Stena RoRo AB (Sweden) v OAO Baltiysky Zavod (Russia) No 9899-09
Having heard and considered the report of Judge Goryacheva, as well as the explanations of the representatives of the participants in the case, the Presidium has established the following.
By an award of 24 September 2008, rendered in Case No. V053-56/2007 (hereinafter – the Arbitral Award), the Arbitration Institute of the Stockholm Chamber of Commerce ordered OAO Baltiysky Zavod (hereinafter – the Factory) to pay to Stena RoRo AB (hereinafter – the Company) EUR 20,000,000 in damages, EUR 209,364.80 for compensation of arbitration costs, and SEK 1,071,280 and EUR 800 for the Company’s expenses in the arbitration with incurred interest on these sums in relation to the breach of the ship-building contracts Nos. 443 and 444 of 7 July 2005 (hereinafter – the Ship-Building Contracts), and the option agreement of 7 July 2007 (hereinafter – the Option Agreement).
Since the Factory did not voluntarily comply with the Arbitral Award, the Company filed with the Arbitrazh Court of Saint Petersburg and the Leningrad Region an application for the recognition and enforcement of the Arbitral Award.
By the ruling of 20 February 2009 (taking into account the ruling on correction of errors of 4 April 2009), the Arbitrazh Court of Saint Petersburg and the Leningrad Region refused the application.
The Court was guided by the fact that the enforcement of the Arbitral Award against the Factory, which is a strategic enterprise for which the State has special management rights, could lead to the Factory’s bankruptcy and be detrimental to the sovereignty and security of the State and is therefore contrary to the public policy of the Russian Federation.
The second ground for refusing to grant the application was the conclusion that the dispute settled in the arbitration was not covered by an arbitration clause. The Court ruled that the arbitration clause was contained in contracts that did not enter into force because the decision of the board of directors of the Company on the approval of the transaction was not vested in the form of minutes. Such minutes were not communicated to the Factory; thus, the fundamental principle of Russian law based on the recognition of equality of participants in a civil law relationship, inscribed in Article 1 of the Civil Code of the Russian Federation (hereinafter – the Civil Code), has been violated.