Despite the crisis, in the second quarter of 2011 foreign companies invested US$1.6bn. in Russian commercial real estate (logistic complexes, trade centres, office buildings). This is more than 15 times the investment in the first quarter of 2011.1 Experts say that the amount of foreign investment into Russian commercial real estate may increase to US$3.574bn. by the end of 2011.2

Foreign investors usually prefer arbitrating real estate disputes to using state arbitration courts of the Russian Federation for several reasons. In particular, foreign investors might be more familiar with arbitration, than with the Russian state commercial court. Moreover, it is possible to choose English as a working language for arbitration, while, in Russian state arbitration courts, Russian is the only possible language.

At the same time, according to Russian law, the possibility of referring disputes connected with real estate to private arbitration has been rather foggy for a long time. That is because the Highest Arbitration Court of the Russian Federation (HACRF), which is the highest state commercial court in Russia, was unwilling to share its powers to adjudicate real estate disputes with private arbitration.

HACRF’s argument was that to enforce arbitral awards on real estate disputes state authorities have to register rights to real estate. Public authorities cannot be obliged to register the rights to real estate established by the award of a private arbitration. On 26 May 2011 the Constitutional Court of the Russian Federation (CCRF) finally ruled that legal norms which allow arbitral tribunals to adjudicate private disputes which result in changes to the Unified State Register of Rights to Real Property and