Review of the Most Important Trends in the Russian Court Practice (2014) Pertaining to International Commercial Arbitration

In 2014, the Russian courts issued a number of decisions highly relevant to international commercial arbitration. We present below a review of the most important conclusions and trends in Russian court practice as may be inferred from those decisions. Although some of the court cases had to do with “domestic” rather than international commercial arbitration, the court findings may be of broader importance as discussed below.
1. The approach of the Russian Higher Arbitrazh Court to so-called “objective impartiality” in arbitration has been revisited in two consecutive cases by the Constitutional Court of the Russian Federation (hereinafter – Constitutional Court). In the first ruling, issued in November 2014, the Constitutional Court held, in contrast with the position traditionally held by Russian arbitrazh courts, that membership of a party to arbitration in a non-commercial organization that founded the arbitral institution administering the arbitration does not, per se, undermine the arbitrators’ independence (although a lack of independence still may be established where a sufficient objective connection exists between a party and an arbitrator). The Constitutional Court ruling was only issued to fit a set of specific facts (i.e. that of domestic arbitration cases administered by arbitration institutions founded by non-commercial organizations, a member of which is party to an arbitration with a non-member). However, the same reasoning may apply in a broader context, e.g., where a party to a dispute acts as a founder of the arbitral institution, without actually intruding on the arbitrator’s independence. It remains to be seen how this ruling will shape the Russian courts’ broader approach to “objective impartiality” and whether the courts will apply the rationale of the ruling, by extension, to international commercial arbitration.
In a subsequent resolution issued in December 2014 the Constitutional Court confirmed that although the “objective impartiality” test applies to the tribunal and not the arbitral institution, still the connecting factors between the arbitrators and the parties need to be considered. It is to be inferred that in situations where one of the parties or its affiliates are the founders of an arbitral institution, and have the ability to influence the arbitration proceedings and the tribunal because of such special status, the courts still may find, in line with the pre-existing prevailing practice, that the “objective impartiality” is not secured and the arbitral award is not to be enforced, or is to be set aside, as the case may be.