Kyrgyzstan v Stans Energy Corporation case


On 25 May 2015, the Moscow Arbitrazh court (a state court) published its decision on Kyrgyzstan v Stans Energy Corp case regarding the issue of challenging of the arbitral award on 30.06.2014 (case A40-64831/2014).

A quick retrospective: Kyrgyzstan sought the annulment of the arbitral award, but the Moscow Arbitrazh Court refused the motion (the ruling on 08.07.2014). Then, the CIS Economic Court reversed its decision regarding the interpretation of article 11 of the Convention on 23.09.2014 (case No 01-1/1-14). The court ruled that article 11 of the Convention applied only if the parties concluded an arbitration agreement and as the result, the Moscow court of cassation overturned the ruling of 08.07.2014. The court of cassation ordered to review case A40-64831/2014.

A few days ago the court published its ruling on 25.05.2015.

Although, after both the decision of the CIS Economic Court and of the court of cassation the new ruling of the court could be predictable there are some new points (e.g. regarding impartiality of the arbitrators). The main findings are the following.

1) The Moscow Arbitrazh Court following the CIS Economic Court decision declared there was no arbitration agreement between Kyrgyzstan and Stan Corp. Thus, the Arbitration Court at the Moscow Chamber of Commerce and Industry had no competence over the dispute (page 7).

2) The arbitral award [awarded more than US 117 millions of compensation] violates sovereign of Kyrgyzstan. The court underlines public law recognizes sovereign of a state unless the state express consent to exercise of jurisdiction. The court concluded if there was no arbitration agreement there was no express consent to exercise of arbitral jurisdiction (pp. 10-11).

3) The court doubted the impartiality the arbitrators. As it noticed in the ruling the doubt is based on the following. The claimant requested the reduction of the amount of the arbitration’s fee on 10%. Until the request has been examined by the arbitral tribunal (01.11.2013), the claimant paid the reduced arbitration fees (29.11.2013). That fact has been found sufficient to declare abuse of impartiality of the arbitral tribunal by the state court (p.11).

The ruling on 25.05.2015 could be appealed before the court of cassation and thereafter before the Supreme Court of Russia.

p.s. The ruling on the similar case (А40-19518/2014) – Kyrgyzstan v Lee John Bek has not been published yet.

Author: Mikhail Samoylov

Photo: David Trilling

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