Summary: The Supreme Court upheld the decisions below that the arbitration clause in a supply contract was not incapable of being performed because the claimant lacked the means for paying the SCC registration fee (its request of arbitration had been dismissed pursuant to the SCC Rules after its request for deferral of payment of the fee had been denied). In general, lack of means on the side of the claimant does not preclude arbitration. Further, if a party to an arbitration agreement commences a court action in a matter falling within the scope of the agreement, that party bears the burden of proving that the clause is null and void, inoperative or incapable of being performed, and the other party must be given the opportunity to prove the contrary. Here, the claimant had not proved that it was unable to exercise its rights in the contractually agreed arbitral forum, while the defendant had showed that the claimant's financial difficulties were due to the deliberate transfer of funds to an affiliated company of the same group.
by Mikhail Samoylov, Associate
Please follow the link (registration required) to find the full text of the decision in English.