Russian arbitration law reform

Global Publication September 2016

A new regulatory landscape

Russia has reformed its arbitration law to bring it more in line with the UNCITRAL Model Law, and to implement greater regulation of domestic and foreign arbitral institutions operating in the region. We analyse the changes to Russia’s arbitration law, including the new regulatory landscape for domestic and foreign arbitral institutions, the status of ad hoc arbitrations, and the arbitrability of disputes.

Drivers of reform in Russia

The most recent round of legislative reform of Russian arbitration law concluded in December 2015 with two bills signed into federal law. These laws came into force on September 1, 2016, with certain provisions becoming effective at a later date.

Commercial Arbitration (ICA Law) to bring Russia’s arbitration regime more in line with the UNCITRAL Model Law. This reform was primarily driven, however, by the desire to change the Russian arbitration landscape and to develop the domestic arbitration services market. Hundreds of arbitral institutions across Russia offer their services. Reportedly, many of those have been used for fraudulent goals, such as enforcing non-existent debts for the purpose of bankruptcies. Others were established by corporations to handle disputes with their contractual partners, raising significant concerns over impartiality. Reform was needed.

New Russian registration and authorisation requirements for arbitral institutions

The new legislation requires that arbitral institutions be established only by non-profit organisations and that they be registered with the Russian Ministry of Justice. Most existing institutions will therefore need to be reorganised, though this reform does not affect the International Commercial Arbitration Court or the Maritime Arbitration Commission at the Russian Chamber of Commerce and Industry. In addition, arbitral institutions, including foreign institutions, must obtain authorisation from the government to administer Russia-seated disputes.

If an institution does not obtain both registration and authorisation, any arbitrations administered by it will be considered ad hoc (rather than administered), which has significant consequences under Russian law. Ad hoc tribunals are prohibited from resolving corporate disputes between the shareholders of Russian corporations; ad hoc arbitrations do not enjoy the same judicial support as do administered arbitrations; and parties to ad hoc arbitrations cannot exclude recourse to Russian courts against awards on jurisdiction or final substantive awards. Perhaps more controversially, after the conclusion of the matter, ad hoc tribunals must send the arbitral award and the case file to the Russian court for safekeeping.

Parties drafting arbitration agreements therefore need to exercise care when choosing which institution and institutional rules will apply.

Changes to the rules governing arbitration agreements

Changes to the rules governing arbitration agreements introduced by the reform are largely based on the 2006 version of the UNCITRAL Model Law (article 7, option I). The requirement that an arbitration agreement be in written form will be satisfied if the agreement is concluded in a form which allows access to the information contained in it for subsequent use. This may include electronic communications; an exchange of statement of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other; or incorporation by reference. The arbitration agreement can also be included in the rules of exchange houses and in some cases in the charter of a Russian legal entity.

The reform also clarifies that in the case of an assignment, both assignor and assignee will be bound by the arbitration agreement. Further, all doubts around interpretation of an arbitration agreement should be construed in favour of its validity and enforceability.

Parties to Russia-seated administered (but not ad hoc) arbitrations may, by agreeing on the finality of the award, exclude recourse to the courts against an award on jurisdiction and exclude proceedings to set aside an award.

New clarity in Russia on the arbitrability of particular types of dispute

The new law has removed uncertainties over the arbitrability of certain types of dispute. Prior to the reform, the ICA law generally allowed for civil law disputes to be arbitrated but this did not affect the application of other federal laws. Russian courts could, therefore, regard as non-arbitrable: disputes concerning immovable property (until 2011, when the Constitutional Court overturned this practice); corporate and procurement disputes; and other disputes with a concentration of public interest (as, for example, disputes concerning lease of forest plots).

Under the new legislation, express federal law provision is required before a category of disputes will be treated as nonarbitrable. The list of non-arbitrable matters so far includes:

  • bankruptcy disputes
  • privatisation disputes
  • disputes concerning public procurement
  • employment and family matters
  • environmental damage disputes
  • personal injury cases.

One of the most widely discussed reforms is that certain corporate disputes involving shareholders of a Russian legal entity are now arbitrable; provided the cases are administered by registered arbitral institutions and the arbitration is seated in Russia.

The new legislation distinguishes between three categories of corporate dispute as outlined below:

  1. Disputes involving a public element: these cannot be referred to arbitration. (Examples include disputes on state registration of corporations.)
  2. Disputes involving contracting parties only: these are arbitrable. (Examples include disputes arising from share purchase agreements.)
  3. Disputes involving a greater number of parties: these may be arbitrable under certain circumstances. (Examples include disputes relating to the challenge of corporate resolutions or to shareholders’ agreements.) These disputes can be only referred to arbitral institutions which have adopted specific rules for corporate arbitrations, among them that the shareholders be informed of the dispute and that shareholders be able to join the proceedings at any stage.

The option of arbitrating corporate disputes may be appealing primarily in the context of Russian-registered joint venture companies with a limited number of shareholders. Parties should note however, that arbitration agreements concerning corporate disputes can only be concluded after February 1, 2017. Agreements concluded before that date will be deemed incapable of being performed.

Judicial assistance to Russian-seated arbitrations

The reform allows tribunals in administered Russian-seated arbitrations to request the Russian courts’ assistance in the taking of evidence – obtaining material (physical) evidence and documents. The courts will not assist tribunals with obtaining other categories of evidence or witness statements.

Setting aside and enforcement

A party seeking to enforce an award in Russia should first send a written demand to the respondent requesting that it voluntarily comply with the award. An application to court can only be made if that demand is not satisfied within 30 days. (This change came into effect on 1 June 2016.)

With effect from 1 January 2017, a first instance court will have one month from the date of filing of the application to render its decision on enforcement (or setting aside) of the award.

Russia’s legislative reform has also introduced a provision on recognition of foreign declaratory judgments and arbitral awards. If Russia is signatory to an international treaty which provides for the recognition of such judgments and awards, then these will be recognised in Russia without enforcement proceedings. Since Russia is already a party to the New York Convention, declaratory awards rendered in another New York Convention jurisdiction, therefore, may be directly applicable in Russia and relied upon in the Russian courts. The respondent will bear the burden of opposing recognition and must do so within one month from the date on which it learned of the judgment or the award. The grounds for refusal of recognition are essentially the same as the grounds for refusal of enforcement.


Reform of Russian arbitration law, in particular with respect to the rules on arbitrability and arbitration agreements, will be welcomed by arbitration users. It is hoped that reform will drive further improvements to the Russian arbitration market to make it more transparent and reliable, in turn improving trust amongst users and judges.

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