The Constitutional Court of the Republic of Belarus comprising the Presiding Officer – Chairman of the Constitutional Court of the Republic of Belarus P.P. Miklashevich, judges T.S. Boiko, T.V. Voronovich, S.Y. Danilyuk, V.P. Isotko, L.G. Kozyreva, V.V. Podgrusha, L.M. Ryabtsev, O.G. Sergeeva, A.G. Tikovenko, S.P. Chigrinov

on the basis of part one of Article 116 of the Constitution of the Republic of Belarus, subpoint 1.1 of point 1 and point 3 of the Decree by the President of the Republic of Belarus of June 26, 2008 No. 14 “On Certain Measures to Improve the Activities of the Constitutional Court of the Republic of Belarus”

in open court session in the exercise of obligatory preliminary review examined the constitutionality of the Law of the Republic of Belarus “On the Arbitration Courts”.

Having heard the reporting judge L.G. Kozyreva, having analysed the relevant provisions of the Constitution of the Republic of Belarus (hereinafter – the Constitution), the Law of the Republic of Belarus “On the Arbitration Courts” and other legislative acts of the Republic of Belarus, the Constitutional Court found the following:

The Law of the Republic of Belarus “On the Arbitration Courts” (hereinafter – the Law) was adopted by the House of Representatives of the National Assembly of the Republic of Belarus on June 24, 2011, approved by the Council of the Republic of the National Assembly of the Republic of Belarus on June 30, 2011 and submitted for signing by the President of the Republic of Belarus.

The Law establishes the forming and operating procedures of the arbitration courts except for international courts of arbitration (hereinafter – the arbitration court), sets the requirements to be met by an arbitration agreement, establishes the procedures of arbitration and enforcement of arbitral awards, as well as regulates other issues relating to the activities of these courts.

While reviewing constitutionality of the Law the Constitutional Court proceeds from the following.

Under the Constitution the individual, his rights, freedoms and guarantees to secure them are the supreme value and goal of the society and the State (part one of Article 2); safeguarding the rights and freedoms of citizens of the Republic of Belarus shall be the supreme goal of the State (part one of Article 21); all shall be equal before the law and have the right to equal protection of their rights and legitimate interests without any discrimination (Article 22). According to the Constitution everyone shall be guaranteed protection of his rights and freedoms by a competent, independent and impartial court within the time limits specified by law (part one of Article 60).

One of the ways to exercise the everyone’s constitutional right to protection of his rights and freedoms against violations and unlawful infringements in civil law relations is to appeal before the arbitration court.

The ability of the state to refer disputes to the arbitration court has been recognised in international legal acts. The common principles of resolving such disputes have been laid down in the European Convention on International Commercial Arbitration of April 21, 1961, to which the Republic of Belarus is a party, and recommended by the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL) of December 15, 1976.

1. According to article 1 of the Law the arbitration court is an organisation that is not included in the judicial system of the Republic of Belarus, it is created to resolve disputes in the form of a permanent arbitration court or arbitration court, formed by agreement of the parties to resolve a particular dispute.

Arbitration courts are not referred to the judicial system of the Republic of Belarus. They are non-state independent bodies to protect the property and non-property rights and lawfully protected interests of individuals and (or) legal entities in civil law relations.

According to the Constitutional Court opinion, the settlement of disputes of the parties by arbitration is a non-state jurisdictional activity carried out by arbitration courts under the Constitution, laws and other acts of legislation of the Republic of Belarus. Such activity is based on a due civil law contract and is alternative to judicial administration of justice.

2. In article 5 of the Law it is established that the activity of arbitration courts shall be based on the principles of legality, independence, competitiveness and equality of parties, autonomy of the will of the parties, confidentiality, binding and final arbitral awards etc. The Law provides for the rules on probable removal and resignation of the arbitrator and interim measures, on pre-notification of the parties about the time and place of arbitration and about the fact that the arbitral awards are voluntarily enforced. In order to set them aside these awards may be challenged by an appeal before the court of competent jurisdiction (articles 15, 30, 32, 46 and 49).

