St Petersburg Commercial Court confirms that an arbitration clause remains valid even without naming an arbitral institution or expressly providing procedural rules
In a decision dated 3 October 2026, the Arbitrazh Court of St Petersburg and the Leningrad Region addressed an unusually drafted arbitration clause providing that disputes were to be submitted to the “Arbitration Court of the Plaintiff’s Country”, thus amounting to a floating arbitration clause. Despite the absence of any named arbitral institution, seat or arbitration rules, the Court held that the clause constituted a valid and enforceable arbitration agreement.
The decision in Case No. А56-47049/2026 is particularly interesting because of a terminological difficulty specific to the Russian legal system: Russian Arbitrazh Courts are state courts, notwithstanding the similarity between the Russian term arbitrazh and the English term arbitration. The Court therefore had to determine whether the parties’ reference to an “Arbitration Court” meant a state court or a private arbitral tribunal.
Background
The dispute arose from a contract dated 13 October 2023 between Chinese company HEBEI TIFONG TRADING CO., LTD, as seller, and Russian company OOO Vostok, as buyer.
In January 2026, the Chinese seller assigned its claims under the contract to OOO Legal Company “Pervaya Instantsiya”. The assignee subsequently commenced proceedings before the Arbitrazh Court of St Petersburg and the Leningrad Region, seeking USD 334,400 in principal, USD 246,285.60 in contractual penalties, further accruing penalties and costs.
Vostok objected to the jurisdiction of the Russian state court, relying on the arbitration agreement contained in clause 9(c) of the underlying contract.
The Floating Arbitration Clause
Clause 9(c) provided:
“In case of impossibility of disputes, regulations by negotiations the Parties should bring a matter into Arbitration Court of the Plaintiff’s Country. Arbitration language will be Plaintiff’s language”.
The clause was plainly imperfectly drafted. It did not identify an arbitral institution, specify arbitration rules, determine the number or method of appointment of arbitrators, or expressly designate a seat.
More fundamentally, the expression “Arbitration Court” was potentially ambiguous in the Russian context.
Russia’s Arbitrazh Courts (arbitrazhnye sudy) are not arbitral tribunals. They form part of the state judicial system and exercise jurisdiction primarily over commercial and other economic disputes. Accordingly, the mere use of terminology resembling “arbitration” does not necessarily establish that the parties intended private arbitration rather than proceedings before a state Arbitrazh Court.
The Court nevertheless concluded that clause 9(c) referred to private arbitration.
Why “Arbitration Court” Meant an Arbitral Tribunal
The Court considered that the expression “Arbitration Court” in international commercial practice denotes an arbitral tribunal – a non-state dispute resolution body – rather than a state court.
Importantly, however, the Court did not base its interpretation on those two words alone. It relied particularly on the second sentence:
“Arbitration language will be Plaintiff’s language”.
That reference to an “Arbitration language” was a significant indication that the parties intended arbitration.
The language of proceedings before a Russian state Arbitrazh Court is prescribed by law and cannot be changed by agreement between the parties. By contrast, Article 22 of the Russian Law on International Commercial Arbitration permits the parties to determine the language of their arbitration.
The reference to the language of the proceedings therefore helped resolve the ambiguity inherent in the expression “Arbitration Court”.
The Clause Had to Be Interpreted as a Whole
This contextual interpretation is perhaps the most interesting aspect of the decision.
The Court identified several elements which, considered together, demonstrated an intention to arbitrate: the English expression “Arbitration Court”, the express reference to an “Arbitration language”, and the symmetrical mechanism under which the forum and language depended upon the identity of the claimant.
Taken together, these elements demonstrated that the parties intended private arbitration rather than proceedings before a state Arbitrazh Court.
The decision thus illustrates the importance of distinguishing between the Russian Arbitrazh Courts, which are state courts, and arbitration, which is a private dispute resolution mechanism. Despite the potentially confusing terminology used in the contract, the Court considered the parties’ intention sufficiently ascertainable from the clause as a whole.
No Arbitral Institution? No Fatal Defect
The second major difficulty was that clause 9(c) did not identify any arbitral institution.
The Court considered this immaterial.
Referring to paragraph 30 of Resolution No. 53 of the Plenum of the Russian Supreme Court of 10 December 2019, it held that an arbitration agreement is incapable of performance only where the parties’ intended arbitration procedure cannot be established from the agreement.
