Commercial element to the dispute: a prerequisite for obtaining interim measures in support of foreign arbitration? | Practical Law

Commercial element to the dispute: a prerequisite for obtaining interim measures in support of foreign arbitration? | Practical Law

Natalia Belomestnova (Associate), Goltsblat BLP

Commercial element to the dispute: a prerequisite for obtaining interim measures in support of foreign arbitration?

Published on 04 Mar 2010International, Russian Federation
Natalia Belomestnova (Associate), Goltsblat BLP
The Federal Arbitrazh Court of Moscow region, in its decision of 21 January 2010 (which became available in February 2010), rejected an application for interim measures in support of an LCIA arbitration in London.
In October 2009, the 9th Court of Appeal granted interim measures to the claimant, Edimax Limited, which had initiated LCIA proceedings in London against the respondent, an infamous Russian businessman, Shalva Chigirinsky. The interim measures were granted on the basis of a guarantee provided by Mr. Chigirinsky in connection with a deal between Edimax Limited and two companies of which Mr. Chigirinsky is a controlling shareholder. The interim measures took the form of a freezing order over an apartment located in Moscow and owned by Mr. Chigirinsky.
The Federal Arbitrazh Court of Moscow annulled the ruling of the 9th Court of Appeal and rejected Edimax Limited's application for interim measures. It found that arbitrazh courts in Russia did not have jurisdiction to grant such measures unless there was clearly a business or commercial element to the dispute.
In reaching this conclusion, the court relied on Article 90(3) of the Russian Arbitrazh Court code (which provides that interim measures can be granted by the arbitrazh court upon the application by the party to the arbitration proceedings at the place of arbitration, or at the place where the debtor is located or has a place of residence) and paragraph 34 of the Ruling of the Supreme Arbitrazh Court of Russia, which provides that "the arbitrazh court may grant interim measures upon application by a party to arbitration following the usual procedure provided by the norms of the Arbitrazh code". This was interpreted by the Federal Arbitrazh Court rather broadly. It concluded that, since the arbitrazh courts are competent to consider only economic disputes or disputes related to business and other commercial activity, interim measures can only be granted in arbitrations concerning such disputes. The court considered that in providing a guarantee to Edimax Limited, Mr. Chigrinsky had acted as a private individual, and therefore the arbitrazh courts did not have jurisdiction to grant interim measures in this case.
In reaching this decision, the court of cassation has applied a criterion for granting interim measures in support of arbitration which does not directly follow from Article 90(3) of the Russian Arbitrazh Court code. It remains to be seen whether this position will be supported by the High Court of Arbitration or followed by other courts.