Modern Arbitration Live News Journal No 2
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Issue 2 /2021 NEWS JOURNAL HIGHLIGHTS OF ALTERNATIVE DISPUTE RESOLUTION The second issue of Modern Arbitration: LIVE News Journal offers a comprehensive analy- sis of Russian and foreign news in the field of alternative dispute resolution for the sec- ond half of 2020. Modern Arbitration: LIVE News Journal comprises overviews of arbitral awards and legislative amendments, interviews and commentaries by experts, as well as notes on the most topical issues of arbitration and mediation. MODERN ARBITRATION: LIVE JOURNAL WAS PREPARED BY: Alina Shirinyants Katsiaryna Piskunovich Arina Akulina Mikhail Makeev Daria Kravetz Svetlana Grubtsova Ekaterina Baliuk Valeria Butyrina Ekaterina Bubnova With the support of TABLE OF CONTENTS International Arbitration and Russia 5 Issues of Third-Party Funding 39 Enforcing arbitration agreement impossible to prohibit. Third-Party Funding of Litigation and Arbitration in Russia 40 Sanctions as an obstacle to access justice. Application of a foreign law in light of sanctions 8 Women in Arbitration 43 Interview with the Founders of Russian Women in Arbitration 45 New Trends in International Arbitration 13 To Disclose or Not to Disclose – That Is the Question 14 Arbitration in the COVID-19 Era: Virtual Hearings 49 Insolvency and Arbitration 15 Case Law 49 Expert Commentaries 16 Discussions in the Professional Community 50 Effect of Insolvency Proceedings on Arbitration: A View from the Standpoint of Foreign Jurisdictions 19 A Look at the Western Borders: Kaliningrad as a Promising Seat of Dispute Resolution 53 Arbitration and Pharmaceuticals 21 Expert Commentaries 53 Expert Commentaries 24 Investment Arbitration News 27 Spanish saga 29 Arbitration on the Lookout for Nature 31 Arbitration and Technology 33 Using AI and Automated Decision-Making Technologies in Online Arbitration: France experience 33 Space Arbitration 35 Expert Commentaries 35 3 4 The Delovye Linii Conflict: Highlights of Recent Developments more This November, the Commercial Court of Saint Petersburg One could justly note that the English court took a similar and the Leningrad Region refused to recognize and en- stance, ordering ordering the LCIA to revise the quantum force an LCIA award recovering USD 58 million from the of its award. The court considered the tribunal’s error to co-owner of Delovye Linii, Alexander Bogatikov. be material and noted that the tribunal made “the sort of simple mistake any of us can make,” but “with the most In support of this position, the Russian court indicated that unfortunate consequences.” The English court judged that in calculating the damages that the claimant incurred as such an arithmetic mistake could result in “substantial in- a result of an unexercised option, the LCIA erroneously justice” for Bogatikov’s company. added the purported “tax risks” to the value of the enter- prise, instead of deducting them. The conflict before the LCIA arose in 2017, when a Delovye Linii top manager Mikhail Khabarov was dismissed from The LCIA acknowledged the mistake but refused to correct his office in the company, failing thus to exercise an option it, reasoning that the mistake did not affect the calcula- to buy 30 % in the company’s shares valued at USD 60 tion of damages and was a technical one. The Russian million. In January 2020, the LCIA rendered the award at is- court disagreed with this: according to the court, an error sue, awarding USD 58 million to a Cyprus company (which in the decision such as this was contrary to the fundamen- Mikhail Khabarov used to control Delovye Linii). tal, basic legal principles of the Russian Federation and the constitutional legal guarantees of judicial protection of Notably, the LCIA eventually corrected its mistake later on. the rights of Russian nationals. Enforcement of Yukos Award 2020 abounded with news related to the attempts by the Notably, as regards the actual recoveries under the award, Yukos shareholders to enforce the arbitral award that or- the last six months have proved rather unfortunate for dered the Russian Federation to pay over USD 50 billion the Yukos shareholders. Thus, in October, the Supreme to Hulley Enterprises, Yukos Universal, and Veteran Petro- Court of the Netherlands lifted the attachment of the Rus- leum. sian vodka brands in the Benelux countries, relying on the provisions of the Russian Civil Code that stated that pub- Thus, in late May, the shareholders tried to resume the lic enterprises were not responsible for the debts of their recognition and enforcement proceedings before the US founder (the Russian Federation). District Court for the District of Columbia. The US case has remained adjourned since September 2016, pending Simultaneously with the main proceedings in the Nether- a decision on the legality of the arbitral award issued in the lands, smaller cases are pending in other jurisdictions under Netherlands. claims by minority shareholders. Before the Ontario Superi- or Court, Russia continues its efforts to submit Russian