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Lloyd's Law Reporter


[2017] EWHC 1911 (Comm), Queen's Bench Division, Commercial Court, Sir Michael Burton, 27 July 2017

Arbitration - Award made in Russia - Award set aside by Russian courts - Whether award enforceable in England - Whether Russian courts were biased - New York Convention

By a Share Purchase Agreement dated 22 November 2007 OJSC agreed to purchase from M one-half plus one share of M's holding in Maxi-Group, a Russian company founded by M. A dispute arose as to the calculation of the price, and it was referred to arbitration in Russia before the International Commercial Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation. After hearings in June, September and October 2010, OJSC counterclaimed alleging fraud and breach of contract in February 2011. OJSC sought permission to amend its defence and also a suspension of the arbitration. The tribunal issued an award on 31 March 2011, ruling that OJSC as controlling shareholder in Maxi-Group had had sufficient opportunity to discover the true circumstances and to raise them in the arbitral proceedings, and accordingly there was no ground for allowing OJSC to amend its defence or for suspending the proceedings. The sum awarded by the tribunal was RUB8,928,001,875.70 plus interest. On 28 June 2011, by a written judgment, the Russian Arbitrazh Court rejected the allegation of fraud, but held that the award should be set aside on three grounds: non-disclosure of links between M's expert witnesses and two of the arbitrators; public policy, in that the arbitrators had erred in assessing the price payable by disregarding the terms of the Share Purchase Agreement, an outcome that was "in conflict with the public order of the Russian Federation"; and the non-arbitrability of corporate disputes. The second and third grounds had not been pleaded or argued before the court. Further appeals in Russia were dismissed. M applied to enforce the award in England under the New York Convention.

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