From Russia with Love: Lessons of the Noga arbitration case

In the context of globalisation, free market economy and growing volume of transnational trade, the settlement of disputes between parties engaged in commercial activities across national boundaries has become more complex than ever before. In this respect, the development and growing significance of international commercial arbitration over the last thirty years tries to satisfy the always new and challenging practical needs of the international business community.
Parties to international business transactions tend to favour arbitration as a speedy, flexible and secure method of dispute resolution. Nevertheless, international arbitration bears its own risks and loopholes.
Within the arbitration world, arbitration proceedings involving a state as a party stand for a very specific category . Indeed, history has demonstrated that states have a natural tendency to retain their sovereignty, particularly their judicial sovereignty. This tendency does not automatically disappear even when states agree to enter in dispute resolution mechanisms like arbitration. Moreover, states' expectations differ from those of private parties who resort to arbitration. Indeed, for private parties the resort to arbitration is tantamount to an escape from the strict requirements of litigation, whereas for states it is tantamount to a loss of liberty and power . As a matter of fact, the specific status that a state may claim at every stage of the arbitral process, be it prior to the arbitration proceedings or subsequent to the rendering of an award, generates a whole range of complications that often endanger the effective resolution of a given dispute.
One of the traditional dangers of arbitration proceedings involving a state party is the risk of claims of immunity on the part of the latter. The claims of immunity can appear either at the beginning of the arbitral process in the form of a claim of immunity from jurisdiction, or at the very end of the arbitral process in the form of a claim of immunity from execution of an award. Nevertheless, in order to preserve as much as possible the effectiveness of arbitration proceedings involving a state as a party, recent years have seen major innovations. As authors noted, "in the field of arbitration of state contracts, the trend has increasingly been for the state-party to be treated no differently than its private co-contractor. Indeed, as states become more frequently involved in commercial activities, special regimes for states and state-owned parties often appear incompatible with the requirements of international trade" . In short, the aim is to de-politicize the contractual relationship and bar the state-parties from resorting to dilatory tactics aimed at interfering with the arbitral process.
Despite this evolution, arbitration proceedings involving a state as a party remain risky. Indeed, in addition to have the immunity tool, states appear as prone to resort to "disruptive manoeuvres" that can bring the arbitration proceedings to an end or result in the setting aside of the arbitral award.
In this respect, the noga case perfectly illustrates the complex legal nature of arbitration cases involving a state as a party and all the potential techniques a state might resort to in order not to abide by an unfavourable award. The decision rendered by the Second Circuit Judges in the noga case is also representative of the trend referred to above, which consists in mitigating the various obstacles endangering the effectiveness of arbitration proceedings involving states, and here more particularly, the risk of being left with an unenforceable award against one of them.