INTRODUCTION
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INTRODUCTION
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The St. Petersburg International Commercial Arbitration Court ("SPICAC" or the "Court") was founded in response to the expressed desire of Russian and foreign investors and the city administration of St. Petersburg to have in the city a reliable, fair and efficient forum for the resolution of commercial disputes. St. Petersburg's status as a major investment center demands that disputes be resolved locally, and having such a forum will also improve the investment climate in St. Petersburg and Northwest Russia. The Court serves as an alternative to the Russian state court system or arbitration abroad or elsewhere in Russia. Having such a local forum is less costly, and it makes resolution of disputes more efficient as most evidence and witnesses are located where disputes arise.
The Court was founded by the Foundation for Protection of Investments (the "Foundation"), which is a non-commercial organization founded in 1995 by the city of St. Petersburg. The other activities of the Foundation are to provide technical and other experts for the resolution of primarily non-legal disputes and to provide non-binding mediation for the peaceful resolution of investment disputes. The Foundation is governed by an independent Supervisory Board consisting of city officials and independent legal specialists. Neither the Board nor the Foundation plays any role in connection with particular disputes.
The arbitration rules of the Court (the "Rules") are essentially those of the United Nations Commission on International Trade Law ("UNCITRAL"). The UNCITRAL rules are recognized worldwide as providing an objective and efficient procedure for conducting arbitrations and have been used in numerous international commercial arbitrations.
In the case of the Court, the UNCITRAL rules have been modified pursuant to UNCITRAL's own standard recommendations for the adaptation of its rules for institutional use. Further, the rules contain certain other minor modifications to conform them to the 1993 Russian Law on International Commercial Arbitration.
Separate from the arbitration Rules, a Regulation on Arbitration Costs has also been adopted. It too is included in this Brochure.
In order to arbitrate at the Court, the parties to the dispute must agree in writing to submit the dispute to such arbitration. Normally, this is done in an arbitration clause when the parties conclude their contract. It is important to stress, however, that the agreement to arbitrate can be reached at any time.
If the parties do not specify the number of arbitrators, then the number will be three (Article 5 of the Rules). If no law is chosen, then the arbitrators will apply the law which they deem appropriate. If the parties fail to specify the language of the proceedings, then the arbitrators will decide this question (Article 17). The Court can assist in locating interpreters and translators as needed. The list of arbitrators contains arbitrators having abilities in many languages, and parties are urged to take this into account when appointing arbitrators.
It is presumed that the arbitrations will occur in St. Petersburg, but the parties may agree upon another location and utilize the Rules and the services of the Court. If the formal location of the arbitration is St. Petersburg, this does not prevent certain aspects of the arbitration (e.g., hearings) from occurring elsewhere.
The parties are free to choose any arbitrator they wish. The arbitrators must be impartial and independent and should not be representatives of the parties. A party's choice of an arbitrator is subject to challenge under the Rules on grounds of conflict of interest or non-independence (Articles 9-12).
If the parties have decided that there will be a single arbitrator, the appointment is made by the Court, unless the parties themselves agree on an arbitrator (Article 6). If there are three arbitrators, each party appoints one of the arbitrators and the two thus appointed select the third, who shall chair the arbitral tribunal (Article 7). If the parties or the two arbitrators fail to make a selection, the Court makes the appointment (Article 7).
It is recommended but not required that the arbitrator be a lawyer. As is the case with international arbitration courts generally, the Court does not maintain its own employee staff of arbitrators. Rather, the arbitrators are law professors, practicing lawyers or other specialists brought in specially to arbitrate in particular cases.
For the convenience of the parties, the Court maintains a list of arbitrators which the Court considers qualified to arbitrate disputes involving Russia, but neither the parties nor the Court are obligated to choose arbitrators from this list. The list contains both Russian arbitrators and foreign arbitrators from many countries. Many of the foreign arbitrators on the list are fluent in Russian and are experienced in Russian law.
There are no qualifications, rules or restrictions on who may represent the parties to the dispute in the arbitration proceedings. The parties may represent themselves, or they may retain lawyers or other representatives to act on their behalf. It is recommended, however, to utilize the services of a lawyer experienced in arbitration and Russian legal matters. Such representatives may be of any nationality. (See Article 4.)
