International Commercial Arbitration Issue No. 1 for 2007

Materials on the UN Convention on Contracts for the International Sale of Goods
 
Prof. I.S. Zykin Protection of Sellers’ and Buyers’ rights under CISG.

Difficulties of application of the CISG by Russian parties are largely related to the fact that this Convention represents a compromise that was reached on the basis of norms of non-Russian (non-Soviet) law. For example, in contrast to the CISG, the Civil Code of the Russian Federation provides for specific sanctions for the breaches committed by one of the parties to a contract, while this Convention contains general lists of remedies available for sellers (Art. 45) and buyers (Art. 61) and the interested parties are free to select the desired remedy from the relevant list themselves.

Prof. A.L. Makovsky Influence of the CISG on Formation of Norms of Russian Law.

The CISG played a unique role in formation of modern Russian legislation. Its norms were conceived by the Contracting States as relatively special and narrow, but in Russian legislative acts as adopted in the course of the last decade they were assigned a very important and broad role, specifically in the sphere of regulating domestic operations. However, in some instances the approach taken by the Russian lawmakers departs from that of the CISG.

 
Investment Disputes

 
Max Gutbrod and Steffen Hindelang Externalisation of Effective Legal Protection Against Indirect Expropriation

In recent years direct expropriation of investments of foreign investors was seen rarely. However, expropriation has by no means vanished: its execution has just become more subtle. Ambiguous or generously worded laws are “interpreted” to the detriment of investors, administrative discretion is influenced or the administrative bodies fail to act in a transparent manner. Can the legal order of developing countries live up to the standards required by international investment agreements? The authors undertake a disenchanting comparative analysis based largely on provisions of Russian law.

The article was translated by permission of Journal of World Investment and Trade.

 
Russian Experience

 
B.R. Karabelnikov Russian Courts and International Arbitration: Developments in 2006

In the course of the previous year Russian state courts passed numerous judgments in matters related to the enforcement and challenging of international arbitral awards. Although certain negative features which were heavily criticized in the literature are still discernible, one can detect substantial positive developments that are mostly related to the narrower application of the notion of public policy and burden of proof of grounds for setting aside or refusing enforcement of an international arbitral award. However, in general the attitude of Russian judges to arbitration remains somewhat hostile and suspicious. Publication of a selection of judgments of Russian courts commented in this article is started in the current issue of the journal and shall be completed in the next issue.

 
International Practices

 
R.O. Zykov Ordre Public Norms of the EU Antitrust Law as Grounds for Setting Aside of Arbitral Awards

The question as to the extent of arbitrators’ freedom to deal with matters of mandatory law of a country of contractual performance is often raised in arbitration.. In other words, is arbitration as a means for resolving private disputes allowed to decide on matters of public law? While the article is largely based on materials of Eco Swiss China Time Ltd v. Benetton International NV, it mostly discusses not the peculiarities of this famous case but rather the conclusions which should be made on its basis.


Arbitral Awards

 
ICAC Award of November 11, 2006, Case No 37/2006

The buyer, a Ukrainian company placed an order with the Russian company for the supply of a rare article requiring complex production process. Subsequently the Ukrainian company declined to accept the delivery or to pay for the ordered goods. Its position was based on provision of the contract which provided for the delivery of the article in question after pre-payment. Since prepayment never took place, the respondent maintained that it was not required to perform the contract. After the scrutiny of the contract the Tribunal decided that since the term for delivery after prepayment was too short for manufacturing of the article in question, the seller had to commence the manufacturing before the prepayment and thus was eligible for requested remedies.
 

Procedural Order of the ICAC of February 14, 2006, Case No 140/2003

The Russian claimant submitted its claim to the ICAC at the Chamber of Commerce and Industry of the Russian Federation maintaining that it was the arbitration institution selected by the parties in the their contract. The Respondent from Italy disagreed. According to the Respondent, since the arbitration clause failed to refer to a correct title of the ICAC, this arbitration institution had no jurisdiction to consider the case and the dispute should be instead referred to an unnamed arbitration institution. The Tribunal suspended consideration of the claim and suggested that the parties take the benefit of application of the European Convention on International Commercial Arbitration (Geneva, 1961) to which both Russia and Italy are parties and ascertain the meaning of the arbitration clause in their contract on the basis of Art. IV.5 of this Convention.