ENFORCING FOREIGN COURT JUDGMENTS - PowerPoint Presentation

Slide1

ENFORCING FOREIGN COURT JUDGMENTS:

EXAMPLES/CASESSlide2

Principles of recognition - I

Article 241 Arbitrazh Procedural Code (APC) RF

Recognition and enforcement

Of foreign court judgements on commercial matters

If it is envisaged by:

International Treaty of the RF; or

Federal LawSlide3

Principles of recognition -II

Article 243 (4) APC RF - under no circumstances may a foreign judgement be reviewed as to its substance

THE Court shall determine whether there is any reason for non-recognition or enforcement in accordance with Article 244 APC RF Slide4

Reasons for non-recognition - I

Article 244 APC RF - a judgement shall not be recognised:

(1) If it has not came into legal force;

(2) The defendant (the party against whom the judgement was entered) was not notified in due course;

(3) In accordance with THE international Treaty of the RF the dispute is in THE exclusive jurisdiction of a Russian court;Slide5

Reasons for non-recognition - II

(4) If there is an earlier judgement of a Russian court given in proceedings between the same parties involving the same cause;

(5) If proceedings between the same parties involving the same cause are pending before a Russian court and those proceedings ARE the first to be instituted;

(6) THE Limitation period for enforcement has lapsed;

(7) If such recognition is contrary to the public policy in the RFSlide6

Pan Am Pharmaceuticals Inc (USA) vs Russian Cardiology -I

Non -recognition on the basis of absence of AN international treaty on legal assistance between RF and a relevant foreign state

Pan Am Pharmaceuticals Inc (USA) vs Russian Cardiology Complex

FAS Moscow Region Ruling, 17.11.2004, No KG-A40/10556-04Slide7

Pan Am Pharmaceuticals Inc (USA) vs Russian Cardiology -II

Held: presence of AN international treaty is a mandatory condition of recognition and enforcement by the Russian court

There is no treaty between USA and RF on legal assistanceSlide8

Pan Am Pharmaceuticals Inc (USA) vs Russian Cardiology-III

Russia has not concluded such treaties with all jurisdictions in Western and Central Europe or with the United States or Canada

Restrictive approach of Russian courts hindered the development of good business relations between Russian and Western companies, as the latter often fear that they may be unable to protect their interests by seeking the requisite legal remedies in RussiaSlide9

Yukos Case - I

BNP Paribas SA and others v Yukos Oil Company, FAS Moscow Region Ruling of 02/03/2006

The High Court of Justice Chancery Division (UK) judgement of 24/06/2005

The sum claimed by the Banks was advanced pursuant to a Loan Agreement dated 23 September 2003

Event of Default: included any event or circumstance which had or might reasonably be expected to have a material adverse effectSlide10

Yukos Case -II

October 2003, following an inquiry into Russian oil companies, the defendant’s

chief executive officer was arrested.

The Russian tax ministry fixed the defendant’s

tax liability for 2000 at $US 3.3bn.

15 April 2004, THE defendant’s assets were frozen pursuant to a freezing orderSlide11

Yukos Case - III

29 June 2004, judgment was given against the defendant for the tax due in 2000; process of execution of that judgment followed

Summary judgement application (without full hearing)

Held: the defence had no prospect of successSlide12

Yukos Case -IV

UK court judgement was recognized and enforced in Russia in the absence of a treaty

On the basis of the 1994 Agreement on Partnership and Cooperation between Russia and the European Union,

Which was recognized as a treaty on reciprocal legal assistance for the purposes of Russian procedural legislationSlide13

Recognition on the basis of Federal Law

“Reciprocity and Comity” principle (comitas gentium)

It is not contained in the APC RF

But it is contained in the Federal Law “On Insolvency (bankruptcy)”

Reference to a Federal Law in article 241 APC allows courts to apply RP principle in bankruptcy proceedingsSlide14

Generally recognised Principles of International Law

Reciprocity

Comity (mutual recognition by nations of the laws of other nations)

Contained in Section 15 (4) of the Constitution RFSlide15

Rentpool B.V. vs OOO “Podjemniye Technologii” 2009 -I

June 2009 the Moscow Regional Arbitrazh Court ruling

7 December 2009 - supported by the Supreme Arbitrazh Court RF (No VAS-13688/09)

Judgement issued by a Dutch district court was recognized and enforced on the basis of reciprocity and comity, deciding to uphold these generally recognized principles of international law despite the fact that Russia has no treaty on reciprocal recognition of judgments with the Netherlands Slide16

Rentpool B.V. vs OOO “Podjemniye Technologii” 2009 -II

Held: formal refusal by a Russian court to recognize (enforce) a foreign court judgement because it found no grounds to do so in Russian procedural legislation

