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

on the basis of Article 116.1 of the Constitution of the Republic of Belarus, article 22.3.2 of the Code of the Republic of Belarus on Judicial System and Status of Judges, article 98 and article 101.1 of the Law of the Republic of Belarus “On the Constitutional Proceedings”

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

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

The Law of the Republic of Belarus “On Amending the Law of the Republic of Belarus “On Arbitration Courts” (hereinafter – the Law) was adopted by the House of Representatives of the National Assembly of the Republic of Belarus on 25 June 2020, approved by the Council of the Republic of the National Assembly of the Republic of Belarus on 30 June 2020 and submitted for signing to the President of the Republic of Belarus.

The Law was adopted with a view to improve the legal regulation of public relations in respect of functioning of arbitration courts, to further develop and increase the efficiency of the arbitration institution in the Republic of Belarus.

1. Within its competence to exercise obligatory preliminary review of the constitutionality of laws the Constitutional Court examines the Law based on the provisions of the Constitution:

declaring the Republic of Belarus to be a state based on the rule of law (Article 1.1); establishing that the Republic of Belarus shall be bound by the principle of supremacy of law, according to which the State and all the bodies and officials thereof shall operate within the confines of the Constitution and acts of legislation adopted in accordance therewith. (Article 7.1, Article 7.2);

providing that 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, that it shall regulate economic activities in the interests of the individual and society (Article 13.4, Article 13.5);

guaranteeing by the State the rights and freedoms of citizens of Belarus that are enshrined in the Constitution and laws, and specified by the State's international obligations. (Article 21.3);

defining that 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);

providing that everyone shall have the right to freedom of association (Article 36);

establishing the State obligation to take all measures at its disposal to establish the domestic and international order necessary for the full exercise of the rights and freedoms of the citizens of the Republic of Belarus that are specified by the Constitution (Article 59.1);

guaranteeing everyone’s protection of his rights and freedoms by a competent, independent and impartial court within the time limits specified by law (Article 60.1).

One of the ways to exercise the constitutional right to protect one’s rights and freedoms from violations and unlawful infringements in civil law relations is to refer to an arbitration court.

The possibility of submitting any disputes to an arbitration court is recognised by international legal instruments. General principles for settling disputes by such courts are determined by 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.

Guided by article 54.1 of the Law “On the Constitutional Proceedings” the Constitutional Court establishes the conformity of the Law to the Constitution of the Republic of Belarus, the international legal acts ratified by the Republic of Belarus on the contents of its provisions, its form, delineation of competence between state bodies and the procedure of adoption.

2. The Law amends the Law of the Republic of Belarus “On Arbitration Courts” (hereinafter – the Law on Arbitration Courts) with respect to the expanded competence of the Ministry of Justice in the field of establishing of arbitration courts and their functioning.

Thus, article 6 of the Law on Arbitration Courts, which determines the conditions for official registration of a permanent arbitration court, is added a provision stipulating that the Ministry of Justice, the relevant main department of justice shall verify the documents submitted for official registration, indexing of a permanent arbitration court, official registration of alterations and (or) addenda to the charter of a permanent arbitration court. The list of instances in which official registration or indexing of a permanent arbitration court, official registration of alterations and (or) addenda to the charter of a permanent arbitration court shall be refused, is also added such grounds as inconsistency of the name of a permanent arbitration court, including an abbreviated one, to the requirements of legislation and (or) the charter of this court; failure to correct violations, that involved the suspension of official registration or indexing of a permanent arbitration court, official registration of alterations and (or) addenda to the charter of a permanent arbitration court, within the time limits established by the Ministry of Justice, the relevant main department of justice (article 1.4 of the Law).

The Constitutional Court notes that the legislator, acting within its discretionary powers, adjusts the legal mechanisms of the operation of arbitration courts. Taking into account Article 59.1 of the Constitution the legislator determines the procedure for official registration of a permanent arbitration court and meets the need to ensure a balance of private and public interests, strengthen the rule of law and law and order in the operation of arbitration courts, for recourse to them is one of the ways to implement everyone’s constitutional right to protect their rights and legitimate interests (Article 22 of the Constitution).

