Constitutional Court backs arbitration

The Constitutional Court has backed arbitration and confirmed that tribunals can take on cases where real property is at stake. Their competence in this area had been challenged by the Supreme Commercial Court.

The Bank of Kazan won arbitration for foreclosure of a mortgaged building and obtained a writ of execution in state court. Pledgor has challenged the writ saying that disputes about immovables involve a public element since the law requires the state registration of such property. Disputes about real estate, therefore, can only be considered by state courts.

The chairman of the Supreme Commercial Court Anton Ivanov stated that the Constitutional Court must answer a wider question: whether an arbitration tribunal is "a court in terms of the constitutional right to justice” or is it just “a means of alternative dispute resolution"?

The Constitutional Court pointed out that the public nature of a dispute does not depend on the type of property involved, but on the parties themselves and their relationship. State registration is not the subject of a dispute and does not change the essence of the relationship. Registration by a state agency merely reflects the particular attention the law pays to the circulation of such property.

More about the judgement.