Would constitute a direct violation of the Constitution and of international conventions to which Russia is a partySlide17

Rentpool B.V. vs OOO “Podjemniye Technologii” 2009 - III

The recognition and enforcement of Russian court judgements in the Netherlands Constitutes unconditional grounds for recognizing and enforcing Dutch court judgements in Russia On the basis of reciprocity and comity in international lawSlide18

Rentpool B.V. vs OOO “Podjemniye Technologii” 2009 - IV

This is the first time that recognition and enforcement have been successfully sought on these grounds for a judgement from a non-treaty country

It is still unclear what would have happened if the Counsel for the applicant had not provided evidence on enforceability of Russian courts judgements in the NetherlandsSlide19

Rentpool B.V. vs OOO “Podjemniye Technologii” - conclusion

The absence of a treaty between Russia and a foreign country no longer constitutes unconditional grounds for a court to refuse to recognize and enforce such decisions in Russia

Still important to persuade a court that there is a practice of recognition and enforcement of Russian courts’ judgements in a relevant countrySlide20

“Public policy” (PP) reason for non-recognition -I

Universal reason to set aside orders for the enforcement of judgements

No legal definition

PP is open-textured and encompasses a broad spectrum of different actsSlide21

“Public policy” (PP) reason for non-recognition - II

Supreme Court of RF definition

Ruling of 27 May 2003 Case No 5G03-39Slide22

“Public policy” (PP) reason for non-recognition - III

“

Public policy” is defined as fundamental provisions regarding public, economic and social foundations of a society established by the state; AND

Fundamental principles of the legal systemSlide23

Moscow National Bank Ltd. (London) vs. GU

“

E

ye microsurgery“

- I

October 2002 the arbitrazh court ruling recognising the UK court decision

This ruling was revoked twice by the Federal Arbitration Court of the Moscow Region and finally was adjourned until a decision was reached on the Russian court case on the validity of the guarantees given by

GU

“

E

ye microsurgery“

to Moscow National BankSlide24

Moscow National Bank Ltd. (London) vs. GU “

E

ye microsurgery“

- II

August

2003 -

the Russian court decided the case on the validity of the guarantees given by

GU

“

Eye

microsurgery“

to Moscow National Bank and held guarantees void

Guarantees did not satisfy the mandatory provisions of the Russian lawSlide25

Moscow National Bank Ltd. (London) vs. GU “

E

ye microsurgery“

- III

The third ruling on enforcement of the UK court decision

In this ruling the court

refused to recognise and enforce the UK court decision in Russia as based on a void contract (guarantees issued by

GU

“

E

ye microsurgery“

and held void by the Russian court)

Slide26

Moscow National Bank Ltd. (London) vs. GU “

E

ye microsurgery“

- IV

The

arbitrazh court held that enforcement of the decision of the UK court based on void documents would therefore constitute a breach of Russian constitutional and legal order and would be against public policy Slide27

“Improper notice” reason for non-recognition - I

The defendant (the party against whom the judgement was entered) was not served with a document which instituted the proceedings in due course so as to prevent him from preparing a defence

the ground for non-recognition most frequently used by a party against whom a foreign judgment is enteredSlide28

“Improper notice” reason for non-recognition

- II

In some cases Russian courts take evidence of service of documents issued by a foreign court as

acceptable evidence

of notice

In other cases Russian courts refuse to consider such service of documents as acceptable evidence (for instance, the case OOO “Jun Shen” vs. OOO PK “Forest resources”)

Reliance on “improper notice”

ground may be successful

Slide29

“Improper notice” reason for non-recognition

- III

Service made by way of publication in the media is

not

proper notice

There are a number of cases that support this positionSlide30

Presidium of the Supreme Arbitration Court RF, Information letter No. 96 of 22.12.2005 - I

A Polish entrepreneur applied to the Russian court for enforcement of a Polish court decision to recover debt from a Russian company

The Russian court established that the documents were served by post at the last known address of the company in Russia Slide31

Presidium of the Supreme Arbitration Court RF, Information letter No. 96 of 22.12.2005 - II

Held:

The documents were not served personally on the Russian party

As a result of such [improper] notice the Russian party

could not

attend proceedings by a foreign court and arrange for its defence

Posting a notice to a party at its last known [place of business] address is improper noticeSlide32

Lapse of limitation period for enforcement

Article 246 of the

Arbitrazh Procedural Code (APC) RF

Application for a foreign court judgment enforcement shall be filed within 3 years from the date it becomes effective

Justifiable reasons can be given for a failure to apply in time

This period can be extended by a courtSlide33

Thank you!

MGAP Attorneys at law

Moscow - London 2010

by Tatiana Menshenina, Natalia Kalinina, Alexander Yurchik