Good news for the international arbitration community. A recent decision from the Russian Supreme Court has analyzed again the topic of how convenient is for an agent to be authorized for intervene into an arbitration agreement. The discussion has included also the idea of general authorities to perform the conclusion of contracts in the best interests of the principal, which is sufficient. It formerly seemed to be an established judge practice, validated by the Russian Supreme Arbitral Court. It was said that no special authority is needed on this matter. In addition, this concept was again in the amendments that were added three years ago to the conflict of laws chapter of the Russian Civil Code. The article 1217.1 dictates now that the authority of agents is presumed and it implies the faculty of choosing the means of conflict resolution and the pertinent legislation.
Those reasons were accepted by the first instance. The Court concluded that the person who intervened into the original contract in representation of the claimant had just a general authority. It made the agent impossible for concluding contracts, and not only that: The agent hadn’t particular authorities for entering into the arbitration agreements between both parties. Unusually, the courts discussed the provisions in Russian law. On agency, which is unusual too for this kind of matters. That helped –ex post–the transaction by the principal to be ratified. The latter, also in the case that the agent was not authorized from the start for entering into a contract on the principal's representation. However, the consideration of courts on the case was very clear: the inexistence of ex post ratifications, even though the claimant did commenced arbitration, trusting on the presence of a contract arbitration clause.
It is important to notice the fact that, supporting their arguments; the courts furthermore relied on Article 62 of the Arbitral Procedural Code. The procedural faculties of the attorney deals with this particular provision. It was necessary for counseling to act in local court litigation. Among other things, it lists a series of procedural faculties that are essentially required for being precisely settled to counsel in the faculties of a lawyer. Of course, it includes the faculty of referring legal conflicts to an arbitral court. Based on this, the submission to enforce was discharged, although the award was put to one side.
This advance is without a doubt an important step for commercial arbitration in the Federation. The lately approved reform in the Russian legislation about this topic will make things easier for foreign and local companies to resolve their disputes. The law will start operating in the second half of the current year. It will let parties to agree on the objective of an award issued by a Russian located arbitral tribunal which acts under the administered law. Thus, it excludes any recourse to Russian courts to set aside. Whereas this piece of the new legislation might be interesting for parties (apprehensive about the interventionist activities of Russian courts), the understanding submitted in the mentioned case could tremendously stop its implementation. If a respondent can eventually go against the legitimacy of an arbitration clause, it might perform it in Russian courts, since there will be no agreements to arbitrate about, let alone an arbitration agreement on its objectives.