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Chapter 6 - Immunity - Enforcing Foreign Arbitral Awards Against Russian Entities

Author(s): 
Kaj I. Hobér
Page Count: 
14 pages
Published: 
February, 1999
Jurisdictions: 
Russia
Practice Areas: 
Enforcement of Arbitral Awards,
Sovereign Immunity
Author Detail: 

Kaj Hobér is a Partner at Mannheimer Swartling in Stockholm and Professor of East European Law at Uppsala University.

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The last  hurdle  that  a  Western  businessperson  may  have  to  overcome  to  execute an arbitral award against a Russian entity is immunity. The defense of state immunity may typically be used by arguing that a FTO, or a FTO that has been transformed into a joint stock company, is a state organization and that the property it has in its possession is state property and is thus entitled to immunity, immunity issues may also arise if the Western party has been successful in piercing the corporate veil of the FTO and thus, as a matter of principle, has access to (all) property of the state; in such a situation the state may well raise the immunity defense. 
 
As will be described below, the Soviet Union always adhered to the theory of absolute immunity! as opposed to the theory of restrictive immunity.2 Generally speaking, absolute immunity requires the consent of the state in question before jurisdiction and/or execution may be had against it, or its property. Consequently, the traditional Soviet position with respect to state immunity has the potential of being a source of aggravation in foreign trade. 
 
However, in practice this has not been the case, at least not since the second world war. Indeed, discussion of immunity issues in Soviet foreign trade has typically been considered as an exercise reserved for the halls of academe. Even though Soviet lawyers have never at the theoretical level conceded that FTOs are precluded from pleading immunity, in practice immunity has  frequently  been waived  by  bilateral  agreements  or  contractual  provisions.3 For example,  the !972 US-USSR Trade Agreement contained the following, fairly comprehensive waiver: 

 

Table of Contents: 
Chapter 6   Immunity (A) General (B) State Immunity in Soviet Theory and Practice (C) Soviet Entities Before Western Courts (1) Introduction (2) Major Legal Systems (A) The United States (B) The United Kingdom (C) Germany (D) France (E) Switzerland