Russian Arbitrazh Court Not an Arbitral Tribunal, Says Munich Court of Appeals

The Munich Court of Appeals (Oberlandesgericht) has held that a Russian Arbitrazh Court (Arbitragegericht, in the German original) is a state court, and not an arbitral tribunal. As a result, the application to the Munich court to recognize and enforce the Arbitrazh court’s judgment as a foreign arbitration award pursuant to Sec. 1061 German Code of Civil Procedure (ZPO) and the New York Convention was denied.

In the underlying matter, a Russian buyer had entered into a purchase agreement for technical equipment with a German supplier. The agreement provided for disputes to be resolved in arbitration proceedings, to the exclusion of the ordinary courts, with the seat of the arbitration being in “K.”. When the German seller failed to perform, the Russian party turned to the Arbitrazh Court. It obtained a judgment for damages, which it then took to Munich to seek recognition and enforcement.

The Munich court denied the application, having reviewed the issue whether the judgment of the Arbitrazh Court was an arbitration award from a German law perspective as the lex fori. While permanent arbitration courts could qualify as arbitral tribunals within the meaning of the New York Convention, the Russian Arbitrazh Courts constitute a specialized branch of the Russian state court system.

In addition, both the fact that the judgment was given “in the name of the Russian Federation” and that it contained asection on legal remedies pursuant to the Arbitrazh Procedure Codes supported the analysis that it was a judgment of a state court, and not an arbitral award.

I believe that the Munich court’s analysis was absolutely right: The Arbitrazh courts are, from our perspective, somewhat of a misnomer and the court was right to look beyond the name to the substance of that judicial body. As the recent decision of the Presidium of the Supreme Arbitrazh Court of the Russian Federation in the Sony Ericcson matter on optional jurisdictional clauses illustrates, in terms of procedure, the hierachy of courts, from the Arbitrazh Court to the  Appellate Arbitrazh Court and finally to the Supreme Arbitrazh Court of the Russian Federation. In terms of substance, it shows how the Arbitrazh courts work in parallel to arbitral tribunals, ruling on the validity and construction of an arbiration clause.

In the German tradition, the published judgment has been sanitized, and does not disclose the parties, not even the exact name and location of the court, the Arbitrazh Court K. The dispute resolution clause that I have quoted may have got somewhat lost in translation; having been been translated from English or Russian language originals into German, and than on to English. Oberlandesgericht München, file no. 34 Sch 30/10, February 28, 2012, recently published in the DIS database.

 

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3 thoughts on “Russian Arbitrazh Court Not an Arbitral Tribunal, Says Munich Court of Appeals

  1. May I suggest that, If there was indeed an agreement to arbitrate, one might be excused for wondering respectfully on what basis the Arbitrazh Court accepted jurisdiction in the first place. Perhaps neither Party brought the arbitration clause to the attention of the Court?

  2. I am a United States librarian that is involved in international law issues. Would you send me a copy of the opinion? I would like to read it. The case is very interesting.

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