HKIAC permitted to administer corporate disputes in Russia upon award of PAI status

As of 25 April 2019, the Hong Kong International Arbitration Centre (“HKIAC”) is the first foreign arbitral institution permitted by the Russian Ministry of Justice to function as a permanent arbitral institution (“PAI”) under Article 44(3) of the Federal Law No. 382-FZ dated 29 December 2015 on Arbitration in the Russian Federation as amended by the Federal Law No. 531-FZ dated 27 December 2018 (“Federal Law”). On 4 July 2019, the Vienna International Arbitration Centre (“VIAC”) became the second foreign arbitral institution to be awarded PAI status.

As a PAI, HKIAC is permitted to administer:

• international disputes seated in Russia;
   
• disputes between parties from any Special Administrative Region as defined under Russian law or disputes arising from agreements to carry out activities in any such region; and
   
• corporate disputes in respect of a legal entity in Russia as defined by Article 45(7) and (7.1) of the Federal Law and Article 225.1 of the Arbitrazh Procedural Code (“APC”).

On 27 May 2020, the Council for the Development of Arbitration of the Russian Ministry of Justice (“Council”) issued a response to a joint request by HKIAC and VIAC for clarification in respect of issues concerning the scope of PAI administered arbitrations.

With respect to the scope of PAI’s power to administer corporate disputes, the Council has identified the following three categories of corporate disputes under Russian law:

• non-arbitrable corporate disputes which include disputes on convening of a general meeting of a company’s shareholders and disputes relating to the expulsion of shareholders from a company subject to narrowly defined exceptions;
   
• corporate disputes which do not require the application of special corporate dispute rules. This includes disputes arising out of agreements regarding the management of a legal entity and disputes relating to the ownership of stocks and shares in the charter capital of business entities and partnerships; and
   
• corporate disputes which require the application of special corporate dispute rules. This includes disputes relating to the incorporation, reorganisation and liquidation of legal entities, disputes under the claims brought by shareholders of a legal entity seeking compensation for losses caused to the entity and disputes relating to the issuance of securities.

HKIAC does not presently have special corporate dispute rules and its power to administer corporate disputes is thus confined to (b). HKIAC also does not have a separate division in Russia and is therefore unable to administer arbitration of domestic disputes.

HKIAC’s PAI status is a welcome expansion of HKIAC administered arbitrations of certain corporate disputes relating to Russian legal entities.

Sharina Mahtani

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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.