The RAA Model Code of Best Arbitration Practice

15.04.2014 The RAA Model Code of Best Arbitration Practice
1 Introduction

The Russian Arbitration Association (the “RAA”) is currently undergoing a consultation process, in collaboration with Russia based arbitration teams, in respect of improvements to be made to the current system of international arbitration in the Russian Federation.

The current thinking of the RAA is to draft a special code of best arbitration practice which will provide a general code of practice for arbitration within the Russian jurisdiction (the “Code”).

The Code is being developed based on the experience of key arbitration jurisdictions. This article will discuss the extent to which each jurisdiction has in place a document or series of documents that are broadly equivalent to the Code.

2 Jurisdictional Analysis
2.1 France

International arbitration is recognised as a mainstream way of solving business disputes with an international aspect. France is one of the world’s main arbitration centres and arbitration has strong support of the French courts. France’s new arbitration statute is one of the most arbitration-friendly in the world.

There is no code of good arbitration practice in France. However, French law provides for a certain number of obligations which can be equated to good arbitration practice standards. In addition, arbitration practitioners and users in France may refer to certain “soft law” instruments that may have bearing on their arbitration proceedings.

An example of a French law provision is Article 1456 para 2 of the French Code of Civil Procedure which states that “before accepting a mandate, an arbitrator shall disclose any circumstances that may affect his or her independence or impartiality.” This law codified principles already well developed in French case law.

The IBA Rules on the Taking of Evidence in International Arbitration (the “IBA Rules”) and the IBA Guidelines on Conflicts of Interests (the “IBA Guidelines”) are examples of “soft law” instruments which are widely accepted around the world and are also frequently used in France. The Ethical Charter of Arbitration 2011 (the “Charter”) published by the French National Bar Association is an example of a France specific “soft law” instrument. The Charter mainly concerns duties and responsibilities incumbent upon an arbitrator – although it is not a commonly used document.

The parties to an arbitration may refer to IBA Rules in their arbitration agreement, however, given the wide acceptance and use of the IBA Rules, it is often sufficient for a party to request application of, or reference to, the IBA Rules at the time when the Terms of Reference and initial Procedural Order setting forth the arbitral procedure for the case are being adopted.

2.2 Spain

Recourse to arbitration for international disputes has increased over the past few years, although most arbitration is still domestic.

The Code most closely resembles the Spanish code of good arbitration practice which was drafted by the Spanish Arbitration Club. It is a non-binding document which is a list of recommendations and practices which can be adopted by the various arbitral institutions in Spain or elsewhere. The Spanish code was created to streamline and clarify various procedures and rules of the vast number of arbitration institutions present in Spain.

The Spanish code is divided into two sections: Section I is geared solely towards arbitration institutions and Section II consists of a model set of rules which reflect prominent international arbitration practice. The recommendations on independence and impartiality of arbitrators are contained in the document entitled: Recommendations on Independence and Impartiality of Arbitrators (2008). The IBA Guidelines are also frequently used.

Spanish arbitral institutions have adopted and incorporated their own unique practices, rules and regulations, most of them adhering to international standards. The recommendations contained in the Spanish code serve as a useful guide for Spanish arbitral institutions to evaluate their own procedures.

2.3 Hong Kong

Arbitration is a commonly accepted dispute resolution process in Hong Kong, administered by the Hong Kong Arbitration Ordinance. It is a pro-arbitration and pro-enforcement jurisdiction. Hong Kong does not have a document equivalent to the Code and instead relies on the interaction between the procedural law and the respective institutional rules. However, the Hong Kong International Arbitration Centre (the “HKIAC”) Rules contain a section regulating general conduct of arbitrators and parties to the HKIAC arbitration. The parties to an arbitration may also agree to follow the IBA Rules and/or IBA Guidelines.

2.4 Sweden

In Sweden, arbitration is generally considered to be the forum of choice to resolve commercial contract disputes and Swedish courts are generally arbitration-friendly. Sweden also does not have a document equivalent to the Code. However, the Stockholm Chamber of Commerce (the “SCC”) has published guidelines which serve as a practical tool and source of information for arbitrators when conducting arbitrations under the SCC Rules. The guidelines deal with a number of areas of arbitration such as arbitrators’ expenses, costs, tax issues and the final award. They are not intended to be treated as additional rules of procedure.