The Constitutional Court considers that the above rules, ensuring the necessary procedural rights of the parties to arbitration, are aimed at implementing the principle of fair trial, which within the meaning of Article 60 of the Constitution applies either to proceedings in a state court or in arbitration. Such approach is consistent with the provisions of international legal acts and practices of their application. Under the International Covenant on Civil and Political Rights (point 1 of article 14) and the Convention for the Protection of Human Rights and Fundamental Freedoms (point 1 of article 6), in the determination of his civil rights and obligations everyone is entitled to a fair and public hearing within a reasonable time by an independent, impartial and competent tribunal established by law, while respecting the principle of everyone’s equality before the court.

3. In accordance with part one of article 3 of the Law a permanent arbitration court is a non-profit organisation or a separate unit (unit) of a legal entity.

However, it is provided that the state authorities, including local self-governments, may not form the arbitration courts (part two of article 3 of the Law).

In the Constitutional Court opinion, the restrictions imposed by the legislator concerning the establishment of permanent arbitration courts by state authorities and local self-governments (part two of article 3 of the Law) are aimed to avoid direct or indirect use of power (public) authorisations conferred to these bodies. The restrictions reflect the private-law nature of arbitration and safeguard the respect for the principle of independence of arbitrators while resolving disputes.

4. According to the Constitution, the State shall guarantee to all equal opportunities for free utilisation of abilities and property for entrepreneurial and other types of economic activities which are not prohibited by law (part four of Article 13); a proprietor shall have the right to own, enjoy and dispose of property either individually or jointly with others (part two of Article 44).

Property relations within the framework of these constitutional provisions are based on principles such as the equality of participants in civil relations, freedom of their will and freedom of contract. It follows from the freedom of contract, as enshrined in article 2 of the Civil Code of the Republic of Belarus, that the participants of civil matters may determine any contractual clauses consistent with legislation. This principle implies the ability to include the arbitration clause in the contract.

In article 9 of the Law it is stipulated that the arbitration agreement is an agreement of the parties to refer the dispute to the arbitration court, specified in the agreement of the parties. The arbitration agreement shall be concluded in writing as a separate agreement where the parties agree to refer all or certain disputes, which have arisen or may arise from legal regulation binding on the parties, or in the form of arbitration clause – a separate provision in the contract.

The stipulation of the concept and form of an arbitration agreement in article 9 of the Law corresponds to the optionality principle and means that the arbitration is based on the agreement of the parties to the dispute and their freedom to regulate mutual relations in their discretion.

At the same time, the Constitutional Court notes that the conclusion of the arbitration agreement between the parties is not a circumstance precluding the ability to exercise the constitutional right to judicial protection in the ordinary or economic court under the procedure established by existing legislation, in particular in cases of termination of the arbitration memorandum as agreed by the parties or decided by court.

5. Article 19 of the Law establishes a provision stating that the arbitration court shall resolve any disputes arising between the parties which have concluded the arbitration agreement, except for disputes, to which the founder of a permanent arbitration court, established as a non-profit organisation, or a legal entity, of which the arbitration court is a separate division (division), is a party. Disputes, directly affecting the rights and legitimate interests of third persons who are not parties to the arbitration agreement, as well as disputes that may not be subject to arbitration in accordance with the legislation of the Republic of Belarus or of a foreign state, if its application is provided by the arbitration agreement or other contract between the parties, are also excepted.

The Constitutional Court pays attention to the fact that in determining the competence of the arbitration courts it is essential to proceed from the contractual nature of arbitration, what is admissible only in civil law relations. Because of their specific legal nature such relations are characterised as relations of equitable property owners. Such relations are based on the principles of the initiative and optionality in cases, where the owners dispose of the rights belonging to them.

The ability to resolve civil disputes through arbitration is based on the provisions of articles 13, 22, 44 of the Constitution and enshrined in civil law. According to point 1 of article 10 of the Civil Code the court, economic court or arbitration court shall protect either violated or challenged civil rights in accordance with their jurisdiction established by procedural legislation, and in cases provided by legislation – in line with the contract. Pointing to the civil law nature of the dispute as a criterion for its probable resolution through arbitration means that the system of current legal regulation does not admit the ability to refer to the arbitration court any disputes arising from administrative and other public relations, as well as any cases to be considered in special proceedings.

6. The right to judicial protection, enshrined in Article 60 of the Constitution, involves concrete guarantees for an efficient restoration of rights through administration of justice that meets the fairness requirements.

In article 46 of the Law it is established that the arbitral award may be appealed by a party to the case under the procedure provided respectively by civil procedural or economic procedural legislation, by filing an application to the court in order to set aside the arbitral award within three months from the date of its receipt by the party applying. The Law provides grounds for appealing and setting aside the arbitral award, as well as the consequences of the latter (articles 47 and 48).

