Prove that Arbitration Does Exist!
By Cai & Lenard, Ukraine
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Probably there is no guide on how to draft an arbitration clause properly that does not recommend to specify the arbitral institution or administering body correctly. Naming an institution to administer the arbitration proceeding or to appoint the arbitrators if the institution never existed, is misnamed in the clause or refuses to act, is one of the examples of pathological arbitration clauses.
It is so in doctrine and in international practice. But how do Ukrainian courts decide if there are any doubts concerning the name of the institution?
First of all we would state that Ukrainian courts do not support the approach of rescue of an arbitration clause. If the clause is drafted like that “Arbitration court in London, according to UNCITRAL Arbitration Rules” the conclusion that the parties agreed about ad hoc arbitration in London may be the last thing to come to a judge’s mind. Ukrainian court may decide that the parties did not specify correctly the name of the institution, which was the LCIA.
There are plenty of decisions where courts recognized arbitration clauses as unenforceable, because the party “did not prove the existence of the arbitral institution, specified in the agreement”. In some cases a counterparty presented to the court a certificate issued by the Ukrainian Chamber of Commerce and Industry to confirm that there is no such institution as it was indicated in the contract. Sometimes, if the contract is bilingual and contains the institution’s correct name, the court may recognize the arbitration clause unenforceable because the prevailing language version specifies the institution incorrectly. In all mentioned cases the courts did not state that the arbitration institution specified in the contract did not exist, but indicated in their decisions that the respective party did not prove the existence of an institution.
However, this does not mean that in each national proceeding of recognition and enforcement of a foreign arbitration award a party should present the confirmation of existence of an institution. It would be ridiculous to prove each time before the court that ICC or SCC do exist.
Probably, bearing that in mind the Supreme Economic Court of Ukraine in case № 2-14/9495-2007 adopted the resolution of 29 May 2008, where mentioned that the facts of common knowledge should not be proven. To be correct we have to note that the court did not state directly that the existence of an arbitration institution should not be proven. But at least we have more certainty in that issue and even can summarize that usually there is no need to prove that the arbitral institution exists if it was named correctly in the contract (its prevailing version) and the counterparty does not argue against it.
ABOUT THE AUTHOR: Konstantin Pilkov, MCIArb
Konstantin Pilkov, MCIArb is a Head of International Arbitration Practice, Managing partner at the Cai and Lenard law firm in Kyiv, Ukraine. He is a member of the Chartered Institute of Arbitrators, the German Institution of Arbitration (DIS), the Austrian Arbitration Association, the Swiss Arbitration Association (ASA), the Ukrainian Bar Association and the European Arbitration Chamber. Mr Pilkov is listed as an arbitrator at the International Commercial Arbitration Court at the European Arbitration Chamber, the court of arbitration at the First Securities Trading Association (PFTS Association). Konstantin Pilkov is Vice-chairman of the Court of Arbitration at PFTS Association. Certified insolvency practitioner.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.