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Guide to Regional Arbitration (volume 5 - 2017)

Worth a Closer Look: Eastern Europe

02 November 2016

RUSSIAN ARBITRATION ASSOCIATION (RAA)

How old is it?

It was founded in April 2013, but its rules came into force in July 2014. It’s yet to administer a case.

Isn’t this listing a bit premature?

It takes a while before any new organisation gets its first case. And the RAA certainly fits the bill as “one to watch”. It’s got some very big names on its board (Vladimir Khvalei is chairman, with David Goldberg and Ilya Nikiforov as his deputies), the rules seem to have been well received, and people are rallying behind its mission to improve arbitration’s presence in the country.

Why’s that necessary?

See above. As it stands, the Russian system, as represented by ICAC (MKAS), is characterised by low transparency, efficiency and quality.

How does the RAA propose to fix that?

It’s promising several positive innovations: greater involvement of respected practitioners; transparent fees policy; steps to avoid conflicts; regular news updates; and, perhaps most importantly, higher arbitrator fees than those offered by the local competition.

It’s also going to train arbitrators in the manner of CIArb so that the work from existing centres improves (it’s a sad fact that, even when arbitrating abroad, Russian businesses seldom pick Russian arbitrators); it’s going to suggest changes to the laws and other steps that would improve domestic arbitration; and it’s going to begin providing more easily accessible resources on Russian arbitration law and practice (and potential arbitrators) on its website.

Commentators think, at the very least, the RAA will give a shot in the arm to competitiveness among arbitration providers in Russia, raising standards across the board. Some think it could emerge as the go-to institution.

Istanbul Arbitration Centre (ISTAC)

Why is it worth a closer look?

It’s a budding institution with great potential that has just issued its first rules (at GAR Live Istanbul, it so happens).

When was it founded?

The Istanbul Arbitration Centre was established in 2015, after several years of discussion (mainly about whether such a centre should be in Istanbul or Ankara). It’s led by Ziya Akinci – a well-known name in Turkey and beyond – and an international board, whose members include Hamid Gharavi, Jan Paulsson and Bernard Hanotiau.

Is it busy?

It is – given how recently it came into being. At the time of writing ISTAC was handling four disputes. And that’s probably just the start.

Is it going to be popular?

There’s every chance, given the signs. Turkey is a society where the blessing of someone in authority counts for a lot. So on that score it was significant that before the launch of its rules, ISTAC president Akinci and secretary general Candan Yasan met with the Turkish prime minister, who gave it his blessing. And Recep Tayyip Erdoğan, no less, has also apparently said, publicly, “I support ISTAC”. So those on the ground think that uptake will be good and that state-owned entities will now push to include ISTAC arbitration clauses in their contracts. It’s already made its way into several, including the contracts for the construction of Istanbul’s third airport. Siemens’ Turkish division is also pushing it (according to the firm’s general counsel Celal Savas, at GAR Live Istanbul 2016).

Turkey’s also seen as the Germany of the Middle East: an export powerhouse that sells infrastructure to its neighbours. So if its private companies also get behind it, ISTAC could become quite busy.

What are the rules like?

ISTAC’s tried to make a virtue of its recent arrival on the scene by adopting the latest innovations, including fast-track arbitration and emergency arbitrators. They’ve tried to widen party autonomy by giving parties options on how to begin proceedings. ISTAC also allows parties to exclude the jurisdiction of the Turkish courts if they wish, which is good as they still do deliver the occasional unnerving surprise.

Is there any particular reason to seek it out?

An ISTAC award will probably be a bit easier to enforce within Turkey – Turkish judges have been described as “psychologically more comfortable” with enforcing an ISTAC award rather than one from a foreign institution.