Data

Date:
10-09-2019
Country:
Russian Federation
Number:
305-ES19-11815 (40-50736/2018)
Court:
Supreme Court of the Russian Federation
Parties:
AO Mosteplosetstroy v OOO Mosteplosetstroy

Keywords

CONSTRUCTION CONTRACT – BETWEEN TWO RUSSIAN COMPANIES - REFERENCE TO UNIDROIT PRINCIPLES IN ORDER TO SUPPLEMENT APPLICABLE DOMESTIC LAW (RUSSIAN LAW)

LIMITATION PERIOD – SUSPENSION OF LIMITATION PERIODS BY PREVIOUS ARBITRAL PROCEEDINGS - REFERENCE TO UNIDROIT PRINCIPLES (ART. 10.6)

Abstract

This case concerned a dispute between two Russian companies over unpaid amounts arising from a construction contract and the running of the limitation period.

Under the construction contract, the final price was to be determined upon completion of the project, based on work acceptance certificates. The contract allowed the contractor to withhold 5% of each payment as a retention sum, payable upon the commissioning of the facility.

After completion, the subcontractor claimed the outstanding debt and interest in arbitration. However, the arbitral award was set aside due to the lack of jurisdiction and non-arbitrability. The claim was rejected by the lower Courts, holding that the subcontractor had missed the three-year statute of limitations.

The subcontractor then appealed to the Supreme Court, arguing that the lower courts misapplied limitation rules and that the arbitration claim should have suspended the statute of limitations. The Supreme Court agreed and overturned the lower courts’ rulings,
.
The Court referred not only to the relevant rules of the Russian law, but also to the UNIDROIT Principles of International Commercial Contracts 2010, i.e. Article 10.6, which provides that limitation is suspended when the creditor initiates arbitral proceedings or participates in ongoing proceedings recognized by the law governing the arbitration. Suspension lasts until a final decision is rendered or proceedings otherwise terminate. The Principles also clarify that, in the absence of specific procedural rules, arbitration is deemed to commence on the date the claim is received by the debtor.

The Court therefore concluded that the arbitral proceedings in January 2017 suspended the limitation period.

Abstract in English kindly provided by Roman Zykov

Fulltext

}}

Source

}}