law In mid-June, Russia filed a request against resuming hear- expert opinions that had not been put forward when the ings in that US case. arbitration seated in Toronto was considering the issue of INTERNATIONAL its jurisdiction. Previously, in December 2019, Judge Penny The US Court granted Russia’s request and stayed the dismissed Russia’s request in question, holding that the proceedings until 18 November 2022 or until the Nether- requesting party had to prove the following: lands Supreme Court hears Russia’s cassation appeal that it admitted in the end of June. The hearing of the appeal • the evidence could not have been obtained with due ARBITRATION care; took place on 5 February 2021. • the evidence is relevant to the case; The Russian party has tried to stay enforcement of the • the evidence is authentic; awards in the Netherlands, too. The country’s Supreme • one may expect that evidence, in conjunction with all AND RUSSIA Court, however, eventually dismissed Russia’s motion. other evidence filed, will affect the outcome. Issue 2/2021 5 6 According to the Canadian Judge, Russia failed to prove Notably, such a position is at odds with the opinion of the any of these circumstances, hence its new evidence could French Cassation Court in a non-Yukos case. In December ENFORCING ARBITRATION not be admitted. Pursuant to the resolution of the Ontario 2020, the French Court, on the contrary, ruled that where Superior Court of 4 August, the Russian party can appeal jurisdiction is concerned, parties are not prohibited from AGREEMENT IMPOSSIBLE TO PROHIBIT. this decision. offering new arguments that were not addressed in the ar- bitration. SANCTIONS AS AN OBSTACLE TO ACCESS JUSTICE. APPLICATION OF A FOREIGN LAW Russian Athletes in Arbitration IN LIGHT OF SANCTIONS On 11 December 2019, the World Anti-Doping Agency sian biathletes – Olga Vilukhina, Yana Romanova and (WADA) banned Russian athletes from the Olympics and Olga Zaytseva – for alleged doping (Olga Vilukhina, Yana world championships for four years. Romanova and Olga Zaytseva v. the International Olympic Committee). For Ms. Vilukhina and Ms. Romanova, the Viktor Rykov By its 17 December 2020 award, the Court of Arbitration panel held that their conduct did not go beyond “mere for Sport (CAS) upheld WADA’s decision, but shortened suspicion” of potential anti-doping rule violations, annulled International lawyer, Nexign, JSC the duration of Russia’s ban to two years, providing for the bans appealed, and ordered to reinstate all their results a number of restrictions for that period. Until 16 December in individual events at the Sochi Olympics. Ms. Zaytseva, 2022, athletes will be able to compete in the Olympics and conversely, violated anti-doping rules, but instead of im- Paralympics, as well as world championships only under posing a lifetime ban, the panel ruled that she was banned a neutral flag and provided that they go through additional from competing in subsequent Winter Olympic Games af- doping tests. ter Sochi. Since Ms. Zaytseva did not take part in the Pye- ongChang Olympics in South Korea in 2018, she will now Earlier, on 24 September, CAS overturned lifetime bans be able to compete in the future Olympics. on participation in the Olympics imposed on three Rus- Articles 248.1 and 248.2 Russian Arbitrazh (Commer- for the purchase of trams and spare parts between Rus- cial) Procedure Code (CPC) represent a novel concept sian customer, Uraltransmash, JSC (Claimant) and Polish of Russian procedural law encompassing, respectively, supplier (Respondent). The contract contained an arbitra- two problematic institutes of modern legal order: restric- tion agreement, which directed parties’ disputes to be re- tive measures related to Russian citizens and corporations solved in accordance with the Rules of Arbitration Institute The Moscow and Moscow District Commercial (Arbitrazh) Courts (sanctions) and injunctions against international arbitration. of the Stockholm Chamber of Commerce (SCC). Agreed with an Ad Hoc Award Rendered with Respect to Non-Signatories Although the new law has been enacted just a half year Initially, in 2019, courts of two first instances rejected Claim- 2 of the Arbitration Agreement more ago (date of enactment – 19.06.2020), the first case ant’s claims due to numerous reasons. However, a cassa- law is already available: Judgement of Sverdlovsky Re- tion court reversed judgements of lower courts, pointing gion Commercial Court (Court) dated 05.10.2020, case out that Claimant’s allegations regarding unenforceability of On 3 November 2020, the Commercial (Arbitrazh) Court for In this regard, the Moscow Commercial Court cited the No А60-62910/2018 (Judgement). Judgement relates, the arbitration agreement have not been sufficiently exam- the Moscow District upheld the ruling of the court of first arbitral award in its ruling: mostly, to application of art. 248.1 CPC and briefly touches ined, especially in the light of new CPC articles. instance which refused to set aside the arbitral award in upon an issue of determining foreign law contents.