The Government will take care of the private arbitration courts
The Russian Union of Industrialists and Entrepreneurs (RSPP) suggests imposing legal limitations on the circle of companies and organizations entitled to establish private arbitration courts. It is not in principle a prohibition for commercial structures to create their own arbitration, but the RSPP believes that such arbitration should only consider internal disputes with subsidiaries, and all external disputes, in their turn, should be mostly submitted to the private arbitration courts under non-commercial organizations (like business associations, chambers of commerce and industry etc.), and certain commercial structures – like stock exchanges.
The letter containing suggestions on improving the work of private arbitration justice has been sent to the Ministry of Economic Development. The Ministry, in its turn, will promptly submit the RSPP’s initiatives for discussion in the recently established interinstitutional workgroup on improvement of the legislation on private arbitration. And the development of such legislation is a part of the government plan on creation of an international financial center.
According to the authors of the letter, establishment and financing of the private arbitration courts by commercial organizations leads to violations of the principle of objective consideration and equal rights of the parties, which, they say, is reflected in the decisions by the Higher Court of Arbitration. The latter has frequently refused to recognize the decisions by commercial arbitration.
Alexander Varvarin, the RSPP Managing Director of corporate relations and legal support, explained to Izvestia: “Endowing all legal entities with the right to establish permanent private arbitration courts makes it difficult to control them, leads to abuses of such right, to the appearance of the private arbitration courts created on the principle of “one-day” companies”.
This approach is shared by Irina Danilina, Vice-President of the SMP Bank.
She stated: “If there is a dispute between the company and an organization that is not affiliated with it, this will surely lead to a violation of said principle, and such cases should be considered in an independent private arbitration court or in state courts”.
Besides, the prohibition to establish private arbitration courts, according to the RSPP idea, should embrace state and municipal institutions as well as organizations with state interest over 50% and their subsidiaries.
The issue of committed private arbitration proceedings has been raised by the RSPP members deliberately. The sector of non-governmental arbitration in the judicial system is currently significant: several hundred funds and associations have their private arbitration, and many commercial structures prefer resolving matters in the so-called pocket private arbitration courts. Such giants as Lukoil OJSC, Gazprom OJSC, “Uralo-Sibirskiy Bank” OJSC, Rosatom SC actively employ their own private arbitration courts; one such court existed under the RAO EES prior to the dissolution of the holding.
The problem is that, when a party enters into an agreement with a stronger counterpart, it is often unable to resist the conditions being imposed on it and is forced to accept the private arbitration reservation. The subsequent disputes, as a result, are frequently resolved by arbitrators chosen from the employees of the company, under which the commercial arbitration exists. And this, in turn, results in accusations of interestedness being voiced against such structures.
Advocate Yuly Tay is convinced that even if there are “bad sheep” in the private arbitration among the judges, who accept bribes and make illegal rulings, we should concentrate on expelling them from the community, and not on indiscriminately strip the commercial arbitration of the right to consider outside disputes.
However, Alexander Bolomatov, Associated Partner of the Law Firm "YUST", points out that, if the considerations of non-integrity of certain arbitrators are rejected, the businessmen have another way out: registration of an NGO and establishment of an arbitration court under it is not hard to do.
It would seem that the RSPP seriously means to deal with the acute problem of the private arbitration courts. The Union’s list of suggestions totals over 20 clauses, including the measures of control over the activities of the private arbitration courts and increasing their responsibility for the decisions they pass as well as the measures of state incentives to the development of the private arbitration institution. It is suggested, inter alia, to prohibit the non-governmental courts to name themselves “federal”, “regional”, “district”, “city” etc.
Alexander Varvarin says: “Such names mislead the potential parties to a case regarding the status of such courts – in particular, whether the court is public or private arbitration”. That is why, according to him, it is necessary to establish a legal prohibition of the use in the name of the private arbitration court of such words and phrases as are confusingly similar to those used in the names of public courts and other public and local authorities.
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