An ICC Arbitration Clause Found Unenforceable in Russia: Potential Risks and Drafting Considerations

7 January 2019
View Debevoise Update

Key takeaways:

  • Russian courts have recently refused to enforce an ICC award on the grounds that, inter alia, the arbitration clause did not explicitly refer to the ICC International Court of Arbitration as the relevant institution;
  • The decision, while not binding on Russian courts and still subject to appeal, may raise concerns over the enforceability of standard arbitration clauses lacking an express reference to a specific arbitral institution, as well as certain ad hoc arbitration clauses;
  • Businesses may consider revising their existing arbitration clauses that do not refer to a specific arbitral institution, to confirm and clarify the parties’ intention to submit their disputes to the relevant institution. For future contracts where enforcement in Russia is a possibility, care must be exercised in ensuring that all necessary details regarding the parties’ preferred dispute resolution option are fully and clearly spelled out in the arbitration clause;
  • The ICC has recently modified its standard arbitration clause recommending that, for arbitration agreements with a Russian seat, the arbitration clause should explicitly refer to the ICC International Court of Arbitration.