Enforcement of SCC Arbitral Awards in CIS Countries: Reflections on Arbitration History - Chapter 21 - Between East and West: Essays in Honour of Ulf Franke
Vladimir Khvalei, Baker & McKenzie, Moscow.
Originally from Between East and West: Essays in Honour of Ulf Franke
The history of the Stockholm Chamber of Commerce is mystically linked with Russia. It was in 1917, the year when the Bolsheviks took over the Russian Empire, that the Stockholm Chamber of Commerce was established in Stockholm, perhaps in the belief that a revolution in Russia would inevitably lead to a large number of disputes. And disputes did arise, one should admit, in particular, in the wake of the nationalization of foreign investments in Russia. However, at this time the system of BITs was not developed, arbitration was not a preferred way for resolving international disputes, and since there was no efficient mechanism for enforcement of foreign arbitral awards, disputes were referred mainly to foreign state courts. Stockholm Chamber of Commerce managed to prove its efficiency in international arbitration only after 1977 when the Chamber of Commerce and Industry of the USSR and the American Arbitration Association signed a protocol recommending that U.S. and Soviet companies should refer their disputes to arbitration under the UNCITRAL Rules in Stockholm with Stockholm Chamber of Commerce being the appointing authority.
At that time, few in the Soviet Union would have dared not to follow official recommendations. As a result, Soviet and U.S. companies traditionally incorporated into their contracts a clause whereby any disputes between them were to be settled in Stockholm. In the absence of any other recommendations, Soviet companies tended in their dealings with firms based in other countries to regard such advice as something universal. Not surprisingly, most of the contracts signed at that time provided that the parties should arbitrate their disputes in Stockholm. At the same time, it would be incorrect to attribute the success of the Stockholm Arbitration Institute to the 1977 event alone. Experience gained by Soviet lawyers in the course of arbitrations in Stockholm certainly in subsequent years influenced their choice in favour of Stockholm as the preferred venue and the SCC Rules as the preferred procedure. The general attitude of the courts in Russia and other CIS countries1 to recognition and enforcement of foreign arbitral awards can be studied from examples of enforcement of SCC awards. It should be noted that in view of the confidential nature of the arbitral process, the texts of arbitral awards and other circumstances mentioned during arbitration proceedings were unavailable, which significantly complicated work on this article. At the same time, the procedure for recognition and enforcement of SCC awards undoubtedly required that arbitral awards as well as certain other documents should be submitted to State courts and thus their content was to some extent reflected in the texts of judgments. Because of this, the circumstances of the arbitral process as mentioned below were reconstructed using facts referred to in judgments of State courts. Those facts might not necessarily coincide with the actual circumstances of the arbitration cases.