In the past few decades, international arbitration has become one of the most widely used methods of resolving disputes arising under various commercial relationships. With the exponential growth of international trade, the number of international arbitral institutions as well as their economic and political impact have also increased greatly. The question of enforcing the arbitral awards has thus become an important tool that is used by various governments to further their interests. On 29 December 2015 the Russian Federation adopted its Federal Law on Arbitration (Arbitration Law) which introduced the licensing requirement for all domestic and foreign arbitral institutions. Amongst other topics, such licensing directly affects the enforcement of arbitral awards.
Since its inception in 1975, the Vienna International Arbitral Centre (VIAC) has established itself as a popular regional centre for commercial arbitration. Recently, VIAC has applied for a permit under the Arbitration Law, namely to be granted the status of a permanent arbitration institution (Permit), and on 18 June 2019, the Council for the Development of the Arbitration Process of the Russian Ministry of Justice recommended that VIAC is granted such a Permit. If successful, VIAC will be the first European institution to be granted the Permit and only the second one world-wide. Needless to say, obtaining the Permit will help ensure that the VIAC's awards are and will be enforceable in front of various courts of the Russian Federation.
The Arbitration Law applies to both domestic and foreign institutions. So far, only four domestic arbitral institution and one foreign institution have obtained the Permit (the Hong Kong International Arbitration Centre obtained the Permit in April 2019). While domestic tribunals without the Permit are banned, the regime for foreign institutions is different. Without the Permit, the awards are not declared unenforceable but are rather treated as the awards of an ad hoc arbitration. Such awards are subject to a very restrictive procedure which may, especially in corporate matters, prevent the enforcement altogether.
According to the Arbitration Law, the arbitral institutions need to clarify whether they seek to settle domestic Russian disputes as well. In order to apply for such a permit, a local branch is required and VIAC has opted not to do so. Furthermore, in order to settle corporate disputes the Arbitration Law also requires that the applicant adopts specialised corporate arbitration rules. As VIAC has not adopted such rules yet, its awards relating to cross-border corporate matters may be rendered unenforceable even upon receiving the Permit. However, the exact interpretation of the term "corporate disputes" and the extent of such restriction remains unknown.
To conclude, we are expecting that the Russian authorities will grant VIAC the status of a permanent arbitration institution which would ensure the enforceability of VIAC's awards. However, to achieve the same effect with regard to corporate matters, it seems that VIAC will have to adopt specialised corporate arbitration rules.
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