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Arbitration Reform – Will Russia Become More Comfortable Jurisdiction for Arbitration?

The session was moderated by Vadim Chubarov, Vice President of the Chamber of Commerce and Industry of the Russian Federation. Among the participants were Mikhail Galperin, Deputy Minister of Justice of the Russian Federation, Wilfried Bergmann, Member of the Board of the “Petersburg Dialogue” Russian-German Public Forum, Andrey Gorlenko, Deputy Chairman of the Committee on Budget and Taxation Policy of the Russian Union of Industrialists and Entrepreneurs, Ruslan Ibragimov, Board Member and Vice President for Corporate and Legal Affairs at MTS PJSC, Vitaly Kisenko, Director of the Legal Department at "Transneft", Aleksandr Muranov, Associate Professor of the Department of the International Private and Civil Law of the International Law Faculty, MGIMO University, and Professor at the Russian School of Private Law, Aleksandra Usachiova, Vice-Director of the Department of the Economic Legislation, Ministry of Justice of the Russian Federation, and Mark Friedman, Partner at Debevoise & Plimpton.

In his presentation Mikhail Galperin told about establishment of a council on arbitration improvement. “In fact, the reform presents an unprecedented opportunity for legal arbitration community to take full ownership of future changes. You know that here the law provides for establishment of a council to improve arbitration practices. The council, which will have one third of public officials and two thirds of scholars and legal practitioners, will give direct advice on what arbitration institution can have a right for it. It should not be the Ministry of Justice doing that, it provides the premises only,” he explains. According to the Deputy Minister, the council will have been finalized by the 1st of September. He also expressed his hope that Russia can build an effective, independent and globally recognized arbitration system.

According to Andrey Gorlenko, arbitration institutions do not communicate the advantages of the system to businesses and provide opportunities for feedback, through which responses about convenience of the procedure could be collected. “To my mind the main reason for discomfort is the lack of trust to the arbitration institution in Russia among all the participants of this area of legal relations – both from legal community, as well as representatives of legal profession. Usually it results from the lack of information among businessmen regarding the existence of modern, professional, well-respected arbitration centers,” Deputy Chairman of the Committee on Budget and Taxation Policy of the Russian Union of Industrialists and Entrepreneurs said.

Professor Wilfried Bergmann stressed that Russian reforms is a big step for Russian judicial system. “I think that this law is a serious major step forward for the reform and implementation of arbitration court system in the country. We in Germany consider it one of the important things. It’s vital not for the legal community only. There is the opportunity to make a decision without public court proceedings,” Wilfried Bergmann said. According to him, referral to the public courts is often expensive and takes up a lot of time. Arbitration courts handle issue faster and have better expertise in many areas. The German expert also suggested expanding the scope of Russian law, so that it provides for specialized arbitration courts.

Aleksandra Usachiova drew her colleagues’ attention to the procedures of provision to NGOs the right to act as a permanent arbitration institution. “The first stage of the reform is over, since laws have been adopted. Now comes the second stage – preparation of regulations, implementation of laws. We’ve started doing it in advance, so that legal community has time to prepare,” Vice-Director of the Department of the Economic Legislation, Ministry of Justice of the Russian Federation, said. According to her, the Ministry of Justice considers the council on arbitration improvement to be not a recommendatory body, but rather a driver of actual development.

The floor was also given to the representatives of major businesses. In particular, Vitaly Kisenko told that "Transneft" often applies to arbitration courts. “"Transneft" has been an advocate of arbitration proceedings for dispute settlement for many years already. We are also trying to rely on mediation and reconciliation of the parties. For us this primarily means enabling environment for negotiations, during which the parties could settle complicated issues together and keep necessary partner relations,” he noted.

According to Ruslan Ibragimov, unlike in "Transneft", in MTS this procedure is not commonly referred to, however the current reforms have been carefully followed. “In recent years there have been major changes going on in industry-specific regulation. It’s getting technically open, hence various forms of interaction both between market actors and between operator and its subscribers. These processes are getting increasingly complicated. Currently we are using extremely complicated structures of relationships. New issues of responsibility emerge for the first time accordingly. We are worried about one thing only: public courts (and it’s not the problem of courts, but of the market as a whole) are lacking relevant expertise. We can not risk relying on judges who lack expertise to make decision,” MTS BM said. He also added that businesses need quick, affordable and enforceable judgments. Besides, entrepreneurs need to feel that they can rely on arbitration court ruling.

At the end of the discussion the moderator expressed his hope that the arbitration reform will carry on and with joint efforts of all stakeholders it will prove successful.