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International Arbitration Practice Newsletter (Issue 2, 2014)

Presidential Executive Office did not support the reform of arbitration courts elaborated by Russian Ministry of Justice

State Legal Department of the Russian President (hereinafter referred to as “the SLD”) in its Conclusive Statement on 3 July, 2014 indicated that draft of federal law "On arbitration (arbitration proceeding) in the Russian Federation" and its concurrent draft law on amendments to other federal laws "require further developments and can be approved only after providing the corrections "
SLD criticism concerns provisions of the bills relating to the following aspects of arbitration courts reform.
SLD did not approve the idea of creating arbitration institutions (arbitration courts) trough administrative procedure. According to the draft law the arbitration institution shall be established as a non-profit organization and receive authorization from the Ministry of Justice.
SLD disagreed with the scope of the bill application extending to international commercial arbitration. SLD stated that domestic arbitration courts and international commercial arbitration shall be regulated by separate laws which would not contain corresponding norms.
SLD also drew attention of authors` bills to a number of provisions which concern independence of arbitrators. In particular, the provision on appointment of an arbitrator by a state court in the absence of an agreement between the parties to arbitration proceeding.
It is worth noting that such outcome of bills consideration by SLD was quite surprising since an initiative to the reform had been supported initially by the Presidential Council on Codification and Improvement of Civil Law.

The Supreme Arbitrazh Court recognized non-arbitrability of disputes arising out of contracts concluded according to the Law on state procurements (№ 94-FZ) (case № A40-148581/2012)

In a judgment delivered by the Presidium of the Supreme Arbitrazh Court of the Russian Federation (hereinafter referred to as SAC RF) in the case № A40-148581/2012 (published on May 27, 2014) acknowledged non-arbitrability of disputes arising from contracts concluded in conformity with the Federal Law № 94 "On placing orders for goods, works and services for state and municipal needs" (Law on state procurement).
According to arguments of SAC RF, "contracts under the Law on state procurement have public foundation, pursue public interest and aim at achieving results for public purposes to meet public needs. Such result can be reached only by spending state budget. Therefore, such concentration of socially significant public elements in the single legal relationship does not allow to recognize disputes arising out of such contracts purely private disputes between individuals which may be settled by arbitral tribunals".

Intellectual Property Court (IPC) clarified some issues on application of the Berne Convention for the Protection of Literary and Artistic Works of 1886 (Berne Convention) having agreed with lawyers from a law firm ART DE LEX (case № A40-56928/2004)

The dispute between a Russian OJSC “Penzenskoye konstruktorskoye byuro modelirovaniya” (hereinafter referred to as PKBM) and Korean companies Korea Aerospace Industries and Doosan Infracore has been considered recently by IPC as the court of cassation.
IPC overturned judicial acts delivered by the Moscow Arbitrazh Court and the Ninth Arbitrazh Appellation Court concerning recovery of $ 50 million from the Korean respondents. IPC ordered a new trial in the court of the first instance.
Chronicle of the case consideration involving lawyers from ART DE LEX- representatives of Korea Aerospace Industries was published on our website. In this report we will focus on IPC interesting findings regarding the application of Berne Convention.
As explained by IPC (the same arguments were developed by ART DE LEX and as a result submitted by Korea Aerospace Industries) art. 5 of Berne Convention only establishes the principle of "national treatment" regime in relation to rights enjoyed by authors in countries of the Union except for a country of origin (para. 1). Art. 5 also sets forth a rule according to which exercise of these rights is not connected with observance of any formalities in a state other than the country of origin (removal from the principle of "national treatment" regime – para. 2).
Thus, these rules govern the legal relationship associated with providing legal protection and remedies to literary and artistic works created on the territory of another country, the state where legal protection is sought.
In this regard, in this case applicable law shall be determined in accordance with relevant international treaties of a state where legal protection is claimed or in their absence in compliance with relevant national legislation.