Baltic Arbitration Days – 2019: Notes from the Field

Baltic Arbitration Days – 2019 focused on arbitration in construction and public procurement disputes, current events regarding Brexit, and on the theme “EU and investment arbitration”.

Mrs. Korinna von Trotha (DIS, Berlin) introduced the event, informed the audience about the DIS projects, about new electronic case management system, future of digitalization and new IT tools, which the DIS is exploring in order to find new ways to use IT tools for arbitrators.

Panel I: needs to shift the mindset in dispute resolution

Moderator of the first panel Dr. Galina Zukova (Belot Malan & Associes, Paris, RGSL) introduces speakers in a very interesting and informal manner. Mrs. Heidi Merikalla-Teir (Merilampi, Helsinki) firstly addressed her experiences from the Finland Arbitration Institute, secondly, the speed of arbitration, thirdly, addressed her views on the future of arbitration and ADR.

Experience from Finland Arbitration Institute: in Finland business resolves most of the disputes in arbitration, both institutional and ad hoc arbitration. The Institute has around 50-80 cases per year. Ad hoc cases reach around 30%. The Institute does not have a specialization as the disputes vary. Its arbitral tribunals resolve shareholder disputes, sale of goods, and many others. The last case amounted to 20 000 Euros, however, many of them exceed hundreds of millions. The average cases value around 300 000 Euros to 500 000 Euros.

Speed of arbitration – the rules provide for possibilities of fast processes. In her opinion, 9 months of arbitration is fast, even in complex cases. The arbitral procedure should be finished within 1 year.

There is much transparency in the Finnish arbitral disputes, as the institutions do publish the cases, with the reasoning of the award, ensuring the confidentiality of parties at all times.

Future of arbitration

Mrs. Merikalla-Teir noted that toolbox and skills required from dispute resolution lawyers need to be increasingly versatile. She believes that in order to provide a broader scope of dispute resolution to the clients, the mindset in dispute resolution needs to shift in favour of other ADR methods such as mediation.

Prof. Jorg Risse (Baker & McKenzie, Frankfurt am Main) told a very interesting and peculiar story that happened with him during several days of arbitration hearings in Riga when somebody slipped a paper with a “poem” under the door of Mr. Risse’ room in the hotel… Mr. Risse made an analysis of the poem, both serious and funny, and invited the arbitrators to reconsider their core values, notice arrogance, pride and other potentially harmful aspects – in accordance with the poem he presented. Mr. Risse believes that if arbitrators drop such qualities, then the progress in arbitration would increase over the years.

Panel II: Setting aside arbitral awards

The panel started from the presentation of Noah Rubins (Freshfields Bruckhaus Deringer LLP, France) who made a comparison between Paris and London as arbitration fora. French law is very pro-arbitration and allows only one way how to set aside an arbitral award, that is enshrined in the French Civil Procedure Code.  An arbitral award can be set aside subject to violation of procedure and public policy.

Pavlo Byelousov (AEQUO, Kyiv) shared his point of view, whether or not state enterprises enjoy any privileges to set aside arbitral proceedings. And whether the Ukrainian courts are willing to accept state entity requests.

The international community has a bad perception of Ukraine and the stereotypes regarding lengthy proceedings, corruption, bribes, setting aside of arbitral awards, etc… Mr. Byelousov tried to explain and to diminish these stereotypes by clarifying the situation in Ukraine.

Laura Hardin (Alvarez & Marsal, Houston, the U.S.) explained how work requests of annulment when one of the parties gets unsatisfied by the arbitral award. Laura focused on the issue of damages which was the reason to annul and set aside the arbitral award.

Panel III: Role of domestic courts in the enforcement proceedings

The panel started from the presentation of Stepan Guzey (Lidings, Moscow).

Stepan mostly described the processes of arbitration in the Russian Federation. It is up to the domestic court in each particular case, to decide whether the award is legally or politically motivated, and whether to enforce the decision locally.

Jennifer Younan (Shearman & Sterling, Paris) described how to enforce an award against a state entity. Domestic courts consider that state entities and the state are separate and distinct. Therefore, an award made against a state entity cannot be enforced against a state, or vice versa. Jennifer mentioned, that she has seen certain jurisdictions where an award made against a state can be enforced against state entities, however, in France it is impossible, as state-owned entities are autonomous and independent. She mentioned that in certain jurisdictions it is different and that such an award may be enforced. Jennifer also spoke about a very interesting and actual topic regarding the piercing of the corporate veil.

The presentation of Maria Kostytska (Winston & Strawn Selari, Paris) featured enforcement of arbitration award in the domestic courts. Maria focused on the Ukrainian cases regarding the annexation of Crimea and the cases that arose because of those events. She discussed the UNCITRAL rules, the New York Convention on arbitration awards.

She proceeded by discussing the Bilateral Investment Agreements (BIT) involved in the cases that arose from the annexation of Crimea. The Crimean cases proved extremely difficult due to territorial change between States, therefore, it all complicated the matter, including the complex issues of jurisdiction and of the notion of investments.

Oleh Marchenko (Marchenko Danevych, Kyiv) presented his point of view to the responsibility of the state in case of non-enforcement of arbitral awards. He argued that awards may not be enforced against state entities or states because of the domestic courts, as the courts are not entirely independent from the state, therefore, they are influenced by the government.

Claimants often seek enforcement of arbitral awards against state-owned entities outside of Ukraine: e.g., in U.S. courts such as in Monegasque de Reassurances S.A.M. v. NAK Naftogaz of Ukraine.

After the hard work during the conference, all participants had the possibility to relax with snacks and drinks on the boat along the Daugava river and on Saturday to participate in a social event in Jurmala in a very informal and friendly atmosphere.

Edward Kuznetsov

Partner of Marine Legal Bureau