Russian cases being litigated in London tripled between 2008 and 2009. White & Case's David Goldberg, Artem Doudko and Mohamed Mahayni ask whether this is a temporary fad or a long-term trend

In recent years, it seems that alongside having the yacht and buying a Mayfair property, the latest must-do activity for billionaire Russians and their businesses has been to participate in complex legal disputes in London through either international arbitration or litigation in the Royal Courts of Justice. This raises the question of whether this is a temporary fad or part of a long-term trend.

There is no doubt that the London legal landscape, including both the High Court and London Court of International Arbitration (LCIA), has always been popular for the resolution of disputes involving parties and/or interests from abroad and, in particular, from the CIS states, including Russia. Research into figures from both courts appear to show a positive trend in terms of an increase in Russian-related disputes over time.

This popularity saw a sharp peak last year. In 2009 alone 54 cases involving at least one Russian party were commenced at the LCIA, tripling from the previous year. In the vast majority of these arbitrations, the parties had opted for English law to govern both the substance of their contracts and the procedure of their dispute.

In the High Court, the figures are equally revealing. A review of the list of cases heard in 2009 indicates that at least 21 cases involved at least one Russian party in that year alone. Of those cases, in at least 13 the claimant/s were Russian.

Evident in these figures is a considerable level of anglophilia among Russians' choice of venue for resolving their disputes. Though the 2009 figures may be partially explained by the general rise in disputes that occurred following the perceived worst part of the recession, the number of cases since 2007 involving at least one Russian party are, and remain, significant. From 2007 to date, just under 10% of arbitrations commenced with the LCIA involved a Russian party. In the same period, a yearly average of at least 13 cases were commenced in the High Court. The above figures are not exact, but represent a conservative estimate based on first-hand research into the matter. One of the limitations of the undertaken research arises from the fact that at times Russian parties are involved in disputes through special purpose vehicles located in Cyprus, British Virgin Islands or other more exotic locations.

Accordingly, one can say with confidence that the actual number of cases in London involving Russian parties is greater than the figures quoted above. An educated guess can be made as to the factors behind this phenomenon. When commencing a claim, litigants will usually choose the courts of their adversaries' usual place of residence or where their assets are located (to assist with eventual enforcement, if necessary). If that place is England, they will go to the High Court. But if it is elsewhere, the reasons for seeking to bring a claim in the English courts are less obvious, given that the English courts generally will not accept jurisdiction on trivial grounds.

Several commentators have cited confidence in English law and the English courts as a likely factor influencing the decision to bring a claim in the English courts. However, the UK and Russia do not have a bilateral treaty in place for the enforcement of judgments, and Russian courts are only recently exhibiting a greater preparedness to enforce foreign court judgments. Some commentators therefore suspect that the publicity attracted by litigious disputes plays a role in the choice by Russians to litigate in England, in order to cast doubt upon and discredit adversaries.

As far as the law is concerned, the English courts have exhibited a somewhat elastic approach in the exercise of their discretion to accept jurisdiction. In Cherney v Deripaska, the commercial court accepted jurisdiction based in part on the claimant's contention that, at a meeting at the Lanesborough Hotel in London, he had orally agreed with Deripaska that any disputes under their contract would be dealt with in England under English law. The decision was reached despite Deripaska having a minimal connection with England and Russia appearing to be a more natural forum for the dispute.

In OJSC Oil Company Yugraneft v Abramovich, a case against the well-known Russian billionaire Roman Abramovich, the commercial court was unsympathetic towards the claimant. Abramovich's assets and links to England are well-publicised but were not enough to establish that he was domiciled in England. The court did not accept that there were reasons which, despite this fact, would allow it to accept jurisdiction.

For Russian companies and nationals uninterested in making their grievances known to the public, or for those put off by the risk of having their claims dismissed by the High Court based on lack of jurisdiction, international arbitration is the preferred method of dispute resolution.

If parties agree to submit their dispute to international arbitration, they can expect that an arbitral award will be enforceable in the UK or in Russia or in most other countries more readily than a court judgment – both the UK and Russia are party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.

The LCIA statistics evidence that Russians are comfortable with having their disputes determined according to English law and arbitrated according to English procedural rules in London. The reasons for this may include numerous tactical considerations that would require a treatise on the subject to explain. Apart from having confidence in English law, Russians entering into contracts with foreign parties also appear to regard London as not only a neutral forum for arbitration, but one which has a strong legal history, sophisticated legal institutions and advisers on whom to rely. This, at least in part, explains the trend in choosing the LCIA.

It is notable, for example, that the LCIA is often well acquainted with the nuances that exist in jurisdictions at the stage of the recognition and enforcement of awards. Historically, Russian courts, for instance, have been known to be reluctant in recognising notification by fax as evidence of due service on the respondent for the purposes of the New York Convention. In arbitrations involving Russian or certain other CIS respondents, therefore, notifications that the LCIA would otherwise send only by fax are also sent by courier. The familiarity with parties' expectations as to issues of due service in Russia makes LCIA-administered arbitration a more attractive option than litigation.

Another explanation of the rise in Russian-related disputes in England may be linked to Russia's economic growth (even despite the global financial crisis). Russia has, in the last decade, regained a position on the list of the world's 10 largest economies and is one of the European Union's most important trading partners. In 2007 approximately one quarter of all foreign direct investment into Russia was from the UK. Russia's economy has seen a significant contraction this year as a result of the recession, but this has not slowed the pace at which Russian deals are being closed or disputes being fought.

The Russian domestic legal system is catching up with the legal needs of its business community, and recently several steps have been taken in the right direction. For example, there have been amendments made with regards to domestic company laws. In addition, the highest arbitrazh (commercial) court in Russia has started publishing its decisions online, providing for greater transparency and consistency in legal decisions in commercial disputes, as the electronically-published decisions are publicly accessible.

Finally, the Russian commercial courts are introducing an electronic filing/communications system, which will allow registered advocates to submit documents and communicate with the courts through electronic means. Despite these developments, for now the provision of English law and an English dispute resolution provision seems to remain the preferred choice for transactions involving Russian parties (where such provisions are possible).

Furthermore, in recent years the English courts have been used by Russian parties not only more often, but on wider-ranging issues, and it will be interesting to see if this particular trend also continues or if the use of the English courts and arbitral institutions will generally remain, for Russian participants, an arena for the resolution of commercial disputes.

A further interesting factor is that an increase in London of the number of disputes involving Russians, and commercial activity involving Russians generally, has been matched by an increase in the Russian-speaking business community in London supporting this workload. Russians in the City, a private and invitation-only members club established in 2002 for Russian-speaking professionals based in the UK, has a membership including some 200 Russian-speaking lawyers practising in London. It is further estimated that the total number of Russian-speaking lawyers in London today is in fact 300-400. Clearly, a demand for their Russian language skills and expertise is growing.

The links between the legal communities in Russia and the UK are established and constantly developing through organisations such as the Anglo-Russian Law Association (ARLA). One of ARLA's upcoming high-profile events will be Russian Commercial Law Week taking place in London during 15-19 November 2010 when a group of Russian judges, academics and lawyers will visit London for a series of meetings, seminars and a conference.

David Goldberg is a partner and Artem Doudko and Mohamed Mahayni are associates at White & Case.