News & Press

1 June 2012 Federal Commercial Court of Moscow region shows formalistic approach to identification of arbitration institution in arbitration clause.

Natalia Belomestnova , Senior Associate

Tatiana Zakharova, Paralegal

Practical Law Company. Arbitration

In a recently published decision of 13 March 2012, the Federal Commercial Court of Moscow region took a formalistic approach to the wording of an arbitration clause and confirmed the annulment of an ICAC award because ICAC was not competent to consider the dispute. The court’s conclusion is based on the fact that the arbitration clause in question referred disputes to settlement under the ICAC rules, not to ICAC as an institution.

In 2008, a preliminary lease contract was concluded by Regus Business Center Metropolis LLC (Regus) and Kubik LLC (Kubik). The contract contained an arbitration clause referring all disputes between the parties to "a commercial court" which would resolve the dispute under the Rules of the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation (ICAC).

In 2009, Regus commenced an arbitration against Kubik at ICAC. In January 2011, the tribunal acting under ICAC rules upheld the claim. Kubik filed an application to the state commercial court of Moscow for annulment of ICAC's award on a number of grounds, including the absence of an agreement between the parties to refer disputes to ICAC.

The court of first instance annulled the award. On appeal, the Federal Commercial Court of Moscow region upheld the first instance court's decision and annulled the award, finding that ICAC was not competent to consider the dispute. The court considered that the parties agreed in the arbitration clause to ad hoc arbitration (www.practicallaw.com/5-107-6360) using the ICAC's arbitration rules, not to arbitration administered by ICAC. The court came to this conclusion noting that ICAC was not specifically mentioned as such in the clause and the term "a commercial court" could mean an ad hoc arbitral tribunal acting under the ICAC rules.

This interpretation of the arbitration clause by the Federal Commercial Court of Moscow region is rather peculiar as it is unclear why the court considered the term "a commercial court" sufficiently clear to identify an ad hoc tribunal, but not ICAC. It remains to be seen whether the courts will follow this reasoning. In the meantime, when drafting contracts, if the parties intend to provide for institutional arbitration, it is advisable to ensure that the arbitration clause sufficiently specifies the relevant arbitration institution.

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