The Russian Constitutional Court emphasised the role of arbitration in resolution of private-law disputes. Having referred to the arbitral tribunals as “civil society institutions”, it however found that proceedings before them should comply with the requirements of Article 6 of the European Convention on Human Rights.
On 26 May 2011 the Constitutional Court of the Russian Federation which for more than three years now sits in St. Petersburg rendered a judgment on the constitutionality of several provisions of federal legislation concerning the status and role of arbitration.
The matter was referred to the Constitutional Court by the Higher Arbitrazh Court (Supreme Commercial Court). In essence, the former had to resolve a long-standing problem created by the latter. According to the commercial courts’ case-law which dates back to at least 2005, decisions of the arbitral tribunals leading to a change in ownership of real estate cannot be enforced as the relevant disputes are not arbitrable, because they involve “a public-law transaction”, namely State registration of a transfer of title.
In this argument, effectively between Russian commercial courts (which are still known as “arbitrazh”) and arbitral tribunals, the Constitutional Court favoured the non-State arbitrators. Mandatory registration of real estate transactions by the State reflects its “special attention” to this market but, according to the Constitutional Court, does not affect the nature of disputes arising between the parties to those transactions. The State registration does not undermine private-law character of their relations which are characterised by the freedom of contract, equality, autonomy and independence of the parties. It follows from this, the constitutional judges’ line of reasoning runs, that nothing prevents the disputes of this type from being referred for resolution to an arbitral tribunal if parties so wish.
This, frankly, unsophisticated finding should lead to bigger share of the arbitration in the dispute resolution market in Russia.
The Constitutional Court, however, felt it necessary to add important obiter dictum on the role and status of arbitration in Russian law in general. Referring to the constitutional right of everyone to protect himself, herself or itself by any method which is not unlawful (Article 45, paragraph 2, of the 1993 Constitution), nineteen St. Petersburg sages concluded that arbitration, both institutional and ad hoc, was a “generally recognised in contemporary legal society” method of dispute resolution in so far as disputes of private character were concerned. They went on to say that the same conclusion flowed from the constitutional provisions on freedom of entrepreneurship and competition.
Private actors’ ability to have their disputes resolved by arbitral tribunals led the Constitutional Court to qualify those tribunals as “civil society institutions with public functions”. The Constitutional Court cited the case-law of the European Court of Human Rights to the effect that waiver of a right to court by referral of a dispute to arbitration is not by itself incompatible with Article 6 § 1 of the European Convention on Human Rights. The constitutional judges produced the following paragraph immediately afterwards:
It [the European Court’s case-law] confirms the right of the private actors – who enjoy autonomy of will and freedom of contract – to use arbitration for resolution of civil-law disputes which may be resolved through societal self-regulation with public interests safeguarded by the legal requirements which establish arbitral procedure pursuant to the guarantees of fairness and impartiality implied in every judicial proceeding pursuant to Article 46 of the Constitution [fair-trial rights] in conjunction with Article 6 of the [European Convention on Human Rights].
This translation is of course unofficial but perhaps it shows the multitude of meanings which can be read into this single-sentence paragraph.
It is true that the European Convention on Human Rights does not prohibit waiver of fair-trial rights. The possibility of such waiver is, however, not limitless. The European Court of Human Rights made it clear in its decision of 23 February 1999: “Waiver may be permissible with regard to certain rights but not with regard to certain others. A distinction may have to be made even between different rights guaranteed by Article 6.” (Suovaniemi et al. v. Finland)
It goes without saying that the Convention obligations are binding as such only upon the public authorities. In terms of Article 6 guarantees it means that this provision “ne concerne que les Etats et les juridictions étatiques” (concerns only States and State jurisdictions [courts]), to borrow the phrase used by the French Court of Cassation (Decision of 20 February 2001, No. 99-12574, published in Bulletin, 2001, No. 39, at page 24). This does not prevent “State jurisdictions” from inquiring into whether non-State arbitral tribunals complied with certain basic guarantees. In Russia, the court would refuse enforcement of an arbitral award if it stands in contradiction with “basic principles of Russian law”.
The Constitutional Court’s above-cited pronouncement may be interpreted as invitation for arbitral tribunals to comply fully with all Article 6 requirements. The judgment’s text can be read as suggesting that every arbitral procedure is equal to judicial proceeding and therefore should be conducted strictly pursuant to Article 6. This approach, however, will not allow parties to the dispute to waive some Article 6 rights, such as the right to public proceedings, and will counter-productively impact the very attractiveness of arbitration.
If the Constitutional Court’s formula is to be read as covering (presumably, the most important and non-waivable) “guarantees of fairness and impartiality”, it will produce a complicated question of what is really included into this noble formula, to be answered on a case-by-case basis by creative and wise Russian commercial courts. Many years ago and in another context, the Inter-American Court of Human Rights attempted to tackle the issue of what constitutes “essential judicial guarantees”. Case-law of other jurisdictions which had a chance to deal with this matter before, such as German and Swiss courts, may perhaps be of some assistance.
It is only important not to automatically equate the fair-trial guarantees which every litigant is entitled to enjoy before a State court as a matter of human rights law with those before arbitral tribunals which, after all, as “civil society institutions”, may be forgiven for laxity. As Judge Aranovskiy, one of three sages appointed during Medvedev’s presidency, emphasised in his concurring opinion appended to the 26 May 2011 judgment, the State should act vis-à-vis arbitration on the basis of presumption of mutual confidence.
Indeed, “[t]houghts speculative their unsure hopes relate, [b]ut certain issue stroke must arbitrate.” (Macbeth, Act 5, Scene 4:19-20).