BELARUSrecent developments

Alexey Anischenko

28 February 2019

Dispute Resolution in CIS-Related Business Transactions

Frankfurt

Some facts about Belarus

➢ Population 9,481,100 (on 207.600 sq.km)

➢ GDP decline in 2015-2016, modest growth in 2017-2018

➢ Devaluation in 2014 (30%), denomination in 2016 (0000)

➢ Around 5 % inflation in 2017-2018

➢ Slightly negative foreign trade balance (positive in services)

➢ “Uberisation” of economy (High-Tech Park)

➢ 38th place in WB Doing Business 2018 (24th in Enforcing Contracts, but only 68th in Resolving Insolvency)

➢ State dominance in the economy, civil legal system, “inquisitorial” process

➢ Party to NYC, CISG, ICSID, DTTs and BITs with main trade partners (including most of EU members states)

➢ NOT [yet] a WTO member (expected in 2020)

➢ Faced first three investments claims in 2018 (UNCITRAL, ICSID AF, ICSID)

2

Statistics – state courts

978

681743

450

0

200

400

600

800

1000

1200

Claims filed Claims upheld

Disputes with foreign parties

2017 2018

3

Statistics – state courts

54

4847

42

0

10

20

30

40

50

60

Applications filed Applications granted

Applications for enforcement of foreign judgements/awards

2017 2018

4

Statistics – arbitration (caseload)

9187

105

94

0

20

40

60

80

100

120

Commenced Resolved

IAC at the BelCCI

5

Statistics – arbitration (domestic vs international)

76

11

2017

International (76) Domestic (11)

86

9

2018

International (86) Domestic (9)

6

Statistics – arbitration (foreign parties)

38

42

2017

Claimants Respondents

28

59

2018

Claimants Respondents

7

Statistics – arbitration (geography, 2017)

8

1

1

1

1

1

1

1

1

1

1

1

2

2

2

2

3

4

5

11

Poland

Ukraine

Azerbaijan

Mozambique

Austria

Mongolia

Italy

Canada

UAE

Romania

Qatar

Germany

Uzbekistan

Kazakhstan

Turkey

Latvia

China

Lithuania

Russia

RESPONDENTS

1

1

1

1

1

1

2

2

3

3

6

8

8

Singapore

Moldova

Estonia

Bosnia and…

British Virgin Islands

Czech Republic

Germany

USA

China

Ukraine

Poland

Lithuania

Russia

CLAIMANTS

Statistics – arbitration (geography, 2018)

9

1

1

1

1

1

1

1

1

1

1

1

2

2

2

3

4

17

18

Latvia

Poland

UK

Netherlands

Azerbaijan

Northern Macedonia

Serbia

Czech Republic

Turkey

Romania

Estonia

Germany

Ukraine

Transnistrian Moldovan…

Switzerland

Lithuania

China

Russia

RESPONDENTS

1

1

1

1

2

2

2

3

3

5

7

Moldova

Uzbekistan

Czech Republic

Austria

UK

Lithuania

Germany

Poland

Latvia

Ukraine

Russia

CLAIMANTS

Status quo

▪ “Overall, after the [2014] reform unified court system is able to serve its

purpose, while certain optimisation of the caseload allows moving

forward – improve the quality and effectiveness of justice.”

V.O. Sukalo, Chairman of the Supreme Court of Belarus

25 February 201910

So where to solve your conflict in Belarus?

ArbitrationMediation Litigation

11

Mediation

▪ Natural response to heavy caseload (1000+ cases per judge per year)

▪ Enforceability of settlement agreements reached in mediation

▪ Financial incentives

▪ The only effective way to resolve corporate disputes

▪ Low public awareness and business culture

▪ Lack of qualified mediators

▪ Law on Mediation, 2013

12

Litigation

▪ Cheap

▪ Fast

▪ Low corruption

▪ Interim measures

▪ Focus on documentary evidence

▪ 3 levels of appeal, but low chances to overrule the 1st instance

▪ Financial incentives to use simplified proceedings and conciliation

▪ More difficult to litigate against state and state-owned companies

▪ Code on Commercial Procedure, 1998 (2004 edition)

13

Arbitration

▪ Arbitration-friendly environment▪ More expensive and slower that state courts, though much cheaper and

generally faster than foreign alternatives▪ Few local arbitrators and counsel with international experience

▪ Specifics of arbitration law, rules and local practice in relation to:

✓conduct of proceedings (no PO1/ToR/PT, several 1 day hearings, often postponed at short notice, focus on documentary evidence, etc.) ✓appointment of foreign arbitrators✓mandatory bifurcation if jurisdictional objection raised✓scrutiny by the IAC Chairman ✓cession/assignment of arbitration agreement

▪ Law on International Arbitration, 1999 (UNCITRAL Model Law based)

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Few tips to consider

▪ Mind state courts as good alternative (particularly in straightforward

cases and when “fast-track” options are available)

▪ If Belarusian law is unavoidable – mitigate with international law (e.g.

CISG) and lex mercatoria (e.g. Incoterms, FIDIC, UNIDROIT Principles)

▪ Work on settlement (either through direct negotiations or mediation)

before rushing to the courts

DON’T SAVE ON LOCAL COUNSEL

– hire experienced one☺15

More information

▪ www.pravo.by – National Legal Internet Portal

▪ www.court.by – Supreme Court of the Republic of Belarus

▪ www.minjust.by – Ministry of Justice of the Republic of Belarus

▪ www.iac.by – International Arbitration Court at the BelCCI

▪ http://newyorkconvention1958.org/ – 5 NYC cases

▪ Case Law on UNCITRAL Texts (CLOUT) – 18 CISG cases

▪ World Arbitration Reporter (WAR) - Second Edition

National reports on Belarus (volume 1)

and IAC at the BelCCI (volume 2)

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ESTONIA

Pärnu mnt 15

10141 Tallinn

phone +372 6 400 900

estonia@Sorainen.com

LATVIA

Kr. Valdemāra iela 21

LV-1010 Riga

phone +371 67 365 000

latvia@Sorainen.com

LITHUANIA

Jogailos 4

LT-01116 Vilnius

phone +370 52 685 040

lithuania@Sorainen.com

BELARUSul Internatsionalnaya 36-1220030 Minskphone +375 17 306 2102

belarus@Sorainen.com

www.Sorainen.com

Thank you!

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alexey.anischenko@sorainen.com

+375 (29) 6210801