Comparing Arbitration in Uzbekistan and Russia.

The number of business contracts including an arbitration clause is increasing rapidly in Uzbekistan. There are a number of reasons for this.  First, the process of resolving a dispute through arbitration is much faster compared to litigation. This is an extremely important factor in the modern business world. In arbitration there is only one instance compared to that of litigation, which involves several instances. Moreover, the duration of settlement of a dispute at an arbitration court takes 20-80 days, whereas in litigation it could take up to several years. Compared to litigation, arbitration is more efficient from the economic point of view, since it costs relatively less because it is not necessary to pay the state and the cost of lawyers/ legal advisors is relatively low.

Furthermore, the decision of the court of arbitration is final and becomes effective immediately after the hearing. It cannot be appealed against at a state court. In the case of non-performance of the decision intentionally, the law ensures that it is compulsory fulfillment.

Courts of arbitration are preferred because it is up to the parties to choose the arbiters. Additionally, it is in the parties’ discretion to agree on the time, date, place for the hearing, language of the hearing and the terms of the dispute settlement. The parties involved in arbitration have the opportunity to preserve the business relationship since arbitration courts involve a conciliation process, unlike those involved in litigation. Another advantage of arbitration is said to be the fact that unlike litigation, arbitration is completely confidential and therefore more beneficial for commercial entities. This leads to the parties feeling more in control of the situation and therefore many people find it to be a beneficial option.   

The ministries and other organizations involved in the development of arbitration are continuously discussing ways of development of international commercial arbitration in Uzbekistan. The most “attractive” feature of arbitration is that the arbitrator panel can include experts from other countries. This is a very important feature because this is a way of ensuring the satisfaction of foreign entities which are involved in Uzbekistan. Many experts believe that the development of international commercial arbitration will help to attract foreign investments, as foreign entrepreneurs are used to resolve disputes in arbitration and this will be an assuring factor for them. According to Carlos Martinez, the development of the system of arbitration is of high importance, especially in the modern market economy. Today time is expensive for businessmen and it is usually wasted in litigation, which eventually leads to loss of money. Therefore, businessmen are seeking an effective way of resolving disputes in a short period of time. Nowadays, there is a trend to develop the arbitration system because the traditional way of resolving disputes (i.e. litigation) takes a long time. There is and increasing demand for such services in Uzbekistan.

Moreover, the development of arbitration system in Uzbekistan will put the foreign entities in an advantageous position because the service of arbitration can be used in Uzbekistan for a lower financial cost. The development of international commercial arbitration will probably help raise the position and prestige of the Uzbek legal system. 

Arbitration in Russia:

The system of arbitration in Russia has been in existence for over 50 years now. Comparing this to the Uzbek system, it is obvious that the Russian system is a far more experienced and advanced one. However, it should be noted that before 1987 the system of arbitration in Russia was quite different from that which exists now. During the Soviet Union the system of arbitration was (just like everything else) governed by the state. It was only after the reform in 1993 that private arbitration tribunals came into existence. Since then they have become increasingly popular all over Russia. The Russian law permits the parties subject to a dispute, to transfer their present or future disputes from the competence of state courts by agreeing on an arbitration clause. The commercial arbitration system in Russia is divided into two main parts: International arbitration and Domestic arbitration.

The governing law regarding international commercial arbitration in Russia is the law No.5338-1 of July7, 1993, On the International Commercial Arbitration. It is mainly based on the UNICITRAL model law. Most of it is associated with the arbitration when at least one party involved is foreign. International arbitration in Russia is also governed by certain international conventions (i.e. NY Convention on the Enforcement of Foreign Arbitration Awards – 1958; European Convention on International Commercial Arbitration – 1961;  and a few bilateral treaties with other countries).  

Domestic arbitration is regulated by the Federal Law on Arbitration Tribunals of 24 July 2002 No. 102-FZ. This law regulates domestic arbitration only and under it the arbitration tribunals have the power to resolve both commercial and private matters.  

There are many reasons as to why parties choose arbitration over litigation. There is a possibility of having a highly qualified arbiter who specializes in the subject of the dispute. Moreover, there is the guarantee from the International Commercial Arbitration Court of the Russian Chamber of Commerce and Industry (ICAC), that the decision will be enforced both in Russia and abroad (NY Convention 1958).

One thing should be kept in mind that Russia still has the state arbitration (arbitrazh) system. This system has existed for a long time, although over the time it has undergone some major changes. Especially in 1987, the courts became a separate branch and were not subject to the control of the executive branch.

From the recent years it is evident that the Russian laws regarding arbitration are becoming more consistent and compliant with international standards. Moreover, the amendments in Arbitrational Procedural Code (APC) demonstrate the progress in state arbitration as well.

Conclusion:

When we compare the Uzbek arbitration system with that of Russia, the differences are evident. The Russian system is one which has been operating for quite some time now and is far more experienced and organized one. Whereas, the Uzbek system has just begun its journey and does not have much experience. Moreover, there are certain divisions in the Russian system (i.e. international arbitration, domestic arbitration and state arbitration). On the other hand the Uzbek system has not yet developed such kind of divisions. The Russian system is governed by a number of international conventions; this is not true for the Uzbek system. Considering how Uzbekistan is a young country in transition, it does not have many foreign investors and therefore the opportunity to develop is not as huge as it is in Russia.

In conclusion, it is evident that the importance of arbitration has increased with time and will keep on increasing. Litigation is already becoming a thing of past in private law. Almost all the developed legal systems use arbitration as a way of resolving disputes. The advantages are obvious and the whole process of arbitration is very beneficial to both the parties involved.

Therefore, I believe that by introducing the system of arbitration the Uzbek legal system has taken a huge step towards achieving a more democratic and brighter future.

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Bibliography:

Online Sources:

Arbitr.ru. (). Хронология основных событий. Available: http://www.arbitr.ru/as/hist/xron1.htm#2. Last accessed 02 Jul 2011.

Gayevoy, O. (2010). Arbitration Courts to Protect Business Interests. Available: http://www.ut.uz/eng/opinion/arbitration_courts_to_protect_business_interests.mgr. Last accessed 1st Jul 2011.

Nikiforov, I. (2005). The commercial laws of The Russian Federation. Part 20. Arbitration. Available: http://www.epam.ru/index.php?id=22&id2=424&l=eng. Last accessed 2nd Jul 2011.

Rahmatullaev, E. (2008). Based on Principles of Independence & Impartiality. Available: http://www.ut.uz/eng/opinion/based_on_principles_of_independence_and_impartiality.mgr. Last accessed 1st Jul 2011.

SilkPress. (2007). Interview. Available: http://www.silkpress.com/discovery-bc/archive/2007.9/10_12.php. Last accessed 1st Jul 2011.

Printed Sources:

 

Martinez, C. (2011). Lecture Handouts. WIUT

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