The following decision of the Moscow Arbitrazh (Commercial) Court shows that the arguments of parties who try to resist the recognition or enforcement of arbitral awards in Russia in the times of the COVID pandemic, such as the impossibility to send representatives or witnesses to Russia or to participate in video hearings, are doomed to failure. Today’s courts and arbitration tribunals technical infrastructure created for the smooth conduct of proceedings, makes it possible to conduct even complex international arbitration proceedings while preserving all procedural rights, such as the right to be heard and equality of arms (A40-91372-2021_20210617_Opredelenie.pdf (arbitr.ru)).
On 15 June 2021 the Moscow Arbitrazh (Commercial) Court dismissed the claims of the Polish company OCEANS GROUP ASIA LIMITED SP.Z O.O. to set aside the decision of the International Commercial Arbitration Court at the Russian Chamber of Commerce and Industry rendered in the dispute between the Polish company and Sibenergougol Ltd.
Sibenergougol Ltd. is a major coal mining company in the Kuzbass, with a history dating back to 2001. The company reached a production capacity of 2.0 million tonnes per year by 2015.
The International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation ruled to recover the payment for the delivered goods (steam coal) plus interest from the Polish company in favour of Sibenergougol Ltd. In April 2021, OCEANS GROUP ASIA LIMITED SP.Z O.O. requested the Moscow Arbitration court to reverse the arbitration award anc claimed that
- there was no arbitration clause between the parties and the arbitration court was not competent to hear the dispute;
- additionally, the company argued that the principle of equality of arms was violated in the proceedings as its representative was unable to participate in the case due to the coronavirus pandemic.
Sibenergougol Ltd insisted that the obligations under the contract had been fulfilled by the parties for more than a year and a half, the parties had corresponded and concluded additional agreements to the contract and the Polish company had never questioned the conclusion or the validity of the arbitration clause until the arbitration tribunal examined the case for recovery of the debt for the supplied goods.
The Polish company also failed to submit another possible version of the contract without the arbitration clause or any other evidence of the non-consensual nature of the arbitration clause, while the burden of proof in this respect falls on the party disputing the validity of such clause.
COVID travel restrictions are not an excuse
The court stated that the company’s right to present its case before the arbitral tribunal had not been infringed, since despite the quarantine restrictions in force, it had the right to find a representative in Russia or to take part in the hearing via video conference, which had been repeatedly proposed by the arbitral tribunal.
At the time of the hearing, the entry into the territory of the Russian Federation from a number of foreign countries had been permitted and, in that connection, the respondent’s arguments that it was unable to secure the attendance of its representatives were unfounded.
Also in accordance with Section 30(6) of the Rules of Arbitration of International Commercial Disputes Arbitration of international commercial disputes (Annex 2 to the Order of the Chamber of Commerce and Industry of the Russian Federation of 11.01.2017 N 6), each party may apply in advance to the arbitral tribunal for request to participate in an oral hearing through the use of videoconferencing systems. Such request shall be considered by the arbitral tribunal taking into account the circumstances of the case, the opinion of the other party and the availability of technical facilities.
The arbitral tribunal invited the respondent to choose the software to organise the videoconference. However, the respondent failed to act and ignored the requests and suggestions of the arbitral tribunal.
The Moscow Arbitration Court dismissed the application for annulment of the arbitral award of the International Commercial Arbitration Court at the CCI of Russia.
The decision also shows that in order to determine whether an arbitration clause has actually been agreed and still is effective, the court takes into account and assesses the entire contractual relationship. A long-standing contractual relationship involving a multitude of contracts and additional agreements, while none of the parties has complained about the one agreed arbitration clause, arguably serves as a clear indication of its effectiveness.