Crucially, failure to designate a specific arbitral institution does not in itself render an arbitration clause inoperative. Arbitration may instead proceed on an ad hoc basis.
The Court further explained that procedural gaps could be filled by the default provisions of the Russian Law on International Commercial Arbitration. These provisions regulate, among other things, constitution of the tribunal, arbitral procedure, seat and language.
Consequently, the absence of a named arbitral institution did not prevent the clause from operating.
In practical terms, the Court treated what might initially appear to be a pathological arbitration clause as a workable ad hoc arbitration agreement.
An Arbitration-Friendly Rule of Interpretation
The decision is also significant for the interpretative standard applied by the Court.
Relying on paragraph 26 of Supreme Court Resolution No. 53, the Court stated that doubts concerning the validity and enforceability of an arbitration agreement must be resolved in favour of preserving the agreement.
A party challenging an arbitration agreement must demonstrate that every possible interpretation results in the agreement being invalid or incapable of performance.
This is a strong and somewhat surprising application of favor arbitrandum. Poor drafting does not necessarily make an arbitration agreement invalid. If the parties’ intention to arbitrate can reasonably be established and the missing procedural details can be supplied by the applicable arbitration law, the agreement should be given effect.
Assignment Did Not Extinguish the Arbitration Agreement
A further complication was that the claimant was not the original Chinese seller but its assignee.
The Court held that the assignment did not affect the arbitration agreement. Under Article 384(1) of the Russian Civil Code and paragraph 31 of Supreme Court Resolution No. 54 of 21 December 2017, the arbitration clause continued to bind the debtor and the new creditor following the assignment.
The assignee could therefore not avoid arbitration merely because it had acquired the substantive claim from the original contracting party. It did not, however, resolve the question whether the Russian assignee could now start arbitration in Russia or whether the
The Court’s Conclusion
The Court ultimately found that the parties had concluded a valid and enforceable arbitration agreement.
It also rejected arguments based on the applicability of Russian law and the parties’ pre-action conduct. The applicable substantive law did not determine the procedural forum, while the correspondence between the parties did not amount to a cancellation of the arbitration agreement.
Because Vostok had raised its jurisdictional objection in due time, the Arbitrazh Court left the claim without consideration pursuant to Article 148(1)(5) of the Russian Arbitrazh Procedure Code.
Comment
Case А56-47049/2026 is a particularly useful and given past rather “arbitration unfriendly” praxis of Russian courts, surprising example of the Russian courts’ approach to pathological arbitration clauses.
The drafting was far from ideal. The clause contained awkward English, did not name an institution, did not expressly provide for ad hoc arbitration and used the potentially confusing expression “Arbitration Court of the Plaintiff’s Country”.
The significance of that last point should not be underestimated. In Russia, an Arbitrazh Court is a state court. The terminology used in the contract could therefore have supported an argument that the parties intended litigation before the competent state court in the claimant’s country.
The St Petersburg Arbitrazh Court nevertheless reached the opposite conclusion by interpreting the clause as a whole. In particular, the reference to the “Arbitration language” was difficult to reconcile with state court proceedings, where the language of proceedings is prescribed by law. It made considerably more sense in the context of private arbitration.
The decision therefore establishes three useful points.
First, context prevails over potentially ambiguous terminology. The expression “Arbitration Court” was interpreted together with the remainder of the dispute resolution clause rather than in isolation.
Second, the failure to designate an arbitral institution is not necessarily fatal. Where an intention to arbitrate can be established, Russian arbitration law may provide the procedural framework necessary for an ad hoc arbitration.
Third, the Court applied a strong presumption in favour of maintaining the effectiveness of the arbitration agreement. It was not enough to show that the clause could be interpreted in a manner that made it defective. The party challenging the clause had to demonstrate that there was no interpretation under which it could remain valid and capable of performance.
For international contracts involving Russian parties, the decision is therefore a useful reminder of the distinction between poor drafting and invalidity. It also illustrates the peculiar terminological problem created by the fact that Russia’s ordinary state courts for commercial disputes are themselves called Arbitrazh Courts.
For similar clauses involving European Parties, Art. IV para 3 and 6 of the European Convention on Commercial Arbitration has to be borne in mind – these provisions provide for a remedy mechanism for incomplete or ambigous arbitration clauses.
KDB.legal Koch Boës assists you with all questions regarding arbitration, arbitration agreements and especially disputes relating to Russia or involving Russian Parties. Please contact us for any questions.
