On 29 March 2019, a series of amendments to Federal Law No. 382-FZ “On Arbitration (Arbitration Proceedings) in the Russian Federation” came into force. The amendments, which were predominantly introduced by Federal Law No. 531-FZ of 27 December 2018 (the “Amending Law“), are an attempt to address various issues that have arisen from the implementation of the 2016 Russian Arbitration Reform over the past three years.
The Amending Law focuses primarily on the Permanent Arbitration Institutions regime (the “PAI Regime“) and the arbitrability of corporate disputes. It imposes even tighter restrictions on arbitration institutions operating in Russia without “permanent arbitration institution” (“PAI“) status. In relation to a narrow category of Russia-related transactions, careful thought should be given before choosing a non-PAI institution, in particular where disputes are likely to need to be enforced inside Russia.
The Russian arbitration landscape is undergoing some major changes. Just a few years ago, in 2016, the arbitration regime in Russia was radically reformed with clarifications around the use of arbitration in corporate disputes, and the introduction of an accreditation regime for “permanent arbitration institutions”. While these reforms were aimed at strengthening the legitimacy of commercial arbitration in Russia, two years later, in the Autumn of 2018, arbitration practitioners and representatives of the business community in Russia were left concerned by several Russian court decisions which seemed to indicate that the standard ICC clause may not be enforceable in Russia (see our blog post on the decisions here). However, 2018 ended on a more positive note. On 26 December 2018, the Russian Supreme Court (the “SC“) issued its guidance in relation to various issues concerning international commercial arbitration (the “Overview“), where, in particular, it confirmed that arbitration clauses recommended by arbitration institutions are valid. On the following day, the Russian President signed a Federal Law modifying the current arbitration regime, which entered into force on 29 March 2019.
On 4 April 2019, the Hong Kong International Arbitration Centre (HKIAC) received approval to be recognised as a “permanent arbitration institution” in Russia. The HKIAC is the first foreign institution to receive such approval, which marks an unprecedented change in the Russian arbitration landscape. Obtaining the “permanent” status means that the HKIAC will be able to administer arbitrations which relate to certain Russian corporate disputes.