Resolution of disputes involving insurance companies in and outside of Russia: A comparative overview of the advantages and disadvantages of various options for dispute resolution May 29, 2005 Leila Litvinova Senior Associate, Moscow Office Co-Chair, Russia Insurance Practice Group RUSSIAN INSURANCE SUMMIT Tel.: Fax:

1 Legal Needs of The Russian Insurance Market Intensive and extensive growth of the Russian insurance market International nature of insurance and reinsurance industry Partner/shareholder disputes Disputes between various market players Unsatisfied customers’ claims

2 I. Options for commercial dispute resolution in Russia: state courts, commercial arbitration, ADR

3 Options for Commercial Dispute Resolution State arbitration (arbitrazh) courts State arbitration (arbitrazh) courts Commercial arbitration Commercial arbitration  International Arbitration  Domestic arbitration Alternative Dispute Resolution Alternative Dispute Resolution

4 II. Procedural issues: arbitrazh litigation, civil court litigation, commercial arbitration (international and domestic)

5 Disputes: Procedural Issues Arbitrazh Litigation – Arbitration Procedure Code Arbitrazh Litigation – Arbitration Procedure Code Civil Court Litigation – Civil Procedure Code Civil Court Litigation – Civil Procedure Code Limited scope for private arbitration Limited scope for private arbitration Mandatory Russian law rules; limited scope for choice of law Mandatory Russian law rules; limited scope for choice of law

6 III. Dispute Resolution Approaches, Including Commercial Arbitration

7 Efforts to Resolve a Dispute Amicably general requirements (to undertake best or reasonable efforts) general requirements (to undertake best or reasonable efforts) special conciliation procedure set in the contract (parity commissions, appointment of an expert, etc.) special conciliation procedure set in the contract (parity commissions, appointment of an expert, etc.) mediation mediation

8 Practical Issues to Consider costs costs time time enforceability of an arbitration award or court judgment enforceability of an arbitration award or court judgment enforcement of an arbitration award enforcement of an arbitration award (additional time and expenses)

9 Speed and Complexity of Proceedings (alternative arbitration proceedings) small claims procedure small claims procedure Fast, low cost procedure Fast, low cost procedure full-scale arbitration process full-scale arbitration process

10 Interpretation of a Dispute Resolution Clause if an arbitration clause (or agreement) is absent (litigation or arbitration) if an arbitration clause (or agreement) is absent (litigation or arbitration) if an arbitration clause or agreement is invalid if an arbitration clause or agreement is invalid if an arbitration clause is vague (any need to argue over jurisdiction?) if an arbitration clause is vague (any need to argue over jurisdiction?) place of dispute proceedings place of dispute proceedings

11 Specifics of Arbitration Clause Application exclusive language and permissive language exclusive language and permissive language the possibility of a multiparty dispute the possibility of a multiparty dispute potential/necessary intervention of local courts (statutory requirements, interim relief, etc.) potential/necessary intervention of local courts (statutory requirements, interim relief, etc.) no incorrect reference to arbitration rules no incorrect reference to arbitration rules

12 The Significance of International Treaties several alternatives given to the parties in an arbitration clause several alternatives given to the parties in an arbitration clause applicability of international treaties applicability of international treaties the law that determines the legal authority of the parties the law that determines the legal authority of the parties

13 IV. Scope of Dispute Resolution

14 Issues to Be Resolved keeping the arbitration clause as broad as possible (excluding for matters that cannot be submitted to arbitration) keeping the arbitration clause as broad as possible (excluding for matters that cannot be submitted to arbitration) the jurisdiction the jurisdiction the law regulating procedure for the arbitration the law regulating procedure for the arbitration if there is a conflict between applicable substantive laws, the law under which said conflict is to be resolved if there is a conflict between applicable substantive laws, the law under which said conflict is to be resolved

15 all pre-arbitration efforts have been exhausted all pre-arbitration efforts have been exhausted all commercial issues have been considered all commercial issues have been considered a full legal review has been completed a full legal review has been completed When to Commence Litigation/ Arbitration

16 Amicable settlements (reasons for success) Amicable settlements (reasons for success) International vs Domestic International vs Domestic Russian courts: practice in the making Russian courts: practice in the making Survey and analysis of current dispute resolution trends in Russia

17 Court Practice – Also Consider: Specifics of Russian Court Practice Specifics of Russian Court Practice  Fighting corruption at all levels  Litigation as a “negotiation” tool: greenmail  Security measures: how they can be abused

QUESTIONS?QUESTIONS? Tel.: Fax: RUSSIAN INSURANCE SUMMIT

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