Taking the high moral ground: the risks for London as a centre for resolving Russian related disputes—a view from LIDW22

Taking the high moral ground: the risks for London as a centre for resolving Russian related disputes—a view from LIDW22

The LIDW22 session on ‘London as a dispute resolution hub for disputes involving parties from Ukraine and Kazakhstan: disputes in turbulent times’ covered two key areas:

  1. the practical impact of the war in Ukraine on arbitrations involving Ukrainian witnesses, counsel, parties or arbitrators
  2. the impact of the war on the London disputes market more generally

Pragmatic response to the situation in Ukraine

As to the first of these, the news is that the arbitral institutions are, not surprisingly, adopting a pragmatic response: including the indefinite postponement of hearings and the like to allow for the availability of witnesses and counsel etc. Olena Perepelynska, President of the Ukrainian Arbitration Association, confirmed definitively that Ukrainian arbitrators are ‘open for business’. Although in the first few weeks of the shock of the war she had a couple of hearings that just didn’t happen, since then those hearings have taken place and the ability of Ukrainian arbitrators to continue to participate and conduct in arbitrations should not be overlooked. Olena also provided an informative guide to the history and process of Ukraine as a seat of arbitration. This was followed by a summary from Askar Konysbayev, GRATA international, on the arbitration situation in Kazakhstan and the enforcement there of foreign arbitral awards.

Impact on London litigation market

As to the second of the themes, the picture was a little more mixed. There was a general recognition that through a combination of sanctions, media pressure and commercial, market pressures, we face the potential for a move away from London as a thriving centre for the resolution of disputes involving Russian entities, at least for as long as Putin remains in power. Such litigation is likely to move away to Dubai and Singapore. In response to this, moderator, Loukas Mistelis, QMUL, posed the question: ‘Is London taking a high moral ground which is out of place with other venues’?

It was generally agreed that London is not significantly out of step with its Western European counterparts in this respect, such as Paris, the Netherlands etc. The ‘collective West’ has adopted a reasonably consistent withdrawal from the highly lucrative Russian disputes litigation. We were, however, urged to recognise that this withdrawal is not just as a result of sanctions (for there is always the prospect of obtaining a licence to continue acting for a Russian sanctioned client) or indeed the keen media influence encouraging disassociation from Russia; rather we should acknowledge that this is a result of commercial pressures – something with which multi-service law firms are not unfamiliar. The push and pull between partners in such firms as they resolve their client conflicts and influences and the pressures brought to bear by the large institutional corporate clients is well known. The loss of appetite for association with Russian clients because other institutional clients fear the reputational downsides is ‘just’ another example of that age-old commercial conflict scenario. 

How will this resolve itself? It was broadly anticipated that we will see partners with Russian clients leaving the global firms and either joining those smaller niche firms who aren’t subject to the same reputational pressures and influence of the institutional corporate clients or these partners will leave and join together to form such niche firms themselves.  However, even where this does happen, such firms will still face logistical difficulties with the scope and breadth of the KYC requirements and issues such as how payments will be facilitated – all risk factors which may continue to supress appetite for such clients and litigation.

What of the rule of law?

In amongst this discussion was whether the role of the ‘rule of law’ was being compromised by the response of the legal market to the conflict. The idea that there has been some gross judicial injustice suffered by Russian litigation parties was rejected. Whilst some surprise was expressed at the degree and extent of the statements from firms in the London market, quick to sever their relationships with Russian clients, the right of all persons to legal representation and the importance for those clients in the midst of litigation was reiterated, as was the view that proceedings are being and will be delayed whilst alternative counsel are sought such that there is no injustice.

Accessing sanction frozen assets

Looking for a more positive conclusion to end on and chiming with the overriding theme of LIDW 2022: Dispute Resolution – Global, Sustainable, Ethical?  Olena Perepelynska remarked that we can expect to see significant disputes to follow with regard to accessing sanction-frozen Russian assets and the extent to which their use will be put to rebuilding Ukraine and compensating victims – perhaps exercising patience and waiting for the right disputes to become involved in to come along will enable the mature London litigation market to maintain and uphold its ethical stance in the face of such turbulent times.

Note: this is a summary of the discussion and does not purport to be a full account of the event.

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About the author:
Ruth specialises in general corporate and commercial dispute resolution with particular experience in shareholder disputes, fraud and warranty claims. Ruth trained and qualified at Berwin Leighton Paisner LLP (now Bryan Cave Leighton Paisner LLP) where she remained in practice for ten years. Her work has involved project managing large-scale cases to trial in the chancery and commercial courts. Ruth was actively involved in in-house training with a particular focus on all aspects of evidence gathering and production, including authoring a user-manual on E-disclosure. She is also a contributor to the New Law Journal.