3. Article 7 of the Law on Arbitration Courts which regulates the liquidation (termination of operation) of a permanent arbitration court is hereby stated in a new wording (article 1.5 of the Law). The said article is added provisions stipulating that the Ministry of Justice or the relevant main department of justice within their competence shall issue a written warning to a permanent arbitration court where they receive information from the law enforcement and other state bodies, other legal entities and individuals on the violations by a permanent arbitration court of the legislation on arbitration courts and (or) the charter of a permanent arbitration court created as a non-profit organisation (the regulation on a permanent arbitration court created as a separate division (subdivision) of a legal entity), with the exception of violations committed in the arbitration proceedings. A permanent arbitration court shall notify in writing the body, that has issued the written warning, about elimination of violations that served as the ground for issuing the said warning. The court shall also provide supporting documents no later than three days from the expiration of the time limits for eliminating violations as established in the written warning. The warning may be appealed to the court within one month from the date of its receipt. Where a permanent arbitration court neither eliminates the violations that have served as the ground for issuing a written warning, nor informs the relevant body about elimination with supporting documents, the permanent arbitration court may be liquidated by a court ruling (paragraphs 11, 13–15).

The legislator also establishes that the liquidation (invalidation of official registration) of a permanent arbitration court, created as a non-profit organisation, shall be decided by the Supreme Court of the Republic of Belarus at the request of the Ministry of Justice. The liquidation (invalidation of indexing) of a permanent arbitration court, created as a separate division (subdivision) of a legal entity, shall be decided by the regional (Minsk city) court at the place of indexing of a permanent arbitration court at the request of the relevant main department of justice (paragraphs 16 and 17 of article 7 of the Law on Arbitration Courts).

The new wording of Article 7 of the Law on Arbitration Courts also envisages that information on that a permanent arbitration court, created as a non-profit organisation, is in the process of liquidation, about the procedure and deadline for filing claims by its creditors shall be provided on the official website of the legal scientific and practical journal “Justice of Belarus” in the global computer network Internet and then published in the appendix to this journal under the procedure established by the Council of Ministers of the Republic of Belarus (paragraph 3).

The Constitutional Court notes that the Constitution grants the legislator fairly broad discretionary powers to regulate public relations, including those related to the operation of arbitration courts, to determine the specifics of legal regulation, to establish, amend and restrict rights, as well as the conditions and mechanisms for their exercise, taking into account that the arbitration court protects civil rights on the basis of the private law initiative of the disputing parties themselves. The improvement of the legal mechanism for guaranteeing that arbitration courts fulfill the legal requirements contributes to ensuring the rights and legitimate interests of the parties to the arbitration agreement, strengthening the rule of law and it also complies with the provisions of Articles 13.5 and 59 of the Constitution.

Article 7 of the Law on Arbitration Courts provides that a permanent arbitration court may be liquidated by a court ruling for failure to eliminate violations that have been fixed in a written warning issued by the Ministry of Justice or the relevant main department of justice within their competence. The Constitutional Court draws the attention of law enforcement bodies to that when applying this provision it is necessary to proceed from its constitutional and legal meaning: the provided sanction – the liquidation of a permanent arbitration court for failure to eliminate violations fixed by the justice department – should not be applied on such a formal ground as violation of the law on arbitration courts and (or) the charter or regulations. The sanction should comply with the general legal principles of legal responsibility and should be proportionate to the violations committed by the permanent arbitration court and their consequences.

4. Article 10 of the Law on Arbitration Courts which defines the requirements for the disputing parties is also stated in a new wording. So, paragraph 3 envisages that the arbitration agreement, providing for all or individual disputes be referred to arbitration, shall not be concluded if those disputes have arisen or may arise out of the legal relationship binding the parties:

should one of the parties to an arbitration agreement be the founder of a permanent arbitration court or the founder (participant) of a legal entity in which a permanent arbitration court was created as a separate division (subdivision) of this legal entity;

should one of the parties to an arbitration agreement be a legal entity, a separate division (subdivision) of which is such an arbitration court;

should it be a legal entity, in relation to which the founder of a permanent arbitration court or the founder (participant) of a legal entity, in which a permanent arbitration court was created as a separate division (subdivision) of this legal entity, are the founder (participant), the owner of the property of the legal entity;

should it be a spouse, a parent (a custodian, a guardian), an adult, emancipated or married children before the age of eighteen and their spouses, a ward, an adoptive parent, adopted adults and their spouses, a grandfather, a grandmother, adult grandchildren and their spouses, brothers and sisters, as well as parents of a spouse of the founder of a permanent arbitration court or the founder (participant) of a legal entity in which the permanent arbitration court was created as a separate division (subdivision) of this legal entity;

should it be a member of collegial governing bodies of a permanent arbitration court or a legal entity in which a permanent arbitration court was created as a separate division (subdivision) of this legal entity (article 1.7 of the Law).

