The RAC and RIMA have undergone a full compliance review and a comprehensive examination of the RAC Arbitration Rules and procedures
The Russian Arbitration Center and the Russian Institute of Modern Arbitration have undergone a full compliance review and a comprehensive examination of the RAC Arbitration Rules and procedures by a group of leading international professional services firms
Since their foundation, the Russian Institute of Modern Arbitration (RIMA) and the Russian Arbitration Center (RAC) have devoted significant attention to the issues of the independence and impartiality of arbitrators appointed to determine disputes, the arbitral institute itself and its employees. It is essential for us to improve administrative standards of administration even further in line with international best practice for compliance issues.
When drafting the Arbitration Rules and other internal regulations of the RAC, we endeavored to comply with best practice and implement effective measures against unlawful and bad faith actions of all those involved in the arbitration process. To this end, the most important aspects of arbitral proceedings that do not come within the tribunal’s own competence were addressed to the collegial body, the Board, which not only performs the role of an appointing committee according to the applicable legislation, but also decides on other matters arising in arbitration (such as: disputes on amounts of fees, extensions of time, consolidation of proceedings, etc). The RAC Board is an elected body that is constituted following a vote of those eligible to do so, including those individuals included in the recommended list of arbitrators of the RAC. In 2020, five prominent international experts also joined the Board, whereupon two subcommittees were formed – one for international and one for domestic disputes.
The RAC requires that all Board members and members of the Administrative Office who are involved in arbitration proceedings comply adhere strictly to the rules on independence and impartiality. As a result of the thorough implementation of this policy, the Russian courts have never found a single violation of the principles of independence and impartiality when addressing the enforcement of awards rendered by the RAC.
Over the course of the past three years spent handling the day-to-day administrative matters of the RAС, we have accumulated sufficient experience to further refine the ways in which we administer arbitrations, and the activities of the RIMA more widely. In this vein, in 2020, we chose to submit our administrative function to its first comprehensive review by one of the world’s leading audit firms.
1. Compliance Audit
The compliance review of the RIMA was carried out by one of the world’s largest audit and consulting firms, PricewaterhouseCoopers (PwC).
The auditor reviewed the process by which: arbitrators were identified, selected, and appointed (or by which their appointment was declined); potential counterparties were selected and subjected to due diligence (including employees); operations with high compliance risk were conducted; and potential conflicts of interest were investigated. In the course of the compliance review, PwC analysed the accounting records, as well as the internal policies and procedures, of the RAC and RIMA.
Having carried out its comprehensive examination and collated its findings, PwC drew the following conclusion: “top management of the RAC demonstrated a high level of commitment to anti-corruption, couple with a good understanding of compliance principles and “zero-tolerance” approach to bribery and corruption”. They also noted that the RAC made considerable efforts to mitigate compliance risks regarding arbitral proceedings.
Based on the audit, PwC provided a number of recommendations on additional preventative measures that could be implemented to further mitigate compliance risks, including the development and implementation of a formalised compliance framework and certain additional procedures, as well as conducting a regular assessment, and update, of compliance risks and controls to ensure compliance with best international practice.
The Russian Institute of Modern Arbitration has considered PwC’s recommendations and, in response, has developed the Anti-Corruption Policy (the “Policy”). When preparing the Policy, we took into account all international regulations, applicable legislation and existing anti-corruption policies of leading international organisations. The Policy provides compliance guidelines for the RIMA’s employees, as well as the compliance control measures. We will continue the implementation of the other PwC recommendations, including, throughout the improvement of arbitration Rules and procedures.
We intend to carry out a compliance review regularly, in addition to maintaining our zero-tolerance for bribery and corruption among the RIMA’s employees and management.
2. Audit of the Arbitration Rules and Procedures
2020 also saw the first comprehensive review of the RAC Arbitration Rules and administrative procedures.
The review was carried out by the Dechert’s international arbitration team, including experts from London, New York and Washington. The project was leaded by Arif Hyder Ali, the co-chair of Dechert’s International Arbitration Group. Arif is also the co-author of The International Arbitration Rulebook: A Guide to Arbitral Regimes, which analyses and compares the rules of several of the leading arbitral institutions.
For several months, the Dechert team has carried out an in-depth analysis of both the RAC Arbitration Rules and the application of their provisions in certain arbitral proceedings.
Following the completion of the review, a White Paper was prepared, which found the RAC Arbitration Rules “to be comprehensive and largely consistent with international best practice” and to “contain many of the innovative procedures”. The Dechert team specifically noted that the RAC Arbitration Rules “adequately ensure the independence and impartiality of arbitrators” resolving disputes within the RAC. Based on their interviews with the Board Members, the team of experts from Dechert also found that the candidates proposed by the Administrative Office for appointment as arbitrators were of the appropriate stature and background.
Based on their review of the RAC Arbitration Rules and procedures, the Dechert team suggested several amendments to the RAC Arbitration Rules, as well as some possible developments to the administrative procedures, including the preparation of practice notes. As a general comment, the experts noted that the RAC Arbitration Rules are somewhat long and highly detailed, and could be simplified in many places.
Taking these suggestions into account, the RAC team has now started the extensive process of refining the RAC Arbitration Rules and procedures. Suggested amendments and draft guidelines will be presented for public consultation in due course.