Maximov v Open Joint Stock Company "Novolipetsky Metallurgichesky Kombinat"

A foreign judgment setting aside an arbitral award is not refused recognition merely because it is wrong or manifestly wrong. The applicant must establish cogent evidence that the decision was so extreme and perverse that it could not have been reached by a court acting in good faith, or that it was deliberately wrong rather than incompetent. Bias may be inferred, but the threshold remains high. Procedural unfairness, novel reasoning, errors of law and an apparent hostility to arbitration may provide context, but do not by themselves establish bias. Where several grounds support a foreign judgment, the court must assess whether the decision as a whole is so tainted that reliance on any surviving ground would be unsafe.

The claimant sought enforcement in England of an award made by the International Commercial Arbitration Court of the Chamber of Commerce and Industry of the Russian Federation. The award had been set aside by the Moscow Arbitrazh Court on grounds including alleged arbitrator non-disclosure, public policy and non-arbitrability. The decision was upheld by the Federal Arbitrazh Court of Moscow District, and permission to appeal was refused by the Supreme Arbitrazh Court of the Russian Federation.

The claimant alleged that the Russian decisions were affected by inferred bias and should not be recognised under the New York Convention or at common law. The central issue was whether the Russian decisions were so extreme and incorrect that they could not have been reached in good faith.

1. Application dismissed. The claimant failed to establish that the Russian judgments setting aside the award were so extreme and perverse that they could only be ascribed to bias.
2. The applicable threshold was high. A foreign court decision being wrong or manifestly wrong was insufficient. The evidence had to be cogent and show either deliberate error, rather than incompetence, or reasoning that no court acting in good faith could have adopted. Apparent bias principles under Porter v Magill [2002] 2 AC 357 did not apply because no personal interest or involvement giving rise to presumed partiality was alleged.
3. The first setting-aside ground was seriously flawed. The Russian courts treated non-disclosure as incapable of waiver, contrary to the applicable rules, and failed to determine the facts relevant to waiver. The second ground was also unsustainable: the arbitrators had followed the contractual pricing formula, and any contrary conclusion would at most have been an error of law, not a breach of fundamental public policy.
4. The third ground, concerning non-arbitrability of a claim for the share purchase price, was novel and inadequately reasoned. Nevertheless, it was arguable that the claim was connected with the wider transaction, including conditions precedent, corporate governance and title to shares. The judge was not persuaded that this ground, considered with the others, could only have resulted from bias.
5. The court therefore did not need to decide the ex nihilo nihil fit issue or the effect of the Dutch proceedings and outstanding appeal. The claimant’s application to enforce the award was dismissed.

Not stated in the judgment for this English decision. The judgment records that the Russian award was set aside by the Moscow Arbitrazh Court, upheld by the Federal Arbitrazh Court of Moscow District, and that permission to appeal was refused by the Supreme Arbitrazh Court of the Russian Federation.