ICC Russia survey: Russia as a place for arbitration | Practical Law

ICC Russia survey: Russia as a place for arbitration | Practical Law

Natalia Belomestnova (Senior Associate) and Tatiana Zakharova (Associate), Goltsblat BLP

ICC Russia survey: Russia as a place for arbitration

Practical Law UK Legal Update 5-520-2241 (Approx. 3 pages)

ICC Russia survey: Russia as a place for arbitration

by Practical Law
Published on 05 Jul 2012 • Russian Federation
Natalia Belomestnova (Senior Associate) and Tatiana Zakharova (Associate), Goltsblat BLP
On 29 June 2012, the Russian national committee of the International Chamber of Commerce (ICC Russia) published the results of its survey "Russia as a place for arbitration".
In September 2011, ICC Russia initiated a poll to ascertain how Rusia is perceived as a place for arbitration by practising lawyers and the business world. The ultimate purpose of the survey was to produce recommendations on possible steps that could be taken to provide more favourable conditions for arbitration in Russia and to develop a positive image of Russia as a place for arbitration.
ICC Russia has now published the results of the survey (which can be viewed on the ICC Russia website). The poll had 112 participants, of which 58% were Russian residents and 42% were foreign residents.
The main results of the survey were:
  • The Arbitration Rules of International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation (ICAC) were found to be the most frequently used in Russia-related arbitration. However, they were named last in terms of satisfaction of the parties with regard to the quality of the arbitration. The most "satisfying" rules were found to be the SCC rules (for Russian respondents) and the UNCITRAL arbitration rules (for foreign respondents).
  • Russian participants listed Paris, Stockholm, London and Moscow as their most popular venues for arbitration, while foreign participants indicated preferences for Paris, Vienna, London and Stockholm, with Moscow coming only seventh.
  • The most popular reasons for choosing Russia as a place for arbitration were found to be:
    • Russian law as governing law in the dispute;
    • the risk of breaking a deal if Russian arbitration was not chosen; and
    • the choice of Russia as the place for arbitration together with the application of foreign arbitration rules (popular among foreign respondents).
  • The majority of Russian and foreign respondents characterised the "arbitration-friendliness" of Russia as average.
  • 69% of Russian respondents and 77% of foreign respondents considered Russian legislation on international arbitration as consistent with international standards. None of the foreign participants named Russian legislation as inconsistent with international standards. However, 89% of Russian respondents and 53% of foreign respondents think that Russian legislation on international arbitration needs some improvement.
  • The majority of respondents considered that the practice of Russian state courts on matters related to international arbitration is not uniform or consistent and is not arbitration-friendly.
  • Respondents listed the following as basic problems with Russian arbitration institutions:
    • lack of independence from their founding organisations;
    • insufficient quality of case administration;
    • difficulties with conducting arbitration in a language other than Russian;
    • low fees payable to arbitrators; and
    • corruption.
  • Russian and foreign respondents had different opinions as to the factors contributing to the submission of a dispute to an institutional arbitration in Russia. Most Russian respondents pointed to the arbitrators' knowledge of Russian substantive law when it is applicable to a dispute as the most important factor in favour of submitting an international dispute to institutional arbitration in Russia. Foreign respondents put that factor in fourth place, identifying familiarity with arbitration procedure as the main factor, followed by the acceptable time frames of arbitration proceedings. The second most important factor for Russian respondents was lower arbitration costs (costs and fees) as compared to the arbitration costs abroad - a factor not at all prioritised by foreign respondents.
  • Both categories of respondents specified their own knowledge of Russia, and the availability of qualified lawyers specialising in arbitration in Russia, among the factors positively influencing the choice of Russia as the place for arbitration. Foreign respondents surprisingly put cultural facilities at the top of the list of positive factors influencing the choice of Russia as the place for arbitration.