Corradino Corporation Ltd. v JSC Russian Insurance Center1 concerned the enforcement of an award rendered by the Maritime Arbitration Commission at the Russian Chamber of Commerce and Industry. It had a somewhat odd underlying set of circumstances, which may have dictated the overall outcome.
The arbitral tribunal issued an award ordering the insurer to pay a certain amount to the foreign claimant under the maritime insurance agreement. The insurer subsequently applied to the tribunal for a correction of an error, which was understood by the tribunal to be a request to render an additional award. The tribunal issued this additional award in which it corrected the reasons for, and operative part of the original award by deducting an unconditional franchise which it had mistakenly failed to deduct previously.
As the additional award was rendered without giving proper notice to the parties or conducting a hearing, it was set aside by the Russian courts. The claimant then sought to enforce the original award, but the first instance court rejected the application, stating that enforcing the award – which contained obvious errors – would be contrary to the principle of legality, one of the fundamental principles of Russian law. The Cassation Court (which hears appeals from first instance courts) reversed the decision as interfering with the finality of the original award and ordered enforcement.
On appeal from the Cassation Court, the Commercial Division agreed with the first instance court’s position. In particular, it found that:
- The principle of legality of judgments – which means that the judgment should be rendered in accordance with the applicable law, well-grounded, reasoned and final – is equally applicable to arbitral awards as one of the fundamental principles of Russian law.
- The error in the award was accepted by the tribunal itself in the additional award, and therefore, the original award violated the principle of legality and was contrary to the provisions of the insurance contract.
“The principle of legality of judgments is equally applicable to arbitral awards as one of the fundamental principles of Russian law.”
Unlike the first instance court, however, the Commercial Division ordered partial enforcement of the original award, effectively deducting the unconditional franchise as per the insurance agreement on its own motion, and in effect implemented the additional award.
This ruling may encourage others to challenge awards on the basis of a tribunal error as to the effect of the applicable law or the provisions of the contract. It could also allow judicial correction of such errors by making adjustments to the way in which the award is enforced. The consequences of this approach are yet to be seen, as it is unclear whether this ruling will be followed by courts in future cases.