Article 12 of the Law on Arbitration Courts determines that a concluded arbitration agreement not meeting the requirements of article 10 of this law shall be considered invalid.

The Constitutional Court considers that the prohibition in article 10.3 of the Law on Arbitration Courts to enter an arbitration agreement for persons, related to an arbitration court, provides for an objective protection of the rights and legitimate interests of participants in civil law relations. It also strengthens independence and impartiality of arbitration proceedings against possible unfair actions of persons related to arbitration, wishing to resolve the dispute in their own interests, and excludes the possibility to take advantage of their position. These restrictions seem to be constitutionally admissible, adequate and proportionate to the interests protected by the Constitution, that is consistent with the provisions of Article 23.1 of the Constitution.

5. Certain amendments to the Law on Arbitration Courts relate to arbitrators’ work. Thus, when organising the arbitration the presiding arbitrator of the permanent arbitration court will no longer be able to appoint any arbitrators – unlike current legal regulation arbitrators shall be appointed only by the parties. The Law also crossed out the requirement for arbitrators in collegial settlement of a dispute to have higher education and at least three years of work experience in the relevant field (paragraphs 8, 9 and other paragraphs of article 1 of the Law).

Article 15.1 of the Law on Arbitration Courts, which provides for challenges of arbitrators, is added a provision on the challenge of an arbitrator who is bound by marriage, family relations, adoption, custody or guardianship with one of the parties to the pending dispute.

The Constitutional Court considers that the said rules of the Law ensure the independence and impartiality of an arbitrator, what is a requirement for observing the principle of a fair trial. Within the meaning of Article 60 of the Constitution a fair trial covers both the proceedings in a state court and the arbitration proceedings. Such legislative regulation is consistent with the provisions of the International Covenant on Civil and Political Rights (Article 14.1) and the Convention for the Protection of Human Rights and Fundamental Freedoms (Article 6.1), according to which 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 and impartial tribunal established by law subject to the principle of everyone’s equality before the law.

6. Article 13 of the Law on Arbitration Courts is added a new provision providing for the possibility to form public associations of arbitrators under the procedure established by the legislation on public associations. Associations of arbitrators may be formed with a view to coordinate operation, protect the rights, represent joint interests, organise training, improve qualifications, ensure publishing and educational activities without forming commercial organisations and (or) participating in them.

The Constitutional Court considers that the envisaged right to form public associations of arbitrators is conditioned by the need to ensure the protection of the arbitrators’ rights, as well as to improve their professional skills in the arbitration proceedings, that complies with Article 36 of the Constitution and strengthens the democratic principles of justice.

7. Article 19 of the Law on Arbitration Courts, which defines the disputes to be settled in arbitration, is amended by article 1.13 of the Law. Thus, it is established that the arbitration court shall settle any disputes arising between the parties to the arbitration agreement. Disputes directly affecting the rights and legitimate interests of the third persons who are not parties to the arbitration agreement and disputes that may not be referred to arbitration under the legislation of the Republic of Belarus or the legislation of a foreign state, where the application of the legislation of a foreign state is provided for by an arbitration agreement or another agreement between the parties, shall be excluded.

In its decision of July 7, 2011 “On the Conformity of the Law of the Republic of Belarus “On Arbitration Courts” to the Constitution of the Republic of Belarus” the Constitutional Court highlighted the need to proceed, when determining the competence of arbitration courts, from the contractual nature of arbitration, which is permissible only in civil law relations.

