Victor Dumler Senior Lawyer of Law Offices Egorov Puginsky Afanasiev and Partners

1. YOU HAVE AN AWARD, BUT NOW WHAT? Enforcing Arbitral Awards in Russia: Recent Lessons. 25 January 2010 Victor Dumler Senior Lawyerof Law Offices Egorov Puginsky Afanasiev and Partners

2. Lack of Proper Notice: Recent Examples • Loral Space & Communications Holdings Corporation v. Globalstar [2009], LCIA, the Supreme Commercial Court held that proper notice does not necessarily require a single, integrated document; proper notice may include a few complementary communications in accordance with the relevant arbitration rules • Valars S.A. v. Agro-Holding [2009], GAFTA, the Supreme Commercial Court stated that the defendant’s correspondence with the arbitral tribunal is sufficient proof of proper notice; the tribunal has discretion on the question of hearings; Hague Service Convention is not applicable • Agrokoncernas v. Avtotor-Agro [2008], Vilnius Court of Commercial Arbitration, proper notice had not been served via factual postal address of the defendant of which the claimant was aware • BELINTERTRANS v. TransEurope-Inform [2009], International Arbitration Court at the Belarusian Chamber of Commerce and Industry, an address stipulated in the contract does not guarantee proper notice if it is received by a non-authorized person

3. The Russian Approach to Public Policy: Recent Examples • Venture Global Engineering LLC v. Avtotor – Holding group [2009], ICC International Court of Arbitration, a penalty  is not contrary to public policy • Erick van Egeraat Associated Architects v. Capital Group [2009], Arbitration Institute of the SCC, an issue of disproportion of a penalty to the consequences of violation of an obligation is to be considered in arbitration • The Ministry of Defense of the Republic of Belarus v. TechPromInvest [2008],International Arbitration Court at the Belarusian Chamber of Commerce and Industry, non – reduction of a penalty does not itself affect the recognition and enforcement of an arbitration award • Kruken GmbH v. Avtotor-Agro [2008], FOSFA, exceeding of an amount of liability in comparison to the liability determined in the contract could be considered as a violation of public policy • Lugana Handelsgesellschaft GmbH v. Ryazansky zavod, German Institution of Arbitration, interest on a penalty and costs to be considered by Supreme Commercial Court 2

4. Challenging the Arbitration Agreement: Recent Examples • In Hebenstreit Rapido GmbH  v. Confectionary plant Saratovskaya [2009], the Supreme Commercial Court rejected the lower courts’ formalistic approach in interpreting the arbitration agreement between the parties - Chamber of Industry and Commerce in Vienna (as agreed) “against” International Arbitral Centre of the Austrian Federal Economic Chamber in Vienna (as recommended). We will hear from the court very soon… • Lugana Handelsgesellschaft GmbH v. Ryazansky zavod, German Institution of Arbitration, the Supreme Commercial Court will consider the reasoning of the lower courts regarding the conclusion of an arbitration agreement by means of an exchange of the documents between the parties. The lower courts refused to enforce an award stating, inter alia, that the arbitration agreement had not been reached in a required, valid form • Valars S.A. v. Agro-Holding [2009], GAFTA, the absence of an original contract between the parties does not affect an arbitration clause 3

5. Other Notable Cases • In Klinger Fluid Control GmbH v. ZAO Enekos [2009], ICC International Court of Arbitration, the court enforced an award made under the ICC Rules in Paris in accordance with Austrian law and dismissed the defendants’ appeal.  The court held that the amount of forgone benefit, as it was determined by the tribunal, could not be revised as the determination of losses is a matter of substantive law rather than procedural law, regardless of which exact law the rule is contained in. In this case, the tribunal referred to the rule under the Civil Procedure Code of Austria. • In re Danish natural person B. v. Russian natural person Z. residing in Moscow [2008], the City Court of Moscow enforced an LCIA award after the Russian Supreme Court’s decision of 16 December 2008 stating that cases on recognition and enforcement of foreign arbitration award should be referred to the middle tier of general jurisdiction courts and not to the first tier of the courts (district and equal to them). 4

6. General Advice • When seeking the requested relief, take the current trends in the recognition and enforcement of arbitration awards in the area into account • Ask the tribunal to be as precise as possible in explaining the reasoning of an award • Ask the tribunal to carefully consider, and articulate in the award, the issue of disproportion of a penalty to the consequences of violation of an obligation • Do not allow unjustified delay in seeking the recognition and enforcement of an award 5

7. General Advice continued • Be especially careful with issuing proper notice – use both contractual and official (registered) addresses of a counterparty; take into account any previous correspondence with the counterparty • Obtain and preserve delivery receipts re key documents during the arbitration • In the formation of new contracts, tie a notice clause together with the arbitration clause; as long as the arbitration clause is in effect, the notice clause should correspondingly remain in effect • Always require a certified copy of the power of attorney • Get certified copies of the corporate approvals before going through with the deal 6

8. The seminar has been held for you by: Victor Dumler Senior Lawyer of EgorovPuginskyAfanasiev and Partners E-mail: spb_office@epam.ru Tel: +7 (812) 322 96 81 www.epam.ru