SCC Case 53/1998 - Chapter 10 - SCC Arbitral Awards - 1999-2003

About the Editors:
Sigvard Jarvin has been involved in more than 215 international arbitrations under the arbitration rules of the ICC, the Stockholm Arbitration Institute, the Dutch Arbitration Institute, the American Arbitration Association, LCIA, UNCITRAL, the Cairo Regional Centre, and other arbitration organizations. He was general counsel to the ICC International Court of Arbitration, Paris (1982-1987) and member of the Court (1988-1995). He also chaired the ICC working party revising the ICC/CMI Maritime Arbitration Rules (1997-1998).

Mr. Jarvin was the rapporteur at the 1990 and 1998 ICCA Congresses and was chairman of the foreign section of the Swedish Bar from 1999 to 2000, and he is also a member of the board of the Institute of Arbitration Law at Stockholm University and a member of the ICC Commission on Arbitration and the International Arbitration Club, London. He is cited yearly as one of the best arbitration lawyers in France in Chambers Global — The World’s Leading Lawyers , published by Chambers & Partners.

Annette Magnusson, is a Professional Support Lawyer at the firm of Mannheimer Swartling, Stockholm. She was formerly Assistant Secretary General and legal counsel for the Arbitration Institute of the Stockholm Chamber of Commerce.

Observation Commentary by:

Alexey Kostin, Vice-President of the International Commercial Arbitration Court at the Russian Chamber of Commerce & Industry.

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Description:

Originally from SCC Arbitral Awards 1999-2003

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Subject-matters:

(1) Arbitrability of tax issues.
(2) Liability to compensate for VAT for services rendered by a foreign company on Russian territory.
(3) Interest rate: alternative claims regarding the accrual dates.

Findings:
(1) The issue to be determined in this arbitration is simply whether or not Respondent is obligated to pay certain amounts to Claimant on the basis of the Agreement. Such issues clearly fall under the arbitration clause.
(2) The Agreement expressly provides that the price for Claimant’s works is “excluding custom duties, import tax and VAT to be paid in Russia according to present legislation”. This provision must be understood to mean that it is incumbent upon Respondent to reimburse Claimant for any custom duties, import tax or VAT levied upon Claimant by the Russian authorities.
(3) Claimant was awarded interest at the rate which follows from Swedish law from the date of the Award, based on Section 4 paragraph three of the Swedish Interest Act.

Parties: Claimant: X, Construction company (Finland)
Respondent: Y, Client (Russian Federation)

Place of arbitration: Stockholm

Nationality of arbitrators: Chairman: Swedish
Arbitrator: Swedish
Arbitrator: Russian

Table of Contents:

X. SCC case 53/1998

Subject-matters:

(1) Arbitrability of tax issues.

(2) Liability to compensate for VAT for services rendered by a foreign company
on Russian territory.

(3) Interest rate: alternative claims regarding the accrual dates.

Observations by Alexey Kostin