Arbitration Involving Russia

History
International arbitration has long been recognized in Russia as a means of settling commercial disputes. In the Soviet Union, contracts between certain state organizations and foreign entities usually contained an arbitration provision, often specifying that any arbitration was to be conducted pursuant to the rules of the Arbitration Institute of the Stockholm Chamber of Commerce. Enforcement was an administrative matter, and payment of arbitration awards was routine.

Foreign Investment
Following the collapse of communism, the growth in foreign investment in Russia has led to a greater number of disputes between foreign investors and Russian entities. The problems with recognition and enforcement of foreign courts' judgments and a low confidence in the Russian court system still present issues of concern. Many foreign economic agreements involving Russian parties or projects in Russia often include international arbitration clauses, given the traditional benefits associated with international arbitration as a neutral and cost-effective means of settling disputes.

Current Situation
Although Russian parties have traditionally chosen arbitration under the auspices of the Stockholm Chamber of Commerce, there is a growing practice of referring contractual disputes to other major international arbitration institutions or to ad hoc arbitration. Many international commercial disputes, especially involving foreign parties from the FSU and Eastern Europe, are being referred to the International Commercial Arbitration Court under the Russian Chamber of Commerce and Industry in Moscow. In the absence of an agreement to resolve disputes through international arbitration, Russian arbitrazh (commercial) courts have jurisdiction in disputes involving foreign investments and joint ventures in Russia.

Arbitration Law
Russia's Law on International Commercial Arbitration of 1993 is based on the UNCITRAL Model Law on international commercial arbitration and applies to arbitration with respect to the international commercial disputes that take place in the Russian Federation. This law governs arbitrations that arise out of foreign trade or economic contracts between parties, at least one of which has its place of business abroad, or is an international organization or a company with foreign investments in Russia.

Enforcement
International arbitration awards, unlike foreign court judgments, which are only enforceable in case of a specific international treaty, are enforceable in Russia under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and other relevant treaties and conventions. The recognition and enforcement of foreign arbitral awards in the Russian Federation is subject to the exceptions provided in the New York Convention. Enforcement of a foreign arbitral award may be barred upon the expiry of the applicable limitation period.