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Russian Commercial Court recognises arbitral award set aside in Turkey
Practical Law UK Legal Update 2-507-1331 (Approx. 3 pages)
Russian Commercial Court recognises arbitral award set aside in Turkey
by Practical Law
| Published on 04 Aug 2011 • International, Russian Federation |
Maxim Kulkov (Partner), Goltsblat BLP
On 20 July 2011, a Russian Commercial Court recognised an arbitral award issued in Turkey under the ICC Rules.
This decision was overturned by the Federal Commercial (Arbitrazh) Court for the Western Siberian Region (Case No A27-781/2011, 5 December 2011).
On 7 December 2010, in Istanbul, Ciments Francais (the claimant), obtained a partial arbitral award against Sibirskiy Cement Holding Company (the defendant) under the International Chamber of Commerce Arbitration Rules (ICC Rules). The claimant brought an application for recognition of the arbitral award before the Russian Commercial Court of the Kemerovo Region (Commercial Court).
The defendant objected on several grounds, including that:
- The award was set aside by a Turkish court.
- The agreement between the parties under which their dispute arose was invalidated in a separate case by a Russian Commercial Court.
On 20 July 2011, the Commercial Court rejected the defendants' arguments and recognised the partial ICC award in favour of the claimant.
The court noted that both the New York Convention and Russian local laws allow a competent court to refuse recognition of arbitral awards which have been set aside. However, Russia, Turkey and France are also all parties to the European Convention on International Commercial Arbitration 1961 (European Convention) and the court held, in this case, that the European Convention was to take precedence over the New York Convention and Russian local law (see Article IX of the European Convention and Article 13 of the Russian Commercial Court Procedure Code) and prevail with regards to the recognition and enforcement of arbitral awards.
The European Convention does provide for recognition and enforcement of an award to be refused if it has been set aside, but only where the setting aside was based on a limited number of grounds. However, since the grounds for setting aside the ICC award by the Turkish courts were not listed in the European Convention, the Russian courts could not refuse to recognise the award.
The court also rejected the defendant's attempt to rely on a separate judgment of the Russian Commercial Court that the agreement between the parties was invalid, on the basis that that judgment was being appealed.
The ruling of the Commercial Court in this case is likely to be appealed to the Court of Cassation.
The case clarifies the hierarchy of the New York Convention, European Convention and Russian local laws in cases on recognition and enforcement of international commercial arbitral awards.