Court Left Alfa Bank in Russia
// Arbitration Practice
Yesterday, the Arbitration Court of Moscow held a preliminary hearing on Sodbisnesbank’s suit against Alfa Bank. The latter had even tried to transfer the case to the International Commercial Arbitration Court, referring to the fact that some of its shareholders were foreigners. However, the court decided to deal with the case itself.
The Arbitration Court of Moscow held a preliminary hearing on the lawsuit filed at the end of last year by Sodbisnesbank against Alfa Bank, for its illegal withdrawal of about $7 million from Sodbisnesbank’s deposit. According to the claimant, Alfa Bank writing off $7 million from Sodbisnesbank’s account after it had its license withdrawn was illegal and violated the rights of first line creditors (Alfa is a fifth line creditor).
Alfa asked the court not to take the lawsuit, since according to its agreement with Sodbisnesbank all disputes were to be heard by an arbitration court. Alfa’s interest in transferring the case to the Arbitration Court can be explained by the fact that they take half a year and longer to process cases. Therefore, there would be a chance that the case will not be heard before Sodbisnesbank is liquidated.
Arbitration Code of Process allows for a so-called arbitration clause, where the state court is under no obligation to hear the case if the parties had not previously reached an agreement on compromising means. At the same time the state court has a right to evaluate the legal effect and the possibility of fulfilling the arbitration clause.
However, the arbitration clause of Sodbisnesbank and Alfa agreement is not very clear. It mentiones that disputes must be considered “in accordance with regulations of international commercial arbitration court in Moscow,” but such arbitration court does not exist. There is the International Commercial Arbitration Court (ICAC) under the RF Chamber of Commerce and Industry, but it takes on only foreign economic disputes. Alfa representatives explained that they had foreign shareholders, and therefore the dispute fell under the jurisdiction of the ICAC. However, Sodbisnesbank explained that even the ICAC under RF Chamber of Commerce and Industry requested that it be correctly named when being addressed. Another reason for why the clause could not be fulfilled was that Sodbisnesbank had no means to pay arbitration fees, since it was undergoing a liquidation process.
After a one-hour meeting the court pronounced that the parties had not reached the agreement on their disputes being taken to arbitration, since it is not clear which Arbitration Court was implied in the document. The court also recognized the Sodbisnesbank’s inability to pay arbitration fees. So the Arbitration Court of Moscow decided to deal with the $7 million claim from Alfa Bank case on its own. The hearing is scheduled for February 24.
Kommersant will be following further events.
Olga Pleshanova, Daniil Zhelobanov
All the Article in Russian as of Jan. 28, 2005
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