed against the debtor before the supervision proceedings, the claimant is entitled to continue in the arbitration or file claims within the bankruptcy case. At the same time, no writ of execution is issued in such cases, and where enforcement of the award is sought, the courts are to ensure that the legalization of the award outside bankruptcy case does not lead to granting the claims of one creditor to the detriment of the other creditors. As in establishing creditor’s rights in the bankruptcy case, the court recognizes only claims where sufficient evidence was presented, in the enforcement case the applicant has to provide documents substantiating its claims. As the applicant failed to submit other documents [except for the award] the courts reasoned that the claims were unfounded and that there had been no debt toward the claimant, Listaks Corporation, Belize.

The courts added that, in order to prove that the award was illegitimate, the creditor or a bankruptcy manager is only to provide the court with prima facie evidence confirming substantial doubts that the debt existed because otherwise, they would have to carry a burden of proving negative facts, which is not acceptable from the viewpoint of maintaining the balance of procedural rights and guarantees. At that, a party to the arbitration is to submit evidence confirming the fact of conducting the arbitration and the validity of the award.

[1] Law N 5338-1 dd. 07.07.1993 (as amended on 29 December 2015).

[2] Federal Law No 382-FZ on Arbitration (Arbitration Proceedings) in the Russian Federation dd. 29 December 2015.

[3] Federal Law No 531-FZ dd. 27 December 2018.

[4] As regards a foreign arbitral institution, it is to provide the following documents in order to obtain the license: a) Note detailing the background and activities of the institution; b) Excerpt from the register or a similar document confirming the legal status of the institution or its founding organization; c) Rules for administering corporate disputes (if the organization wants to administer Russian corporate disputes that require special rules). If a foreign arbitral institution intends to administer Russian domestic disputes, it will need to establish presence in Russia for such purposes (a branch office of the institution or its founding organization).

[5] The main objective of the agreement on the procedure for resolving disputes in connection with business activities that was signed on 20 March 1992 in Kiev (“Kiev Agreement”) was to fill the vacuum that arose after the breakup of the USSR in 1991. This led to the need to create a legal mechanism for determining the correct jurisdiction in disputes within the CIS, and for the enforcement of judgments handed down by state courts. Thus, the Kiev Agreement was mainly intended to regulate proceedings specifically in state courts, not arbitration courts. However, insofar as at that time the majority of CIS countries were not parties to the New York Convention (except for Russia, Belarus and Ukraine), the Kiev Agreement also applied to arbitral awards. But after most of the CIS countries joined the New York Convention, the existence of a double enforcement regime (under the Kiev Agreement and the New York Convention) began to create problems in practice.

[6] Letter of the Supreme Arbitrazh Court of the Russian Federation No. ОМ-37 dated 01.03.1996; “Overview of court practice in cases involving the performance of the function of assistance and monitoring of arbitral tribunals and international commercial arbitration” (ratified by the Presidium of the Russian Supreme Court on 26.12.2018).

[7] Resolution of the Arbitrazh Court of Moscow Circuit dated 18.11.2019 No. F05-19912/2018 in case N А40-90601/2019.

[8] Convention on legal assistance and legal relationships in civil, family and criminal cases, dated 22.01.1993.

[9] For example, in 2001 state courts refused to recognize and enforce an arbitral award of the Arbitration Institute at the Stockholm Chamber of Commerce, finding a violation of the arbitration procedure agreed by the parties, including the fact that arbitrators held the hearing in Stockholm, while the place of arbitration was Moscow.

[10] See Resolution of the Arbitrazh Court of the Moscow District in Case No. А40-219464/16 dated 19 July 2017.

[11] Item 15 of the Plenary Session Resolution.

[12] See Baker McKenzie International Arbitration Yearbook for 2012-2013, JurisNet, pp. 370-373.

[13][13] Resolution of the Supreme Arbitrazh Court of the Russian Federation in case VAS-1831/12 dated 19 June 2012.

[14] Item 24 of the Plenary Session Resolution

[15] Item 49 of the Plenary Session Resolution.

[16] See article 16 of Law of the Russian Federation N 5338-1 dated 07.07.1993 “On international commercial arbitration”; article 16 of Federal Law N 382-FZ dated 29.12.2015 “On arbitration (arbitration proceedings) in the Russian Federation”; article 235 of the Arbitrazh Procedure Code of the RF.  In accordance with the above provisions, in the wording in effect at the time of publication, this period is 1 month as from the date of receipt of the notice on the decision.

[17] See clause 5 of article 235 of the Arbitrazh Procedure Code of the Russian Federation (in the wording in effect as from 1 September 2016).

[18] Item 33 of the Plenary Session Resolution.

[19] The laws provide for a “right to perform functions of a permanent arbitral institution.”

[20] International Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation,

[21] Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation,







[28] Uzbekistan Airways v BB Energy (GULF) DMCC, case file at:

[29] ICAC award dd. 05.02.2019 in case № М-59/2018

[30] The award was set aside by the first level court and the ruling upheld by higher courts. See Ruling of Arbitrazh Court of Moscow dd. 8 May 2019, Resolution of Arbitrazh Court of Moscow Circuit dd. 24 July 2019 and Ruling of Supreme Court’s Panel of 25 November 2019 refusing to review the case on the merits.

[31] Ruling of Arbitrazh Court of Moscow dd. 12 February 2020 in case А40-317454/2019.

[32] Instar Logistics v. Nabors Drilling International Limited, case file at:

[33] OFAC’s list of Specially Designated Nationals and Blocked Persons,

[34] See Judgment of Arbitrazh Court of Moscow dd. 14 November 2019 in case А40-149566/2019.

[35] article 451. Amending and nullifying the contract due to material change in circumstances.

[36] Resolution of the Ninth Court of Appeal dd. 10 February 2020 in case А40-149566/2019.

[37] See Draft law № 754380-7 “On amending legislative acts of the Russian Federation to protect the rights of certain categories of individuals and legal entities due to unfriendly actions of the US and other foreign states.” The draft law was approved in the first reading in May 2019, details at:

[38] Silverburn Shipping (IoM) Ltd v. Arc Shipping Company LLC, case file at:

[39] Resolution of the Arbitrazh Court of Moscow Circuit dd. 16 October 2019; Ruling of the Supreme Court Panel dd. 13 January 2020 refusing to review the case on the merits.

[40] Listaks Corporation, Belize v. MDM Leasing, case file at:


Irina Varyushina is a professional support lawyer in Baker McKenzie's Moscow office.