The above mentioned provisions of the Law are aimed at the realisation of the constitutional right to judicial protection, involving not only the right to appeal before the court, but also the ability to get a concrete judicial remedy in the form of the restoration of violated rights and freedoms in accordance with the rules, laid down in legislation, specifying the court and procedure under which a particular decision should be subject to appeal.

The Constitutional Court emphasises that the right to arbitration of a civil law dispute does not mean that the subjects of the arbitration agreement have the discretion to choose the rules of relevant proceedings and the procedure of execution of the arbitral award – they shall be determined by law (article 18). At that the ability of the state court to set aside the arbitral award on the grounds specified in article 47 of the Law may neither be regarded as violating the constitutional rights to judicial protection of the parties to the arbitration agreement. Setting aside the arbitral award does not prevent its participants from subsequent appeal for protection of violated rights or legitimate interests before the arbitration court or before the ordinary or economic court within their jurisdiction.

7. The Law stipulates that the parties which have concluded the arbitration agreement, will take on a duty to execute voluntarily the arbitral award (article 5); they are bound to execute it under the procedure and within a time-limit specified by the award (article 49).

Where any arbitral award is not executed voluntarily by the due date, it shall be enforced. The enforcement of the arbitral award shall be carried out by the ordinary or economic court under the rules of executive proceedings in force at the time of the execution of the arbitral award, on the basis of the court order. When considering the application for a court order the court may not review the arbitration award (article 50 of the Law).

Thus, the state control (judicial review) over the arbitration courts is carried out at the stage of appeal of arbitral awards. The application for a court order guarantees the exercise of the parties’ right to freedom of contract and the constitutional right to judicial protection.

8. According to Article 7 of the Constitution the Republic of Belarus shall be bound by the principle of supremacy of law. This involves ensuring the constitutional principle of legal certainty in the regulation of social relations.

In accordance with the Law of the Republic of Belarus “On the Normative Legal Acts of the Republic of Belarus” the normative legal acts shall be brought into a unified system by means of their mutual harmonisation on the principles of consistency and complexity of the legal regulation of social relations (article 7). Pursuant to this requirement, due to the adoption of the Law some rules of the Civil Procedure Code of the Republic of Belarus regulating the organisation and activities of the arbitration court shall also be amended. Necessary changes and additions to it have not been provided by the Law. It may lead to uncertainty in its practical application, particularly in referring to the arbitration jurisdiction other disputes, including those arising from employment or family relations.

The Law aims to further develop and improve the application of the arbitration institute in the Republic of Belarus, to reduce the number of appeals before the courts in the judicial system of the Republic of Belarus, to ensure the greater use of alternative means to resolve disputes between legal subjects, to define the legal and institutional framework of the activities of the arbitration courts, except for international arbitration courts (arbitrations). The provisions of the Law are consistent with the Constitution and seek to further develop its rules and principles.

In view of the foregoing, the Constitutional Court deems the Law to be conforming to the Constitution as to the content of its rules, the form of the act and the procedure of its adoption.

The Law has been adopted by the House of Representatives of the National Assembly of the Republic of Belarus within its powers in accordance with point 2 of part one of Article 97 of the Constitution, and approved by the Council of the Republic of the National Assembly of the Republic of Belarus within its powers according to point 1 of part one of Article 98 of the Constitution.

The Houses of the National assembly of the Republic of Belarus have acted within their powers provided by articles 97–100 of the Constitution.

Guided by parts one, seven of Article 116 of the Constitution of the Republic of Belarus, parts eight, thirteen, fourteen of article 24 of the Code of the Republic of Belarus on Judicial System and Status of Judges, subpoint 1.1 of point 1 and point 3 of the Decree by the President of the Republic of Belarus of June 26, 2008 No. 14 “On Certain Measures to Improve the Activities of the Constitutional Court of the Republic of Belarus”, the Constitutional Court

RULED:

1. To recognise the Law of the Republic of Belarus “On the Arbitration Courts” to be conforming to the Constitution of the Republic of Belarus.

2. The present decision shall come into force since the date of its adoption.

3. To publish the present decision in accordance with legislation.

Presiding Officer –
Chairman of the Constitutional Court
Republic of Belarus
P.P. Miklashevich