Ben Moshinsky - Tuesday, 19 May 2009

Russian lawyers have hit back at the perception of Russia as a poor jurisdiction for arbitration.

At a seminar, held jointly between the Swiss Arbitration Association and Russian firm EPAM, lawyers lashed out at critics of Russia's justice system. 

In his introductory speech, EPAM St Petersburg head Ilya Nikiforov said: "Russia is much feared by judgment creditors because of its reportedly inconsistent enforcement practices; however, reality shows that those claimants that are brave enough to step in to the jurisdiction with guidance from proper local counsel fare quite well.

He added that Russia's status as an arbitration-friendly jurisdiction is reinforced by its successful enforcement record. "In this world a handful of bad judgments where enforcement is denied are widely publicised and criticised and numerous good cases where everything proceeds smoothly do not receive media coverage."

His comments come as a survey of global firms with Russian offices shows improving perceptions of Russia’s court system. Firms including Baker & McKenzie, Chadbourne & Parke, CMS Cameron McKenna, DLA Piper and Herbert Smith were surveyed by news service Interfax at the start of the year and were positive about improvements in Russia.

And last year the High Court held that Russia would be an appropriate forum for a £2.5 billion (€2.84 billion) claim brought by a Russian oil company against magnate Roman Abramovich.

The 31 October decision by Mr Justice Christopher Clarke was in stark contrast to his ruling just four months earlier, where he held that a $4 billion (€2.94 billion) dispute between two oligarchs should be decided in London due to the poor prospects for a fair trial in Russia.

Stable system

Increased political stability has helped improve the image of arbitration in Russia according to lawyers in the region. Sergey Yuryev, a litigation and arbitration partner in the Moscow office of CMS Cameron McKenna, said: "The stabilisation of the political system has helped. Even during the economic crisis there has been political stability. Foreign companies really do feel more comfortable arbitrating here."

He qualified his comments by saying that there was still a lack of reputable arbitration courts and associations compared with jurisdictions that have an established reputation for arbitration. "The Moscow arbitration court I'd say is the one reputable institution here."

It may take some time before all foreign law firms in Russia offer an arbitration practice to clients. Only about a fifth of foreign firms in the jurisdiction feature an alternative dispute resolution practice.

Yuryev said: "A lot of law firms with offices in Russia do arbitration outside of Russia, in places like London, Paris and Stockholm. But in Russia I’d say there were around 50 foreign firms and around 10 to 15 doing arbitration here."

An analysis of arbitration proceedings in Switzerland and Russia followed Nikiforov's comments at the seminar. Swiss lawyers from five firms including Lenz & Staehelin and Walder Wyss & Partners gave an overview of the Swiss system.

Meanwhile EPAM partner Evgeny Raschevsky examined the effects of Russian public policy on the nature of disputes that go to arbitration in Russia.

Source: CDR news