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Recognition of foreign arbitral awards in Estonia

12.01.2004

In its recent judgement, the Estonian Supreme Court stated that Estonian courts would not examine merits of foreign arbitration awards.

Estonian courts assessed the award of the International Court of Arbitration at the Chamber for Commerce and Industry of the Russian Federation dated 25 December 2002, under which the Estonian company named AS Pioneer was ordered to pay the Russian company named OAO Pskovski Kabelnyi Zavod the sum of RUR 801,404.77. Notwithstanding the defences of AS Pioneer, both the Tallinn City Court as well as the Tallinn Circuit Court recognised the award of the Russian arbitration court.

The Civil Chamber of the Supreme Court upholds the conclusions made by the courts of the first and second instance in the ruling (civil case no. 3-2-1-118-03) dated 1 December 2003. The Supreme Court agrees with the courts that the said arbitration award must be recognised in the Republic of Estonia as the court has been furnished sufficient proof and the preconditions for recognition of the award have been met. The Supreme Court states: "... Estonian courts [do not establish] the substantive lawfulness of foreign arbitration awards nor decide on the merits of such arbitration awards."

The judgement of the Supreme Court also explains that recognition of foreign arbitration awards must be resolved by a court judgement rather than by a ruling.

Estonia has ratified the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards. According to Article V of the Convention Estonia may refuse to recognise or enforce a foreign arbitral award, if among other things:

• The party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case;
• The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties;
• The award has not yet become binding on the parties, or has been set aside or suspended by a competent authority;
• The subject matter of the difference is not capable of settlement by arbitration under Estonian law; or
• The recognition or enforcement of the award would be contrary to the public policy of Estonia.

For implementation of international agreements, including the New York Convention, sections 377 and 378 have been inserted in the Estonian Code of Civil Procedure and on 2 June 1999 the Minister of Justice has passed the regulation no. 26 on the communication between the courts of the Republic of Estonia and courts of foreign states.

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