The Swedish code of judicial procedure does not directly apply to arbitral proceedings but the code has, at a general level, influenced the approach of Swedish lawyers to procedural issues in arbitration.

2.5 USA

Arbitration remains a popular alternative to litigation in the US and the US has adopted a strong federal policy in favour of arbitration. There are many guidance resources for conducting arbitration in the US that cover a wide array of topics, including drafting arbitration clauses, arbitration tribunal selection process, ethics, conflicts of interest, e-discovery, experts and emergency and interim measures. There is no specific code of arbitration best practice. The IBA Guidelines and the American Arbitration Association code of ethics are frequently used.

2.6 England

Arbitration is often used as an alternative to litigation. As one of the world’s leading centres of arbitration, arbitrators of all kinds take place in London. Many of the arbitrations involve parties with no direct connection to England but choose the jurisdiction because they perceive it to be a neutral venue with an arbitration law and courts that support arbitration. 

There is no single guidance document in relation to arbitration in England and there are also no specific codes of conduct applying to solicitors or barristers whether acting as counsel or arbitrators. Solicitors of England and Wales and registered foreign lawyers are bound by the Solicitors’ Code of Conduct 2011. Barristers are also bound by their code of conduct. There are also a number of non-binding ethical codes for arbitrators and counsel such as the CIArb list of guidance, protocols and rules for arbitrators. This is in addition to the usual IBA Rules and IBA Guidance which are frequently adopted.

3 The Code and its significance

Russian arbitration is a fairly new concept by international standards with it only having been in existence for about 20 years. The idea behind the Code is to make Russia as competitive a forum as possible for attracting disputes with an international element. Major Russian corporations have tended to favour the more established jurisdictions to resolve their disputes but there is hope that the Code will give such corporations comfort that a Russian arbitration will be handled fairly and impartially.

Experience of other jurisdictions shows that it is essential to protect basic arbitration principles and to provide guidelines to enable arbitration institutions and arbitrators to provide a high quality of service. As we can see from the above, only a few jurisdictions have codified arbitration principles, while others provide for such principles in various arbitration laws and guidelines. The variance in approach may be explained by the length of time in which arbitration has developed in certain jurisdictions. Spain, a jurisdiction with a document similar to the Code, is a relatively new venue for international arbitration when compared to the likes of France and England, where arbitration principles are ingrained within arbitration laws and institutional rules. Whilst the Russian and Spanish arbitration systems are very different, the increase in the number of international arbitrations in Spain can be mainly attributed to the Spanish code and its role in clarifying various procedures and rules. It is hoped that Russia will see a similar surge in the number of international arbitrations held in Russia as a direct result of the implementation of the Code.

Arbitral institutions have a very strong influence on the running of an arbitration and the arbitrators in general. In order to avoid violation of arbitration principles, such institutions need guidance in relation to the organisation of their work. As a result, the Code is mainly focused on the institutions and the arbitrators themselves rather than the parties to arbitration. The Code covers areas that are deemed to be of utmost importance to the arbitration process including transparency of institutions, avoidance of conflicts, the relationships between institutions and the arbitrators, confirmation of the main principles of arbitration, confidentiality and storage of documents.

The preamble to the Code sets out the main reasons why the Code was developed. According to the preamble, arbitration institutions have a very strong influence on arbitration and arbitrators and in order to avoid a violation of arbitration principles, institutions need guidelines in respect of their work.

