Judicial Acts of the Russian Courts (in connection with the Award dated 24 September 2008 in Case No. V054-56/2007 of the Arbitration Institute of the Stockholm Chamber of Commerce)
Below you will find the judicial acts of the Russian state courts (Ruling of the Arbitrazh (Commercial) Court of St. Petersburg and the Leningrad Region dated February 20, 2009 in case No. A56-60007/2008; Decree of the Federal Arbitrazh (Commercial) of the North-West Circuit dated April 24, 2009; Decree of the Supreme Arbitrazh (Commercial) Court of the Russian Federation dated September 13, 2011 No. 9899/09) which were widely discussed in Russia at that time. The two courts of lower instance refused to enforce the arbitral award dated September 24, 2008, in case No. V054-56/2007 at the Arbitration Institute of the Stockholm Chamber of Commerce, which granted the claims of the Swedish company Stena RoRo AB against the Russian joint-stock company Baltic Plant for the recovery of a loss of EUR 20,000,000, EUR 209,364.80 cents as compensation for arbitration expenses, SKR 1,071,280 and EUR 800 of the company’s arbitration costs with interest on the amounts due because of non-performance by the Russian plant of shipbuilding contracts dated July 7, 2005 Nos. 443 and 444 and of the option agreement dated July 7, 2005. The courts relied on the fact that enforcement of the arbitral award against the plant, which was a strategic enterprise under special governance rights belonging to the state, may have led to the bankruptcy of the plant so damaging the sovereignty and security of the state, and therefore was in contravention of the public policy of the Russian Federation. The second reason for the refusal to enforce the arbitral award was the conclusion that the arbitral tribunal made a decision on a dispute which was not covered by an arbitration clause. The Russian courts indicated that the arbitration clause was contained in contracts that had not entered into force, since the decision of the board of directors of the Swedish company to approve the contracts was not duly formalized as minutes. These minutes had not been delivered to the Russian plant, which was a violation of the fundamental principle of Russian law, based on the recognition of equality of participants in civil law relations, proclaimed in Art. 1 of the Civil Code of the Russian Federation. The Supreme Arbitrazh (Commercial) Court of the Russian Federation recognized all these considerations as untenable and enforced the arbitral award. This Court acknowledged that the issue of the legal validity of contracts and the amount of damages granted was properly considered by the arbitral tribunal on the basis of applicable Swedish law and therefore it was not proper to re-evaluate its conclusions. The Supreme Arbitrazh (Commercial) Court also decided that both the penalty and damages were provided for by civil law and are covered by the legal system of the Russian Federation. Therefore the application of these sanctions cannot as such contradict the public policy of the Russian Federation, despite the status of the plant. It was one of the most prominent pro-arbitral decisions of the Supreme Arbitrazh (Commercial) Court of the Russian Federation at that time. These Russian judicial acts are connected with the decision of the Svea Court of Appeal (Stockholm) dated May 20, 2010, in case No. T 8622-08 (see above).