Resolving the Practicum Scenario in the Russian Federation

By Shebanova, Nadezhda | The George Washington International Law Review, January 1, 2003 | Go to article overview

Resolving the Practicum Scenario in the Russian Federation


Shebanova, Nadezhda, The George Washington International Law Review


I. INTRODUCTION

Answers to the questions asked in the practicum should indicate what actions FIXIT will have to take to reach the desired result-to obtain monetary funds-and include commentaries on the legislation regulating disputes. Before giving specific answers, certain comments should be made about the practicum. The situation described in the practical exercise requires more detail.

First, it is necessary to determine who the parties might be to the contract concluded between ALIENA and DOMESTICA. With respect to the foreign party, it is logical to assume that it is a company with the rights of a legal entity. With respect to the Russian party, the following should be taken into account: according to the Russian Constitution (Constitution), the government of the Russian Federation exercises executive power in the Russian Federation.1 This is a collegial body that stands at the head of an integrated system of executive power in the country and, in accordance with the Constitution, exercises powers in economic matters.2 The government of the Russian Federation only acts, however, as a party to an agreement at the international level. The party that concludes a commercial contract with a private company is a federal executive agency, subordinate to the government of the Russian Federation and responsible to it for fulfillment of the tasks entrusted to this agency. In the situation we are considering, such an executive agency is most likely to be the corresponding federal ministry. We must assume that this will be the ministry of the economy or the ministry of defense. For this reason, in the conclusion of an agreement on the operation of a military installation between ALIENA and DOMESTICA (the parties to this agreement will naturally be the governments of these countries), it is advisable to state specifically which actual federal executive agency of DOMESTICA will act as a party to the maintenance contract.

Second, it follows from the proposed situation that the law governing the legal relations between the parties shall be, according to the terms of the agreement, the national law of DOMESTICA-in our case, that of the Russian Federation. It is not sufficient, however, for the parties merely to determine the applicable law. Bearing in mind that the state is a party to the transaction, it is advisable for the agreement to stipulate which court will consider disputes arising from the contract. Here it is logical to assume that the court with jurisdiction over possible disputes will be the court of the Russian Federation. Economic disputes between legal entities, including foreign ones, come under the jurisdiction of the court of arbitration.

In our situation, the parties may recommend including a provision in the agreement to the effect that "all disputes arising from the present contract shall be considered by the Court of Arbitration of the Russian Federation." The parties shall also have the right to specify precisely which court of arbitration of the Russian Federation shall be entitled to consider any dispute that might arise. If no specific court is designated, then the general principle of the plaintiff choosing the court will prevail; the plaintiff may choose the place of the defendant's locale (in our case, the corresponding federal ministry acting as a party to the transaction). Since Moscow is the seat of the federal ministries, the court to consider any dispute shall be the Court of Arbitration of the City of Moscow.

Finally, in the situation under analysis, we proceed from the assumption that the parties to the contract are FIXIT, a foreign company with the rights of a legal entity, and DOMESTICA, a federal ministry and an executive agency of the Russian Federation. Disputes would be considered in the Court of Arbitration of the City of Moscow, which shall decide the dispute under Russian law.

II. ANALYSIS OF THE PRACTICAL EXERCISE

A. Regarding the Possibility of FIXIT Using Various Methods to Obtain Monetary Damages

The following should be noted with respect to the disputed situation, in which FIXIT considers that it has the right to obtain additional funds, over and above those stipulated by the terms of the contract. …

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