Executing Arbitral Awards Against Russian Entities - WAMR 1993 Vol. 4, No. 5
Originially from: World Arbitration and Mediation Review (WAMR)
Executing Arbitral Awards Against Russian Entities
By Kaj Hober, a partner at White & Case in Stockholm.
[Editor's note: This is the second of three parts of Mr. Hober's in-depth
analysis of the enforcement of foreign arbitration awards in Russia. The
first installment (see 4 WAMR 82) explored the basic framework
governing enforcement. Part III will examine state immunity as a defense
This article is based on a presentation given by Mr. Hober on October
19, 1992 on the occasion of the 75th Anniversary of the Arbitration
Institute of the Stockholm Chamber of Commerce. Mr. Hober's
contribution will be published in the Institute's 1993 Yearbook. Mr. Hober
is also the author of Joint Ventures in the Soviet Union, published by
Transnational Juris Publications, Inc.]
Prior to January 1, 1987, most of the Soviet Union's foreign trade took
place through foreign trade organizations (FTOs), which were organized
through and answered to the Ministry of Foreign Trade. A great many of
the foreign trade disputes currently requiring arbitration stem from
contracts between Western companies and FTOs as organized under the
former Soviet system of foreign trade.
Assets Available for Execution
FTOs always appeared as the contracting party with the Western party,
even though they were never the producer or end user of the product.
Western companies may thus execute only on the assets of the FTO.
All Soviet FTOs were separate legal entities. Under Soviet law, this
meant that they each had their own assets and that only these assets could
be used to pay the FTO's debts. The Soviet state was thus not liable for the
FTO's debts, and the organizations, in turn, were not responsible for the
obligations of the state. However, like all other state organizations that are
separate legal entities, an FTO had no right of ownership in its own name;
instead, they had a so-called right of operative management over property
in their possession. This meant that the FTO could possess, use, and
transfer property in accordance with applicable laws and regulations.
Once a Western party has been successful in enforcement proceedings
before a Russian court and has obtained a writ of execution for an arbitral