In December 2024 the Arbitrazh Court of the Moscow District considered the case on the enforcement of the award issued under the Rules of the Maritime Arbitration Commission at the RF CCI.
OOO Coal Sea Port Shakhtyorsk (Shipowner) applied to the Arbitrazh Court of the City of Moscow with a request to issue a writ of execution for the enforcement of the arbitration award made against OOO AMT Insurance (Insurer).
The Arbitrazh Court of the City of Moscow refused to issue a writ of execution, and the Arbitrazh Court of the Moscow District refused to review this court decision. The MAC arbitration award in case No. 4/2023 was overturned.
Case facts:
A tugboat insurance contract was concluded between the parties to the case.
In January 2021, the tugboat was driven aground, which served as a reason to contact the insurer for payment of insurance compensation.
The insurer refused to pay the insurance coverage, citing gross negligence of the insured (which occurs in 90% of disputes between insurers and shipowners).
The arbitrators considered that there was insufficient evidence of gross negligence in the case. The arbitrators issued a decision to collect the debt from the Insurer in favor of the Shipowner in the amount of 74.4 million Roubles and interest in the amount of 4.8 million Roubles.
The insurer refused to enforce the arbitration award.
Positions of the Parties:
In the state court, the Insurer stated that the findings of the arbitration court were contrary to the public policy of Russia. They explained that the award must comply with the principle of legality enshrined in Part 2 of Art. 15 of the Constitution of the Russian Federation.
The Shipowner asked to leave the arbitration award in force, believing that the interference of the state court in the activities of the arbitration tribunal was unfounded.
Decision of the Russian state courts:
The state courts actually reviewed all the evidence in the case and agreed with the position of the Insurer. The state courts began to investigate whether there were ice conditions when the vessel set out on the voyage, whether the crew was fully staffed, and what circumstances caused the vessel to run aground.
Source: case No. A40-148733/2024
Comments:
The decisions of the state courts in this case hinder the development of arbitration in Russia.
The parties chose arbitration as a means of resolving their dispute. No procedural violations on the part of the arbitrators were declared in the case, and no challenges were made to the arbitrators. The parties had an equal right to choose arbitrators and an equal right to present their position. The parties appointed arbitrators who were qualified to hear this insurance dispute.
The parties to the arbitration agreement undertake to voluntarily comply with the arbitration award.
Article 5 of the Federal Law of 29.12.2015 N 382-FZ (as amended on 08.08.2024) "On Arbitration (Arbitration Proceedings) in the Russian Federation" establishes that no judicial intervention should take place on issues regulated by this law, except in cases where it is provided for by this Federal Law.
In Russia, state courts use the clause on the contradiction of an arbitration award with public order whenever they completely review the materials of an arbitration case. However, such actions negate the idea of choosing arbitration.
The arbitration award must be final for the parties, and the arbitration procedure confidential. The parties choose arbitration in order not to apply to a state court for dispute resolution.
In order to avoid interference by a state court in the activities of the arbitration tribunal, it is recommended to additionally indicate in the arbitration agreement that the arbitration award is final and not subject to challenge.
OOO Coal Sea Port Shakhtyorsk (Shipowner) applied to the Arbitrazh Court of the City of Moscow with a request to issue a writ of execution for the enforcement of the arbitration award made against OOO AMT Insurance (Insurer).
The Arbitrazh Court of the City of Moscow refused to issue a writ of execution, and the Arbitrazh Court of the Moscow District refused to review this court decision. The MAC arbitration award in case No. 4/2023 was overturned.
Case facts:
A tugboat insurance contract was concluded between the parties to the case.
In January 2021, the tugboat was driven aground, which served as a reason to contact the insurer for payment of insurance compensation.
The insurer refused to pay the insurance coverage, citing gross negligence of the insured (which occurs in 90% of disputes between insurers and shipowners).
The arbitrators considered that there was insufficient evidence of gross negligence in the case. The arbitrators issued a decision to collect the debt from the Insurer in favor of the Shipowner in the amount of 74.4 million Roubles and interest in the amount of 4.8 million Roubles.
The insurer refused to enforce the arbitration award.
Positions of the Parties:
In the state court, the Insurer stated that the findings of the arbitration court were contrary to the public policy of Russia. They explained that the award must comply with the principle of legality enshrined in Part 2 of Art. 15 of the Constitution of the Russian Federation.
The Shipowner asked to leave the arbitration award in force, believing that the interference of the state court in the activities of the arbitration tribunal was unfounded.
Decision of the Russian state courts:
The state courts actually reviewed all the evidence in the case and agreed with the position of the Insurer. The state courts began to investigate whether there were ice conditions when the vessel set out on the voyage, whether the crew was fully staffed, and what circumstances caused the vessel to run aground.
Source: case No. A40-148733/2024
Comments:
The decisions of the state courts in this case hinder the development of arbitration in Russia.
The parties chose arbitration as a means of resolving their dispute. No procedural violations on the part of the arbitrators were declared in the case, and no challenges were made to the arbitrators. The parties had an equal right to choose arbitrators and an equal right to present their position. The parties appointed arbitrators who were qualified to hear this insurance dispute.
The parties to the arbitration agreement undertake to voluntarily comply with the arbitration award.
Article 5 of the Federal Law of 29.12.2015 N 382-FZ (as amended on 08.08.2024) "On Arbitration (Arbitration Proceedings) in the Russian Federation" establishes that no judicial intervention should take place on issues regulated by this law, except in cases where it is provided for by this Federal Law.
In Russia, state courts use the clause on the contradiction of an arbitration award with public order whenever they completely review the materials of an arbitration case. However, such actions negate the idea of choosing arbitration.
The arbitration award must be final for the parties, and the arbitration procedure confidential. The parties choose arbitration in order not to apply to a state court for dispute resolution.
In order to avoid interference by a state court in the activities of the arbitration tribunal, it is recommended to additionally indicate in the arbitration agreement that the arbitration award is final and not subject to challenge.
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