Rectification of defects in the arbitration clause and leaving the lawsuit without consideration, in the interest of Sklostroj Turnov CZ, s.r.o.

ALRUD’s lawyers successfully represented a longstanding Czech client: the glass equipment manufacturer Sklostroj Turnov CZ, s.r.o., in a dispute amounting up to 43 million euros, under a complex supply contract, in the Russian Arbitrazh Court.

Russian company ООО «OMSK-STEKLOTARA», a buyer under the contract, filed a claim for recovering the advanced payment under the contract from Sklostroj Turnov CZ, s.r.o. It alleged non-performance of the contract and invalidity of the arbitration clause in the contract. Although our Client did not acknowledge the merits of the claim: the main protection strategy was to terminate the proceedings, without consideration of the merits due to the arbitration clause in the contract. The ALRUD team succeeded in persuading the courts of three instances to leave the claim against the client, without consideration, due to an arbitration clause in the contract providing for settlement of disputes, under the contract in the Vienna International Arbitral Centre. ALRUD’s team also managed to prove validity of the arbitration clause and its capability of being performed.

The key feature of the case was that, due to the defects in the arbitration clause, ALRUD’s lawyers initiated the process of rectifying these in accordance with the European Convention on International Commercial Arbitration of 1961. Our team achieved rectification of defects in the arbitration clause, by obtaining clarifications from the Austrian and Czech Chambers of Commerce, as well as from Vienna International Arbitral Centre.

We managed to avoid procedural jockeying by ООО «OMSK-STEKLOTARA» and following this, due to allegation nature of claim, ООО «OMSK-STEKLOTARA» never applied to the Vienna International Arbitral Centre with a lawsuit against the Sklostroj Turnov CZ, s.r.o., as required by the agreed arbitration clause.

This case turned out to be a precedent and showed not only the possibility to use international legal procedures to rectify the defects in arbitration clauses, in international contracts, but also unacceptability to avoid the proceedings by Russian companies abroad, according to the agreement between the parties.

The ALRUD team, which worked on the project under the leadership of Vassily Rudomino, Senior Partner, Maria Ostashenko and Magomed Gasanov, Partners, included Boris Ostroukhov and Ksenia Erokhina, Senior Associates.