The Russian Constitutional Court clarified its view on the decisions of “pocket ” arbitration courts

In 2014, the Russian Constitutional Court twice expressed its view about the impartiality of the nongovernmental arbitration courts that somehow are affiliated with one of the parties in a dispute. The decision of the Russian Constitutional Court of 18 December 2014, Ruling no. 30-П, regarding Sberbank of the Russian Federation LLC, resulted in heated debates, but it did not include a negative assessment of the “pocket” arbitration courts. Unlike the Supreme Arbitrazh Court of the Russian Federation, the Russian Constitutional Court expressed its view that an arbitration court itself hardly can be partial or biased and that only a particular arbitrator that can be partial.

At the same time, in Ruling no. 2750-O, on the complaint of ZAO Yamalgazinvest published at the end of the last year, the Russian Constitutional Court said that the arbitration courts, when making decision about the impartiality of the “pocket” arbitration courts, had to take into account the organization-legal ties between the parties and the arbitration court. Behind the complaint to the court was the fact that the provisions of the Arbitration Procedure Code and the Law on the Arbitration Courts regarding the impartiality and independence of the arbitrators may result in a situation in which the arbitration court’s establishment and the appointment of a person affiliated with a party to the dispute as the court’s chairperson is a violation of the arbitration court’s guarantee of impartiality.

The Russian Constitutional Court refused to regard such rules as contradictory to the Russian Constitution and in doing so recognized that ZAO Yamalgazinvest’s complaint is not subject to further consideration. The Russian Constitutional Court pointed out that, when making decision about the impartiality of “pocket” arbitration courts, the arbitration courts always must assess the organization-legal ties their founders may have them with one of the parties in a given dispute. Thus, the Russian Constitutional Court showed that the “pocket” arbitration courts are not themselves biased and that the question of their partiality is subject to proof in each case.

ZAO Yamalgazinvest, a subsidiary of Gazprom LLC, applied to the Russian Constitutional Court in the summer 2014, after the Russian Supreme Arbitration Court had overturned the arbitration court’s decisions, based on who established and controlled the court. According to the Russian Supreme Arbitrazh Court, the decision of the Gazprom LLC “pocket” arbitration court on the dispute between ZAO Yamalgazinvest and the Institute Neftegazproject LLC was in violation of the guarantee of objectivity and impartiality, and as a result, it violated the principle of equal rights and autonomy of will. The Russian Supreme Arbitrazh Court ruled that the arbitration court at Gazprom LLC did not have the right to consider a dispute in which one of the parties was affiliated with the gas monopoly since Gazprom LLC was the only stockholder of ZAO Yamalgazinvest and the only organizer of the arbitration court. The Russian Supreme Arbitrazh Court found that the chairperson of the arbitration court at Gazprom LLC was the head of the firm’s legal department, which maintains and finances the arbitration court. The Russian Supreme Court decided that such a court cannot be objective and impartial, regardless of the composition of the arbitration court in a given dispute.

The Russian Constitutional Court’s decisions provoked disputes in the legal community. After the publication of the Russian Constitutional Court’s decision in which Sberbank LLC was a party to a dispute, many lawyers expressed their disagreement with the court’s position, believing that the court had been biased and had affirmed the impartiality of the arbitration court affiliated with Sberbank. At the same time, such criticism of the Russian Constitutional Court’s position perhaps was unreasonable, which became clear with the publication of the second court act. In fact, the Russian Constitutional Court pointed out that the Russian Supreme Arbitrazh Court, when considering the case connected with Sberbank, exceeded its competence because it based its assessment on the possible partiality of the particular arbitration court’s composition. At the same time, the Russian Constitutional Court made it clear that the issue of the impartiality of a particular court considering the dispute must be subject to examination in each case. However, unconditional grounds for the claim of an arbitration court’s partiality because one of the parties to a dispute organizes and maintains it also are possible.