The reform of the arbitration courts (CU) did not vote the confidence of business and the state in this method of resolving disputes, writes Kommersant. Officials and new courts consider it successful, but statistics confirm that the enforcement of arbitration decisions in state courts has not become easier, and Russian business continues to resolve major disputes abroad, which indicates the failure of the economic judicial reform.
The Arbitration Law entered into force five years ago – on September 1, 2016. In November 2021, it will be four years since the end of the transitional period of the arbitration reform, allotted for reformatting the vehicle. The essence of the reform is that several thousand CUs were replaced by seven permanent arbitration institutions (PDAU). Foreign arbitrations – Hong Kong, Vienna, Singapore and the International Arbitration Court at the International Chamber of Commerce (ICC Court) – also received the right to consider disputes on the territory of Russia.
The Ministry of Justice noted that a small number of PDAUs compensates for the creation of regional offices, “increasing confidence in the institution of arbitration on the part of business and the state.” They also indicated an increase in disputes under consideration – from 947 lawsuits in 2018 to 1374 lawsuits in 2020.
Representatives of the PDAU agreed with the positive assessments of the department. Vadim Chubarov, Deputy Chairman of the International Commercial Arbitration Court (ICAC, one of the three general arbitration institutions) for sports disputes, believes that seven PDAUs are enough to take into account the interests of Russian business, including abroad. Alexander Zamaziy, Deputy Chairman of the Arbitration Center at the Russian Union of Industrialists and Entrepreneurs (RSPP), called the termination of the activities of “many dubious and openly unscrupulous structures” and the improvement of arbitration legislation a success of the reform. Vice President for Legal Affairs of Rostelecom and a member of the Association of Corporate Lawyers (RCCA) Alexander Smirnov noted the growing confidence in leading arbitration institutions.
Despite the positive feedback from the authorities and judges, lawyers noted that large and international cases mostly remained in international jurisdiction, and the PDAU considers mainly domestic cases. “The number of cases considered by arbitration centers has not reached significant indicators. The centers themselves are working normally, but there are few of them, and the business does not rely on them much, ”says Yuliy Tai, managing partner of JSB Bartolius.
The number of cases in the Customs Union has decreased almost tenfold and is less than 0.1 percent of commercial disputes in state courts, Vladimir Khvalei participates in the leadership of the Arbitration Association. The statistics show a “complete fiasco” of the reform, he said. Andrei Panov, an advisor to the law firm Allen & Overy, is not ready to call the reform successful either. He believes that business has not found the advantages of arbitration in comparison with state courts – such disputes are noticeably more expensive and last longer.
According to the judicial department at the Supreme Court of Russia, for five years the number of applications to state arbitration courts for the issuance of a writ of execution for a CU decision fell tenfold – from 7324 applications in 2016 to 725 applications in 2020. More than six thousand disputes have moved from the arbitration sphere of the firm to state courts, explains partner of the law firm Roman Zykov. Thus, the reform did not relieve the burden on the state courts and did not cope with one of its tasks.
At the end of May, the Commissioner for the Protection of the Rights of Entrepreneurs under the President of the Russian Federation Boris Titov said that the overwhelming majority of Russian businessmen are afraid of unreasonable initiation of criminal cases against themselves and consider doing business in the country unsafe. Fear of unfair criminal prosecution was reported by 80 percent of the surveyed security service (FSO).