City litigators face new threats to running high-value cases involving parties from Russia, as tensions rise over Ukraine and the merger of two Russian courts puts the enforceability of English Commercial Court judgments in doubt.
International firms contacted by the Gazette admitted to being ‘taken by surprise’ by the speed of events in Ukraine.
Relations between Russia and EU countries are deteriorating at a time when Russia’s Supreme Arbitrazh Court, which hears commercial cases, is being merged with the less well-regarded general jurisdiction equivalent, the Russian Supreme Court.
The merger is of ‘immediate concern’, Tatiana Menshenina, of counsel at international firm Simmons & Simmons, said. Rulings in the arbitration court in 2012 and 2013 had established the enforceablility of English commercial court judgments in Russia.
‘In the new court those judgments could be reversed, or not followed,’ Menshenina said. ‘There is great uncertainty as to what will happen after the merger.’
The London Commercial Court, housed in the Rolls Building, is known among litigators as ‘the court for Eastern Europe’, and parties from Russia (75 cases) and Kazakhstan (86 cases) figured prominently between 2008 and 2013. The 2012 Berezovsky-Abramovich trial alone was reported to have generated £100m in legal fees.
London’s position as the world’s pre-eminent dispute resolution centre faces increased competition from other forums.
Ben Holland, London partner at US firm Covington & Burling, pointed out: ‘If international arbitration was a no-go, commercial parties unable to enforce contracts in the English or EU courts could find other places where many of the advantages of English court litigation can be replicated, for example the US, Canada, Australia, New Zealand, Hong Kong, Singapore and Dubai.’
In a report for the lord chief justice on Maintaining London’s Status as the Pre-eminent Dispute Resolution Centre, part-time high court judge Khawar Qureshi QC cautions against ‘complacency’.
A previous threat from Russia came in May 2012, when Anton Ivanov, chairman of the Supreme Arbitrazh Court, attacked the ‘abuse’ of forum shopping, and argued that Russia should ‘guarantee its citizens and entities protection from the unfair competition of legal systems of other states by way of adopting a special law’.
Ivanov said local judges should have powers to decide whether a foreign court or arbitration tribunal had ‘exceeded its jurisdiction’ by accepting cases against Russian parties.