Arbitary Approach to Arbitration

When you encounter arbitration in Russia, the fun starts almost immediately. It’s purely linguistic fun with no real joy, but with questionable consequences.

Russian commercial courts have been traditionally called “arbitrazhnyie sudy” for several obscure reasons and a feasible one. The feasible reason was purely soviet in nature. Soviet economic entities couldn’t sue each other, but they had some economic disputes nevertheless. An allegedly healthy arbitration system was created to fit the fragile environment of soviet economic non-existent disputes. Nobody was really punished, everybody got an arbitral award. Award is not a judgment. You are supposed to feel good when you get one. You’ve been awarded the privilege to pay a fine. Or receive one. To each his own or, rather, his or her state-owned.

But then the system changed for the better. It became possible to file a real law suit, not disguising the claim as a friendly one. But the commercial courts kept their traditional name. They still bear the name “arbitrazh” courts. This is a misnomer at best. When one translates the name of such a court into English, it should be called “commercial court.”

Unfortunately, people get carried away, and start really outrageous name-calling. You can hear wonderful soliloquy in RusEnglish Legalese: “First, we went to arbitration, we had that wretched clause in the contract, English law, bells and whistles. When that didn’t work, it was Arbitration Court. After arbitration it had to be arbitration. When everything else failed, we had no choice but to get to the Moscow Arbitrary Court.”

Sounds outrageous and ridiculous, but one often encounters that type of magnificent wording. Arbitration morphs into arbitrary, meaning without logic or reason, in disregard of facts. Thus, the poor Moscow Commercial Court undeservingly becomes an “arbitrary court.” 

Sometimes savvy foreigners insist on calling Russian commercial courts “arbitrazh” courts in English. Not a bad idea, somewhat workable, however awful from the linguistic and common sense point of view. And “arbitrazh” could be easily confused with “arbitrage”, a term used to describe simultaneous purchase in one market and sale in another of a security or commodity; in effect, currency speculation, which would have been severely punished in the era when the soviet arbitrazh courts flourished. That’s why, when you hear about space arbitrage, it’s not the time to get excited about Roskosmos and Sber getting at each other’s throats in commercial courts, but, rather the chance to yawn at a dull definition of a mundane financial speculation.