The arbitration is commenced by filing a Notice of Arbitration with the Court at its address and sending a copy to the other party(ies) to the arbitration (Article 3.1). The arbitration is deemed to commence when such copy is received by the respondent (Article 3.2).
The Notice must contain a demand for arbitration, the names and addresses of the parties, an invocation of the arbitration agreement which gives the Court jurisdiction over the dispute, a reference to the contract out of or in relation to which the dispute arises, a general description of the claim and of the monetary amount in question (if any), the relief or remedy sought, and, if the parties have not agreed upon the number of arbitrators, a proposal as to the number of arbitrators (Article 3).
The claimant may but is not required to submit together with the Notice its Statement of Claim in which it sets forth its arguments and evidence in support of the claim. If it does not do so when it files the Notice, then it will do so subsequently in accordance with a timetable established by the arbitral tribunal (Article 18 of the Rules).
At the time it files the Notice of Arbitration, the claimant must pay the registration fee in accordance with Article 4 of the Regulation on Arbitration Costs.
In general, the arbitral tribunal determines how the proceedings shall be conducted, subject to the stipulations of the parties in their arbitration agreement. The parties are also free to submit any proposals regarding how to conduct the proceedings.
Each party is given the opportunity to submit its written arguments and evidence. Although cases may be decided solely on the basis of written submissions and evidence, generally there is at least one preparatory hearing and a hearing on the merits of the dispute. There are no restrictions on the admissibility of evidence; the arbitrators
themselves will decide whether to accept evidence and, if so, what weight, if any, to assign to it.
Any party may propose the appointment of an expert to provide views on technical questions, or the arbitral tribunal may on its own initiative appoint an expert.
The costs of the arbitration generally break down into three categories: the fees of the arbitrator(s), the administrative fees paid to the court, and travel and other expenses of the arbitrator(s), experts, witnesses, etc..
The fees paid to the arbitrator(s) are by far the largest cost. Arbitrators are normally highly qualified legal experts and are paid accordingly. For this reason, parties should consider carefully whether to appoint one or three arbitrators. If the dispute is likely to be simple or the amount in dispute is likely to be small, a sole arbitrator may be appropriate.
The lesser cost is the administrative fees paid to the Court for administering the case. The fees are set by the Court. The starting point for determining the fees is the amount in dispute, taking into account both claims and counterclaims. The Regulation on Arbitration Costs contains general guidelines in this regard. The Court has discretion, however, to modify the fee amount based on other factors, in particular the complexity of the case.
The Court requires the parties to pay advance deposits of administrative and arbitrators' fees as a condition to continuing the arbitration. If one party does not pay, the other party may do so and the proceedings will continue.
When the award is issued, the arbitral tribunal will also allocate the arbitrators' and administrative fees, and perhaps also attorneys' fees, between the parties. As a general rule, the losing party must bear all such costs. This result may be modified on a case-by-case basis, however, depending on the equities of the situation and also if a party is only partially successful.
Normally, arbitral awards are complied with voluntarily, but, in the event that this does not occur, the question of enforcement becomes important.
Russian legislation clearly makes the awards of the arbitral tribunal enforceable within Russia. If the case is an "international" case falling within the scope of the Russian Law on International Commercial Arbitration, it is enforceable in Russian courts pursuant to that Law. If the case is non-international (i.e., domestic), it is enforceable in Russian courts pursuant to the temporary Regulation on the Arbitration Court for the Resolution of Economic Disputes, adopted by the Supreme Court of Russia on June 24, 1992. The award is unenforceable only in the event of irregularities in the proceedings specified by such legislation.
Arbitral awards of the Court are enforceable outside Russia (in most foreign countries) pursuant to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, to which Russia is a party. The award is unenforceable only in the event of irregularities in the proceedings specified in that Convention.
One of the goals of the Court is to make arbitral awards in international commercial disputes more quickly and easily enforceable within Russia, because they will be Russian, rather than foreign, arbitral awards.
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