Constitutional Court v Supreme Commercial Court

At the end of May the Constitutional Court issued the long-awaited decision on the competence of arbitral tribunals. In its query to the Constitutional Court the Presidium of the Supreme Commercial Court challenged the competence of arbitral tribunals in disputes over real estate.

Ludmila Baleevskikh
senior lawyer

Muranov, Chernyakov & Partners
+7 495 783-74-50

Doubts about the constitutionality of certain norms of law arose when state courts were considering two cases of debt recovery and foreclosure of mortgaged property. According to the Supreme Commercial Court tribunals cannot resolve disputes with a public-law element and arbitration shouldn’t be considered equal with state courts (or acts of arbitration with judicial decisions).

So there is a fundamental question about the place of arbitration in the system of dispute resolution.

It is not first time that the Supreme Commercial Court has raised these issues, but this request was the quintessence of its position, keeping up the line of confrontation between courts and arbitration.

Despite the fact that the very admissibility of the query is extremely controversial in itself (the request did not comply with the requirements of law "On The Constitutional Court of the Russian Federation"), the Constitutional Court ruled that the request was admissible and that the court was competent to settle the matter (with some exceptions).

The Constitutional Court decided that tribunals can resolve disputes relating to immovable property and that equating the effects of decisions of state courts and of tribunals on

foreclosure of mortgaged property does not mean the equating of the institutions.

There are many other important legal positions in this decision, including those which the Supreme Commercial Court did not seek and which the Constitutional Court has delivered on its own initiative. The Supreme Commercial Court evidently did not expect this: if it had, perhaps, it wouldn’t have asked the Constitutional Court’s opinion at all.

The Supreme Commercial Court didn't expect this: if it had, it wouldn’t have asked the Constitutional Court’s opinion

I want to mention a couple of important points that are almost revolutionary.

The Constitutional Court appealed to the positions of the European Court of Human Rights (in particular, to the cases ‘Deweer v Belgium’, ‘Lithgow and others v. the United Kingdom’, ‘Transado-Transportes Fluviais Do Sado, SA v. Portugal’) which indicates the gradual convergence of its views on arbitration with those of the ECHR.

This is the first judgement of the court on arbitration which is made in the form of a decision. Up to this point it has only handed down rulings (there are more that twenty of them on this matter). A decision is the final resolution of a case on merits, while a ruling is only an interlocutory measure taken in all other situations, i.e. the refusal to pronounce the contested law as unconstitutional or the refusal to take the case).

On the whole, this decision of the Constitutional Court can only be welcomed as yet another step towards strengthening the authority of arbitration.

Muranov, Chernyakov & Partners