Complicated legal relations within the framework of civil turnover produce uncertainty as to whether the dispute may be referred to arbitration. Article 19 of the Law on Arbitration Courts does not specify which disputes between the parties to civil law relations shall not be referred to an arbitration court. Such legal regulation may entail an ambiguous understanding of the law rules and their non-uniform application, thereby violating constitutional guarantees for the exercise and protection of the rights, freedoms and legitimate interests of individuals and legal entities.

The Constitutional Court considers that while improving the legislation on arbitration courts in order to ensure the constitutional principle of the rule of law and the balance of private and public interests the legislator within its discretion should determine the list of disputes not to be referred to arbitration according to their social importance, specific conditions of the civil turnover and the social and economic system as a whole.

8. The Law (article 1.16) amends article 32 of the Law on Arbitration Courts and provides that, along with the parties, who participate in the hearing under the current legal regulation, the third persons shall also participate in the case and enter arbitration proceedings with the consent of the parties. To involve a third person in arbitration, the consent of the person involved shall be required as well.

The party’s statement to involve a third person shall be made before the arbitration court renders the award. The consent to the involvement of a third person shall be expressed in writing.

When examining the constitutionality of this provision of the Law the Constitutional Court draws attention to the fact that the right of the parties to a civil dispute to refer it to arbitration, acting as an institution of civil society, meets the provisions of Articles 13, 22, 44 of the Constitution and is also provided for by civil law (article 10.1 of the Civil Code of the Republic of Belarus). So, interested parties are granted the right, at their own discretion, to submit a dispute to a state court in accordance with its competence established by law, or to choose an alternative form of protection of their rights and refer it to arbitration. Such options in conjunction with the guarantees enshrined in Articles 22 and 60 of the Constitution expand the possibilities of resolving disputes in the field of civil turnover.

The Constitutional Court believes that the establishment by the Law of the third persons’ right to enter the arbitration proceedings is implied by the need to ensure guarantees of a due and timely arbitration. It is an additional way to protect the constitutional rights and legitimate interests of individuals and organisations.

9. Article 50.2 of the Law on Arbitration Courts is stated in a new wording (article 1.19 of the Law). According to this article a party in whose favour the arbitration award was made, on default of its voluntary enforcement shall be entitled to apply to a court for the enforcement of this award under the procedure established, respectively, by civil procedural or economic procedural legislation, taking into account the specifics provided for by this article.

The Constitutional Court notes that the disputing parties, concluding the agreement to refer it to arbitration and thereby exercising their right to freedom of contract, voluntarily admit to comply with the rules established for arbitration. The Law on Arbitration Courts provides that the parties, who have entered an arbitration agreement, shall assume responsibility to voluntarily abide by any arbitration award (article 5); the arbitration award shall be carried out under the procedure and within the time limits established by this award (article 49).

The Constitutional Court deems that access to the court for enforcement of an arbitration award on default of its voluntary enforcement is a guarantee of the parties’ right to freedom of contract and of the exercise of the constitutional right to judicial protection.

Thus, the established legislative regulation of the procedure for creation (formation) and functioning of arbitration courts, the requirements for the arbitration agreement, the procedure for arbitration proceedings ensure a wider application of alternative dispute resolution between legal subjects, the implementation of constitutional guarantees of equal protection of the rights and the legitimate interests of individuals and organisations and comply with the principles and rules of the Constitution.

The Law has been adopted by the House of Representatives of the National Assembly of the Republic of Belarus within its competence in accordance with Article 97.1.2 of the Constitution, and approved by the Council of the Republic of the National Assembly of the Republic of Belarus in accordance with Article 98.1.1 of the Constitution.

In view of the foregoing the Constitutional Court concludes that the Law is in conformity with the Constitution as regards the contents of its rules, form of the act, delineation of competence between state bodies and procedure of its adoption.

Guided by Article 116.1, Article 116.7 of the Constitution of the Republic of Belarus, article 24.2 of the Code of the Republic of Belarus on Judicial System and Status of Judges, articles 103–105 of the Law of the Republic of Belarus “On the Constitutional Proceedings” the Constitutional Court of the Republic of Belarus

RULED:

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

2. The present Decision shall come into force from the date of adoption. 

3. To publish the present Decision in accordance with legislative acts.

Presiding Officer –

P.P. Miklashevich,

Chairman

Constitutional Court

Republic of Belarus

8 July 2020

No. D – 1220/2020