I. Can allegations of corruption serve as a bar to jurisdiction of arbitral tribunals or admissibility of claims?

In Russia, the principle of the autonomy of the arbitration clause applies, meaning that the invalidity of the contract containing the arbitration clause, or allegations of corruption in the conclusion or performance of such a contract, as a general rule, do not affect the validity of the arbitration clause.

In such cases, the arbitral tribunal is competent to consider disputes insofar as they arise from the civil law relations of the parties.

However, it is possible that a court may conclude that the arbitral tribunal lacks jurisdiction to consider the dispute if it determines that the conclusion of the arbitration clause itself contravenes public policy, including anti-corruption laws. This could occur if the arbitration clause was concluded in violation of the law and aimed at circumventing it.

II. Can allegations of corruption affect the validity of an arbitral award?

According to Russian procedural law, when considering cases on the recognition and enforcement of arbitral awards, courts review the award based on limited grounds, including the requirement that the arbitral award must comply with the public policy of the Russian Federation.

Therefore, a court may refuse to recognize or enforce an award if it contradicts the public policy of the Russian Federation, which includes measures to combat corruption, as well as countering money laundering.

For instance, in Russian judicial practice, there are examples where courts have found the enforcement of a foreign arbitral award, which provides for the recovery of penalties under a contract concluded as a result of commercial bribery, to be contrary to the public policy of the Russian Federation (paragraph 2 of the Review of Practice approved by Information Letter No. 156 of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 26, 2013).

III. In annulment or enforcement proceedings, can the court review the award and the merits to determine whether corruption or related offences affect the underlying dispute?

As a general rule, according to Russian procedural law, when considering cases on the recognition and enforcement of arbitral awards, the court reviews the award based on limited grounds but does not review the merits of the case (part 4 of Article 243 of the Arbitration Procedure Code of the Russian Federation).

However, in practice, when assessing the compliance of an arbitral award with public policy, courts may examine issues concerning the substance of the dispute and the actions of the parties (for example, reviewing arguments regarding the affiliation of the parties or whether the contract terms meet market standards), including reviewing the factual basis of corruption allegations.

IV. Can courts review corruption allegations which have not been raised in the arbitration?

The issue of verifying an arbitral award for compliance with the public policy of the Russian Federation is determined independently by the court, ex officio, meaning regardless of whether allegations of corruption were raised by the parties or considered in the arbitration.

V. Do courts defer to the arbitral tribunal’s finding that no corruption acts were committed?

According to Russian procedural codes, the findings and decisions of arbitral tribunals generally do not have binding effect for the state court.

In any case, when considering issues such as the lack of jurisdiction of an arbitral tribunal to consider a dispute or the compliance of an arbitral award with the public policy of the Russian Federation (which includes the fight against corruption), the court is not bound by the arbitrators’ conclusions.

Arbitral tribunals and courts generally proceed on the basis that the establishment of facts constituting a crime is possible only through criminal proceedings and does not fall within the scope of the arbitration tribunal’s consideration. An arbitral tribunal can establish factual circumstances, but it is not authorized to give these circumstances a criminal law qualification.

Moreover, if a criminal court verdict establishes the fact of corruption, this verdict will be binding for the court considering the enforcement of the arbitral award, regardless of what was established by the arbitrators in their decision.

VI. Is there a standard of proof used by arbitrators and reviewing courts to assess the existence of corruption?

The legislation on both international commercial arbitration and arbitration tribunals in Russia does not establish specific criteria or standards of proof.

However, establishing facts of a crime and providing a criminal-law assessment of the circumstances are only possible within the framework of criminal proceedings and cannot be part of the consideration of arbitration or arbitration tribunals.

For courts, there are also no specific standards of proof established for assessing the presence of corruption. In particular, courts, when considering the compliance of an arbitral award with public policy, may accept any evidence they deem relevant and admissible to establish specific facts, including facts of corruption.

However, in such cases, when determining whether an arbitral award contradicts public policy due to corruption, courts also tend to rely on criminal court verdicts or information from authorized state bodies (such as Rosfinmonitoring) regarding suspicious transactions under anti-money laundering legislation.

VII. Which method do arbitrators and reviewing courts employ to establish evidence of corruption?

There are not many cases where courts have considered issues of corruption when reviewing arbitral awards.

For example, in paragraph 2 of the Review of Practice approved by Information Letter No. 156 of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 26, 2013, the court, while reviewing an arbitral award, was guided by a criminal court verdict that established that a person performing managerial functions at the enterprise, which was a party to the contract, was held criminally liable for commercial bribery.

At the same time, when verifying an arbitral award’s compliance with public policy, courts can assess factual circumstances of the case for signs of money laundering. Courts consider whether the contract could actually be performed (including considering the financial condition of the parties), what the economic purpose of the contract was, whether it pursued a lawful goal, and other relevant factors.

It should be noted that if the court has doubts about compliance with public policy, it may involve an authorized state body to present the court with a position and evidence of public interest violations in the case.

If there are signs indicating the possible use of the arbitration for money laundering purposes, the court may refuse to enforce the arbitral award on the grounds of public policy violation, even if the court does not establish the fact of corruption.

VIII. Are arbitrators seated in your jurisdiction bound by criminal proceedings on issues that could impact the underlying arbitration dispute?

Arbitral tribunals located in Russia are autonomous and, therefore, are not required to stay their proceedings until a criminal court issues a verdict that is relevant for the arbitration case. However, if the arbitration tribunal renders an award that contradicts the findings of a criminal court verdict, it is highly likely that the arbitral award will be deemed contrary to public policy.

The Russian state court, when considering the recognition and enforcement of an arbitral award, is required to stay its proceedings if the case cannot be resolved before another case being considered by another court (Article 143 of the Arbitration Procedure Code of the Russian Federation), which may include the consideration of a criminal case. However, in any case, the necessity to suspend the proceedings is determined at the court’s discretion.

IX. To what extent do they rely on or defer to findings from parallel criminal investigations?

A final criminal court verdict establishing the fact of corruption is binding on all state authorities, courts, and other individuals and legal entities and must be strictly enforced throughout the territory of the Russian Federation (Article 392 of the Criminal Procedure Code of the Russian Federation).

Specifically, when considering the issue of recognition and enforcement of an arbitration award, the issues resolved in the verdict — such as whether certain actions took place and whether they were committed by a specific person — will be binding on the courts (Article 69 of the Arbitration Procedure Code of the Russian Federation).

If an arbitration tribunal renders an award contrary to the findings of a criminal court verdict, it is highly likely that the award will be deemed contrary to public policy, which may include the binding force of a criminal court verdict.

The findings of the investigations or investigative authorities are not binding, but certain documents from the criminal case (for example, interrogation protocols, investigator’s rulings) can be used by the parties as evidence of their positions in court or arbitration, and these documents will be evaluated alongside other evidence

X. Are remedies available when an arbitral tribunal rules that there is no evidence of corruption but subsequently a criminal ruling decides otherwise?

If there is a contradiction between an arbitral award and a criminal court verdict, the award may be deemed contrary to the public policy of the Russian Federation.

If a criminal court verdict is issued after the arbitral award has been recognized or enforced by a court, the decision to recognize or enforce the award may be reconsidered based on newly discovered circumstances (Article 311 of the Arbitration Procedure Code of the Russian Federation). These circumstances include a criminal court verdict related to a party involved in the case. As a general rule, such a request must be filed within three months from the date when the party became aware of the newly discovered circumstances.