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East Europeans will continue to seek justice in London despite Russian call for ‘forum shopping’ clampdown, say David Allen and Philippa Charles, London litigation and dispute resolution partners, Mayer Brown
London’s High Court is the stage for the long-anticipated trial of Cherney v Deripaska – one of the biggest lawsuits ever to be contested in the English courts, but the Russian authorities are beginning to flex their muscles, asserting that disputes involving Russian parties and Russian assets should be heard in Russia.
Sony Ericsson Communication Rus v Russian Telephone Company
saw Russia’s Supreme Commercial Court reject Sony Ericsson’s right to refer a matter to arbitration in London and seize jurisdiction to try the case. The dispute centred on the validity of an optional arbitration clause the Russian courts have previously accepted as valid.
In May, Russia’s Supreme Commercial Court chairman, Anton Ivanov, openly criticised the use of foreign arbitration and litigation proceedings. He referred to the abuse of ‘forum shopping’ in legal proceedings and advocated that “Russia should guarantee its citizens and entities protection from the unfair competition of foreign judicial systems”. He then went on to propose punitive measures against those who meddle with Russian interests overseas.
So what does this mean for Cherney and other Russian and East European cases in the High Court? What impact will there be on London’s litigation market?
Given the ready enforceability of English court judgments (and arbitration awards) in other EU member states and worldwide, it is likely that parties will still claim in England to try to enforce their claims against assets outside Russia.
An example of this is Yukos v Rosneft. Yukos succeeded in enforcing arbitration awards of $425m (£272m) against Rosneft in Holland, although the awards were annulled by the Russian courts, which the Dutch courts found not to be an impartial decision. Arbitration may become more popular as a way of resolving disputes involving Russian parties. Russia is party to the New York Convention, requiring it to recognise and give effect to arbitration agreements and awards. There is no equivalent treaty for English court judgments. Despite the Sony Ericsson decision, Russian courts may be more likely to disregard English court judgments than violate the convention.
Clarity in the drafting of dispute resolution clauses that point to foreign jurisdictions would give the Russian courts little scope to assert that a party has been unfairly prejudiced or that Russian interests have been wrongly seized. Therefore there could even be an increase in the staggering number of cases involving Russian or East European parties in the High Court’s Chancery and Commercial divisions – currently estimated at around 60 per cent.
The coming months will establish whether the Russian authorities are determined to stem the tide of litigation and what tactics they will use. While the location of future claims may be affected, for the moment the London court remains empowered to rule on the disputed ownership of the Rusal company in Cherney. The role of London as a preferred jurisdiction in determining such cases seems unlikely significantly to diminish, at least in the short term.
Mayer Brown senior associate Julie Bowring assisted with this article