The sections of the Code devoted to the transparency of arbitration institutions state that arbitration institutions must ensure that some information remains in the public domain, for example:

  • Information about the status of the arbitration institutions, including contact information;
  • Rules of arbitration;
  • Languages of administration of arbitration;
  • Information regarding beneficiaries of arbitration institutions, including relationships between beneficiaries and arbitration institutions;
  • Information regarding managing bodies of the arbitration institutions, including information about the bodies empowered to appoint arbitrators; and
  • Information on funding of arbitration institutions.
  • In relation to the avoidance of conflicts of interest, the Code states that arbitration institutions should:
  • Inform parties about possible conflicts of interests;
  • Implement in the arbitration rules an obligation for an arbitrator to conduct due diligence regarding possible conflicts of interests;
  • Administer arbitration by the most effective means and maintain independence from the parties; and
  • Be guided by Russian and international regulations regarding the disqualification of arbitrators.
Arbitration institutions should not:
  • Administer arbitration where its affiliates are participating;
  • Advise parties on the merits of the arbitration;
  • Advertise arbitrators or experts; or
  • Appoint as an arbitrator an executive officer of an arbitration institution.

The Code also provides soft regulation of the relationship between the arbitration institutions and the arbitrators and states that:
  • Rules of arbitration should contain information about procedure and terms of composition of the arbitral tribunal;
  • During the appointment of the arbitrators, the arbitration institutions should take into account the specifics of the dispute and the wishes of the parties;
  • The arbitration institutions should provide relevant information about the case for the arbitrator before appointing him;
  • The arbitration institutions should not make a list of arbitrators;
  • Appointment of arbitrators by parties should not be subject to the arbitrators appearing on a list of arbitrators; and
  • If an arbitration institution has a list of arbitrators, it should publish all necessary information and make regular evaluations of the quality of the arbitrators’ work.
The Code covers the main principles of arbitration. Among them it states the following:
  • Arbitration institutions must ensure that parties will have equal procedural rights and will be able to present their position. In addition to that, the defendant should have at least 30 days (15 days for accelerated proceedings) in order to present his position;
  • Arbitration institutions should not interfere in the arbitrators’ decision making process;
  • Arbitration institutions in the process of administration may only perform a limited amount of activities stated in the Code (provide premises for arbitration, correspondence, finance etc.); and
  • Arbitration institutions should control the timing of arbitration.
The Code defines the main principles of confidentiality and states that:
  • Arbitration institutions should follow the regulations of the Russian Federation on personal data;
  • Arbitration institutions should keep confidential information regarding all arbitrations. Confidential information may be given to third parties but only in accordance with applicable legislation. If original documents are requested by state authorities, arbitration institutions should make copies of such documents; and
  • Arbitration awards can be published only if they do not contain any information which could assist in the identification of the parties of the arbitration and only after three years term of the award being handed down.
  • The Code also provides regulation regarding the storage of documents and states that a list of documents specified in the 
  • Code should be kept for at least three years.

The Significance

The introduction of the Code should be a welcome addition to the international arbitration framework in the Russian Federation. It is evident that the RAA has taken into account a broad array of general principles, drawn from across numerous international arbitration systems to codify the underlying principles of arbitration in the Russian Federation and provide a broad commentary on the more established arbitration principles already ingrained within established arbitration systems.

The fact that the Code is drafted with the arbitration institution in mind illustrates the importance of these institutions in the framework of international arbitration and for its future development in the Russian Federation. It is hoped that the Code will bring an element of consistency and continuity to the operation and structure of the arbitration institutions in the Russian Federation and help to propel Moscow to become a more respected venue for resolving international disputes.

It will be several years before the success of the Code can be assessed. At the moment, the Code is non-binding, which means that arbitration institutions are not obligated to incorporate its principles into their own institutional rules. It will be interesting to see how many of the arbitration institutions voluntarily incorporate the Code, as to do so will be acknowledging the importance of the principles contained within it and will continue to develop Russia as a mainstream venue for arbitrating international disputes.

Konstantin Lukoyanov, Head of Litigation & Arbitration, PhD, Moscow, Attorney-at-Law
konstantin.lukoyanov@linklaters.com
Valeria Romanova, Associate, Moscow, Attorney-at-Law
valeria.romanova@linklaters.com
Mikhail Ivannikov, Associate, Moscow, Attorney-at-Law
mikhail.ivannikov@linklaters.com
Alex Vakil, Associate, London, Solicitor, England and Wales alex.vakil@linklaters.com

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