The matter in brief
How it went
Situation. A foreign partner in a joint project stopped performing its obligations after receiving part of the funding from the client, returning neither the money nor the results of the work.
What we did. We commenced proceedings before the ICC arbitration institution under the arbitration clause of the contract and presented evidence of the scope and value of the partner’s unperformed obligations.
Result. The tribunal upheld the client’s claim in full, $1.2 million, and the award is enforceable in the partner’s jurisdiction.
A similar situation? Let us discuss the details at a consultation.
Legal framework of international arbitration
The 1958 New York Convention. More than 170 states are parties to it. This means that an international arbitral award, unlike a judgment of a foreign state court, can generally be enforced in almost any country where the respondent has assets.
The ICC Rules. The International Court of Arbitration of the International Chamber of Commerce administers proceedings under its own rules, from the Request for Arbitration to the final award, with fixed procedural time limits at each stage.
The law on international commercial arbitration. In Russian law, recognition and enforcement of such awards is governed by the Russian Federation Law on International Commercial Arbitration, based on the UNCITRAL Model Law. It also sets the exhaustive list of grounds on which a Russian court may refuse to enforce a foreign arbitral award.
What the arbitration clause of a contract should contain:
How ICC proceedings work
The standard stages a case goes through at the ICC, from the Request for Arbitration to the final award.
Request for Arbitration
The claimant files the Request and pays the filing fee, and the respondent is given a period to submit its answer and any objections.
Constituting the tribunal
The parties agree on the arbitrators, either a sole arbitrator or a panel of three. If they cannot agree, the ICC itself appoints them.
Terms of Reference and exchange of evidence
The parties and the tribunal define the subject of the dispute, followed by an exchange of memorials, documents and witness statements.
Hearings
Oral hearings on the merits of the dispute, including examination of witnesses and experts where the rules allow and the parties require it.
Issuing the award
The tribunal must render its final award within 6 months of the signing of the Terms of Reference, although the ICC may extend this period.
Common mistakes in agreements with a foreign partner
A missing or imprecise arbitration clause. Wording such as “disputes shall be resolved in international arbitration”, with no institution, rules or seat specified, can in practice lead to a separate dispute over whether proceedings can be started at all, before the case is even heard on the merits.
No provision for interim measures. Without the right to an emergency arbitrator or to apply to a state court for interim measures, the partner has time to move assets away or stop responding by the time the tribunal has even been constituted.
Delay in responding to a breach. Waiting for the partner to “finish a bit later” means losing time for gathering evidence while it is fresh (correspondence, acceptance certificates, payment documents) and can affect how the applicable limitation periods run.
Poor documentation of funding stages and obligations. If funding tranches and the scope of the partner’s reciprocal obligations are not recorded in acceptance certificates or written confirmations, proving the exact scope of what was left unperformed in arbitration becomes noticeably harder.
Risks to consider in advance
Enforceability matters more than a win on paper. An ICC award is not yet money in the account. We assess in advance whether the partner has assets in a country that is party to the New York Convention, and how willing the local courts are to assist with enforcement.
The cost of proceedings should be weighed against the amount in dispute. The filing fee, arbitrators’ fees and legal support are generally justified only above a certain claim threshold. For smaller sums, direct negotiation or mediation is sometimes more effective.
Governing law is set in the contract, not in the dispute. The law governing the contract and the seat of arbitration determine both the limitation period and which evidence the tribunal will accept, and in what form.
What we assess before proceedings begin:
International arbitration in numbers
General benchmarks on time limits and thresholds that are useful to know before proceedings begin.
Frequently asked questions
Does the import of equipment from abroad need to be declared to the tax authority?+
Yes, this is a separate procedure of customs declaration and currency control, and we support it in full as part of the transaction.
How do I choose between international arbitration and a state court for a dispute with a foreign partner?+
Arbitration is usually preferable for cross-border disputes: an award is easier to recognise and enforce abroad, unless the contract originally provided for a different jurisdiction clause.
Is this a real case or a generalised example?+
It is a real matter from the firm’s practice. We publish it without company names or the names of the participants, as every client agreement includes a non-disclosure clause.