AO SAO “Gefest” v. General Reinsurance AG (Gen Re)

At a glance

Parties

AO SAO "Gefest" (Russia; reinsured, in bankruptcy) v. General Reinsurance AG (Gen Re) (reinsurer, office in Cologne, Germany)

Case no.

No. A40-125370/17 (appeal Nos. 09AP-71246/2017 and 09AP-19704/2018)

Court

Ninth Arbitrazh Court of Appeal (Moscow), on appeal from the Arbitrazh Court of the City of Moscow

Forum and rules

Arbitration agreement: ad hoc arbitration seated in Moscow; the ICC (Paris) is appointing authority under the UNCITRAL Rules

Treaty

New York Convention, Article II(1) and II(3); European Convention on International Commercial Arbitration (Geneva, 1961)

Tribunal

24 January 2018: D.G. Vigdorchik (presiding), V.I. Popov, S.M. Mukhin. 24 May 2018: D.G. Vigdorchik (presiding), S.M. Mukhin, L.G. Yakovleva

Sector

Reinsurance

Outcome

The court upheld the first-instance ruling that left the claim without consideration because of the arbitration agreement, both on first appeal and again after remand.

Amount

Claimed: RUB 1,525,789.83 (RUB 1,374,704.71 for the reinsurer's shares of losses plus RUB 151,085.12 interest under Article 395 of the Civil Code).

The dispute

Gefest, a Russian insurer, and Gen Re entered into non-proportional reinsurance agreement No. 53-OP/IM-2012 of 30 April 2012. Article 16 of its General Conditions refers all disputes to ad hoc arbitration seated in Moscow, with the ICC in Paris as appointing authority under the UNCITRAL Rules. Gefest sued Gen Re in the Arbitrazh Court of the City of Moscow for Gen Re's shares of losses plus interest. Gen Re asked the court to leave the claim without consideration because of the arbitration clause. Gefest argued that the clause could not be performed: it had been declared bankrupt, liquidation proceedings had been opened, and it could not afford ad hoc arbitration.

Key holdings

1. First appeal: the reinsurance agreement contains a valid and enforceable ad hoc arbitration agreement. It contains no agreement giving jurisdiction to the Arbitrazh Court of Moscow, and Gen Re has no permanent establishment in Russia. Under Article II(1) and (3) of the New York Convention, Article 8(1) of the Law on International Commercial Arbitration and Article 148(1)(5) of the Arbitrazh Procedure Code, the claim was properly left without consideration. Judgment of 24 January 2018, pp. 2–3
2. On remand, the court followed the cassation court's instruction to examine circumstances that might prevent arbitration. It found that Gefest had not tried to start arbitration. Gefest offered no evidence that arbitration was impossible because it could not pay the fees, such as a filed claim, a request to defer fees, or a refusal by the arbitrators. Judgment of 24 May 2018, pp. 2–3
3. The opening of bankruptcy proceedings against a party does not by itself release that party from the agreed dispute-resolution terms. In ad hoc arbitration the parties agree the amount and payment of fees, and that agreement can take a party's financial position into account (Article 22(4) of the Arbitration Law). Judgment of 24 May 2018, p. 4
4. An arbitration agreement is enforceable if it names an existing arbitral institution or sets a procedure for forming the tribunal, and has not lapsed. This clause meets that test. The court also stressed that the contract was a specialised agreement between professional market participants, for whom arbitration clauses are common practice. Judgment of 24 May 2018, pp. 3–4
5. Under Article IV(1)(b) of the 1961 European Convention, parties may agree to ad hoc arbitration. The court again upheld the first-instance ruling and dismissed the appeal. Judgment of 24 May 2018, pp. 5–6

Procedural history

1. 30 April 2012The parties concluded non-proportional reinsurance agreement No. 53-OP/IM-2012, which contains an ad hoc arbitration clause (Article 16).
2. 15 November 2017At the first-instance hearing, Gen Re moved to have the claim left without consideration because of the arbitration agreement.
3. 22 November 2017The Arbitrazh Court of the City of Moscow (Judge O.V. Likhacheva) left the claim without consideration.
4. 24 January 2018The Ninth Arbitrazh Court of Appeal upheld that ruling (operative part announced 23 January 2018).
5. 28 March 2018The Arbitrazh Court of the Moscow District set aside the appellate ruling and sent the case back for fresh consideration.
6. 24 May 2018On remand, the Ninth Arbitrazh Court of Appeal again upheld the first-instance ruling (operative part announced 23 May 2018, after a recess from 16 to 23 May 2018). The ruling could be appealed within one month; the published documents do not show any further appeal.

Tribunal, counsel and experts

Decided by

• D.G. Vigdorchik Judge, Ninth Arbitrazh Court of Appeal (presiding judge)
• V.I. Popov Judge, Ninth Arbitrazh Court of Appeal
• S.M. Mukhin Judge, Ninth Arbitrazh Court of Appeal
• L.G. Yakovleva Judge, Ninth Arbitrazh Court of Appeal (sat on the panel for the 24 May 2018 ruling)

For the claimant

T.S. Surkova

For the respondent

D.A. Kelin · I.A. Sokolov

Run a conflict check on these names →

Keywords

• reinsurance
• Gen Re
• Gefest
• referral to arbitration
• New York Convention Article II(3)
• inoperative or incapable of being performed
• ad hoc arbitration
• bankruptcy
• impecuniosity
• arbitration fees
• European Convention 1961
• UNCITRAL Rules
• ICC appointing authority
• Article 148 Arbitrazh Procedure Code
• claim left without consideration
• Russia

Summary generated with AI from the published documents — refer to the award for the authoritative text.