Russian Council Issues Response to HKIAC-VIAC Joint Request for Clarifications
On 25 April 2019, the Hong Kong International Arbitration Centre (HKIAC) became the first foreign arbitral institution to be granted permission to function as a permanent arbitral institution (PAI) under Russia’s Federal Law on Arbitration dated 29 December 2015 No. 382-FZ.
HKIAC’s PAI status has significant consequences under Russian law. First, it means that HKIAC is authorised to administer certain types of Russian disputes that other institutions are not; namely, certain Russian corporate and procurement disputes. HKIAC may also administer certain Russian domestic disputes. Second, parties to HKIAC-administered arbitrations seated in Russia may (i) benefit from Russian court assistance in obtaining evidence; and (ii) exclude certain aspects of court oversight; options that are not available if the arbitration is administered by an international arbitral institution without PAI status. For international arbitrations seated in Russia, HKIAC administration ensures compliance with Russian law for the enforceability and validity of the award.
The Vienna International Arbitration Centre (VIAC) was also awarded PAI status on 4 July 2019, making HKIAC and VIAC the only foreign arbitral institutions with PAI status.
Recognising that users would benefit from clarification in respect of some areas of Russian law, on 10 February 2020, HKIAC and VIAC submitted a Joint Request for Certain Clarifications to the Russian Ministry of Justice and Council for the Development of Arbitration at the Russian Ministry of Justice (Council) (Joint Request, available here). The Joint Request sought clarifications in respect of issues concerning: (i) corporate disputes; (ii) procurement disputes; (iii) domestic disputes; (iv) the differences between arbitrations administered by a PAI and ad hoc proceedings; and (v) the consequences of a PAI administering an arbitration that it is not authorised to administer.
On 27 May 2020, the Council issued its response to the Joint Request (Response, available in Russian here, unofficial English translation here). It reflects the opinion of the Working Group No. 2 on Foreign Arbitral Institutions of the Council. It does not bind courts or other government bodies considering particular disputes.
Professor Anton Asoskov of Lomonosov Moscow State University, member of the Council and HKIAC’s Council, said: “The position of the Council's Working Group on Foreign Arbitral Institutions is an authoritative interpretation of the law on arbitration issued within the Council's mandate to summarise arbitration law enforcement practice. Despite its non-binding character, it will serve as a guiding tool for arbitral institutions, parties as well as arbitral tribunals in Russia-related arbitral proceedings.”
Sarah Grimmer, HKIAC Secretary-General, commented: “In our study of PAI status we came across several issues under Russian law that were being asked by many users. We were happy to join forces with VIAC to formulate the Joint Request and grateful to receive a timely response from the Council. These documents contain clarifications of some of the most widely asked questions in this area and will serve as excellent reference materials for the community.”