Arbitrability of corporate disputes. Recent innovations in legislation.

Contents:

• Features of arbitrability of corporate disputes
• Rules for consideration of a corporate claim in an arbitration court
• Arbitration of corporate disputes: innovations and prospects

Arbitrability is a mechanism for the distribution of cases that can be considered by an arbitration court, which is not considered to be one-tier and is divorced from the state judicial system. 

As a rule, arbitrators consider arbitration categories of cases that have arisen as a result of disputes in the civil law field. In this case, the arbitrator or the panel of arbitrators may consider conflicts between companies, companies and citizens, as well as citizens with each other. 

Features of arbitrability of corporate disputes

The concept of arbitrability in corporate practice arose on February 1, 2017, when Law No. 409-FZ “On Amendments to Certain Legislative Acts of the Russian Federation and Invalidation of Paragraph 3 of Part 1 of Article 6 of the Federal Law “On Self-Regulatory Organizations” came into force. 

With the introduction of the norm, participants in corporate disputes received a number of advantages over applying to the arbitration court. Among them are the following: 

• Shorter period of consideration of the dispute. Applying to the arbitration court allows you not to stop the company’s activities before making a decision. This allows you to minimize the risks of losses and possible bankruptcy. 
• Flexibility of the procedure. In the case of arbitration proceedings, its participants have more freedom in terms of choosing arbitrators and determining the arbitration procedure. 
• Confidentiality of the arbitration court, which consists in a ban on the publication of the court’s decision by the consent of the parties. In the context of corporate proceedings, when the participants of an LLC need to protect information about the company, this point becomes paramount.

It is important to know that corporate legal proceedings can take place in arbitration, if the other is not contained in the legislation of the Russian Federation. Thus, the arbitration court considers a wide list of corporate conflicts with the exception of a separate list. It includes: 

• Conflicts related to the general meeting of LLC participants.
• Conflict of interests within the company, which at the time of filing the claim works in the field of defense and state security. The only exceptions are conflicts about finding out the fact of ownership of shares or shares. 
• Application of the provisions of Chapters 9 and 11.1 related to the purchase and sale of shares of the Law “On Joint Stock Companies”. 
• Conflicts related to the exclusion of participants from the management of LLC according to Part 1 of Article 225.1 of the APC of the Russian Federation. 
• Conflicts related to the privatization of state or municipal property.

Rules for consideration of a corporate claim in an arbitration court

The arbitrability of corporate disputes presupposes the work of the court in accordance with the rules of arbitration for resolving such conflicts. For example, representatives of the court are required to notify the respondent firm of the commencement of legal proceedings by sending a copy of the claim within three days from the date of registration of the application. The same period of time is allocated to the authority for the publication of information about the receipt of the application for consideration on the merits. 

At the stage of consideration of the case, each participant of the LLC has the right to proceed to arbitration after submitting a corresponding application to the organization administering the arbitration on a permanent basis.  

If the party wants to withdraw the application or resolve the conflict peacefully, then this is possible without obtaining a written single agreement of the LLC participants who have become part of the trial. This does not apply to situations where one of the participants in the proceedings within thirty days sends a written objection in case of refusal of the claim or the conclusion of a settlement agreement. In this case, the arbitrator will decide to continue the consideration of the dispute.  

It is important to know that all corporate disputes must be initiated and considered by arbitration on the territory of the Russian Federation. 

Clause 7 of Article 7 No. 382-FZ “On Arbitration (Arbitration Proceedings) in the Russian Federation” assumes the transfer of the conflict based on the arbitration clause. The rule applies to conflicts that have arisen between the participants of the LLC and the company itself. 

Arbitration of corporate disputes: innovations and prospects

Today, legal practice demonstrates the importance and necessity of arbitration proceedings in the field of corporate disputes. This is supported by the completeness of the existing regulatory legal acts. 

At the same time, there are a number of documents developed by arbitration institutions and professional associations regulating legal relations in the framework of arbitration proceedings. For example, in 2021, the Russian Arbitration Center developed a Code of Ethics for the parties, which takes into account the nuances of different legal systems and suggests forms of interaction between the parties, taking into account all differences.