A. LEGISLATION AND RULES
A.1 Legislation
International arbitration in Belarus continues to be governed by the Law on the International Arbitration Court[1] (“International Arbitration Law“), which was enacted on 9 July 1999. This law is based on the UNCITRAL Model Law and, since its enactment; no significant amendments have been made. In addition, the Economic Procedural Code, adopted on 15 December 1998, contains provisions relating to challenging and enforcing local and foreign arbitral awards.
Belarus is a party to a number of international and regional treaties that relate to arbitration proceedings, including the New York Convention, the European Convention on International Commercial Arbitration 1961 and several CIS treaties.
Over the past year, the Belarusian Government has taken further steps to develop ADR. In particular, under the amendments to the Law on Advocacy and Advocacy Activity in the Republic of Belarus adopted in July 2017, it was clarified that local advocates, as well as mediators, are allowed to act as arbitrators in international and domestic arbitrations.
In addition to that, in January 2018, the Belarusian Parliament adopted amendments to the Civil Procedural Code, which, among other things, provide for the settlement of cases via mediation in appellate court proceedings.
Therefore, the Belarusian Government has taken significant steps for promoting ADR for the settlement of disputes between parties.
However, from the other side, the government is considering amendments to the local laws that are supposed to increase state control over domestic arbitration courts. In particular, these amendments should, among other things, prohibit the use of so-called “pocket arbitration institutions” for the settlement of disputes by affiliated parties.
A.2 Institutions, rules and infrastructure
After the adoption of the Law on Domestic Arbitration Courts[2] in July 2011 and the relevant sub-laws regulating the procedure of the establishment and registration of arbitration institutions, the number of arbitration institutions registered in Belarus significantly increased. There are currently more than 30 arbitration institutions, the oldest and most popular of which is the International Arbitration Court at the Belarusian Chamber of Commerce and Industry (IAC), which was established in 1994.
The IAC handles all types of commercial disputes between local and foreign companies, except disputes that are non-arbitrable under Belarusian law (e.g., disputes relating to rights over immovable property located in Belarus, privatization contracts, IP rights, etc.). The IAC also reviews commercial disputes between local companies.
In addition to that, another international arbitration institution – the Chamber of Arbitrators at the Belarusian Union of Lawyers renewed its activity in 2020 and adopted its new arbitration rules, which are based on UNCITRAL Arbitration Rules. It has the same broad jurisdiction as the IAC and is supposed to be its main competitor.
B. CASES
Belarusian court decisions are usually not publicly disclosed. Generally, Belarusian courts take an arbitration-friendly approach, although they have relatively limited experience in dealing with arbitration-related cases, which may lead to controversial court practices.
B 1. Recent investment arbitration cases.
In June 2021, the first investment arbitral award against the Republic of Belarus was issued. In particular, the Tribunal ordered the Republic to compensate USD 20.4 million to the Russian investor – Magnolium Processing based on provisions of the EAEU Treaty, which provides for the protection of investments made by a company from one EAEU country (Russia, Belarus, Kazakhstan, Kyrgyzstan, Armenia) into other.
As of today, there are at least three pending arbitration proceedings commenced by foreign investors against Belarus: UAB Modus grupe (2021), Delta Belarus Holding BV (2018), and GRAND EXPRESS (2018).
The above confirms the recent trend of the Belarusian authorities acting aggressively in connection with foreign investors.
B 2. Supreme Court refused to set aside the arbitral award based on lack of impartiality allegations
The Supreme Court considered the issues relating to criteria for existing reasonable doubts in arbitrator’s impartiality. In particular, in this case, the applicant stated that the award issued under the IAC Arbitration Rules should be set aside due to the fact that two of three arbitrators were officials of the IAC and are working in the same premises as a counsel of the opposite party who was an employee of the Belarusian Chamber of Commerce and Industry (a founder of the IAC). The applicant argued that the above facts evidenced a conflict of interests and partiality of the arbitrators.
The Supreme Court did not agree that the above facts might be evidence that arbitrators were partial or biased. Interestingly, the Supreme Court did not make any reference to the criteria of the “IBA Guidelines on Conflicts of Interest in International Arbitration.”
The above position of the Belarusian court may be viewed as additional evidence that the local courts are still reluctant to apply soft law rules which are widely recognized in international arbitration.
[1] Law of the Republic of Belarus No. 279-Z on the International Arbitration Court dated 9 July 1999 (as amended).
[2] Law of the Republic of Belarus No. 301-Z on Domestic Arbitration Courts dated 18 July 2011
