An individual entrepreneur (the “IP”) recently signed an agreement with the branch of a closed joint-stock company, which was represented by the director acting under the power of attorney. The agreement contained an arbitration clause under which the IP subsequently filed for arbitration. The arbitration court partially satisfied the IP’s claim; however, the company did not voluntarily execute the decision. Therefore, the IP petitioned to the state commercial courts for an enforcement order for the execution of the arbitration award.

The court of the first instance ruled that the director of the branch of the closed joint-stock company did not have the authority to represent the interests of the company in arbitration. Therefore, the IP was denied receipt of the enforcement order, a decision which the court of cassation upheld.

However, the Presidium of the Supreme Arbitration Court of the Russian Federation reversed the rulings of the lower courts, indicating that if a party is authorised to enter into an arbitration agreement and oversee its fulfilment, then this party is also authorised to receive notification of arbitration proceedings and participate in a hearing. Consequently, notifying the branch director was sufficient. This legal position is grounds for reviewing similar judicial acts.

[Decree No. 18613/10 of the Presidium of the Supreme Commercial Court of the Russian Federation, dated 25 October 2011, on case No. А-32-41312/2009]