The general increase of commercial disputes caused by the global economic crisis has resulted in growth of litigations involving debtors domiciled or with assets abroad. Though there are certain similarities between countries in the enforcement of judgment procedures, the creditor has to take state differences into account as well.The thorough analysis of local enforcement particularities helps to avoid risk of judgment being unenforceable and saves time and money spent on litigation Having substantial experience in this area ALRUD lawyers have prepared the guide observing the key features of cross-border money enforcement rules applying in Russia. 

Foreign judgment 

 

1                    The question of whether a foreign judgment can be recognized and enforced in Russia is one which frequently arises out of international business activity somehow related to Russian jurisdiction.

 

2                    Russian laws primarily rely on international treaties regulating enforcing foreign judgments matters. As a general rule Russian courts are not competent to recognize and enforce a foreign judgment in the absence of concluded treaty with a state of origin of a judgment according to the Russian civil procedure laws which state that ‘’Russian courts can enforce a foreign judgment if recognition and enforcement of such judgments provided by international treaty to which Russia is a party’‘. In addition to international treaties the procedure of enfocement of foreign judgments is also regulated by the Russian civil procedure rules.

 

2.1              Up to the present time Russia is not a party to Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters. European Council Regulation No 44/2001 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters that substituted Brussels Convention is also not applicable to Russian jurisdiction as far as Russia is not a member-state of European Community.  
However, Russia is the party of more then 30 bilateral treaties on legal assistance in civil and related matters which provide the rules of enforcement of foreign courts’ judgments within the jurisdiction of Russia. Such treaties have been concluded with CIS countries, several Asian and African states (like China and Mali) and with the most of Eastern Europe countries. Unfortunately Russia has not concluded such treaties with Western Europe states as well as the U.S., and therefore it is hardly possible to enforce in Russia judgments awarded by state courts of the said countries.

2.2               A foreign court judgemnt may be also enfoced on the bases of reciprocity principle. However the only law adopted in Russian and contained relevant rules on reciprocity is the Law On Insolvency dated October 26, 2002. Consequently its provisions can be referred only to judgments awarded in insolvency matters – such judgments may be recognized and enforced in Russia based on the concept of reciprocity. 

There is also some occasional judicial practice regarding reciprocity principle, e.g. in some cases it was followed by Russian courts in spite of it was not provided by law. However this practice is very inconsistent, and strictly speaking does not have support in the Russian civil procedural law.

            
                              2.3               In case when there is no a relevant treaty, federal law and reciprocity is not stated an applicant retains procedural right to file a petition to enforce a foreign judgment. Nevertheless such a petition obliges a state court just to review it and does not ensure that this petition will be granted and foreign judgment will be enforced. 
 

3                    Russian laws as well as bilateral treaties on legal assistance in civil and related matters set forth the following grounds for refusal of recognizing and enforcing of foreign judgments:

 

3.1               foreign judgment has not come into force according to lex fori principle in the territory of the relevant foreign state

 

3.2               the party was not timely and properly notified of the date and place of hearing of the case

3.3               a foreign court tried the case has not breached the rules of jurisdiction provided by the relevant international treaty

3.4               there is an existing litigation or it has been awarded a judgment come into force by Russian

3.5               court within a dispute between the same parties, on the same subject and on the same grounds

3.6               limitation period is over pursuant to laws of at least one state which is a party to a treaty on legal assistance and it cannot be restored by Russian court  

3.7               foreign judgment contradicts to Russian public order

Foreign arbitral awards

1.                   Russia is a party to the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards which requires courts of member-states to enforce awards made by arbitration tribunals located within their jurisdiction. In addition to that pursuant to Russian reservation with regard to awards made in the territory of non-contracting states Russia applies the Convention only to the extent to which those states grant reciprocal treatment.

2                    Foreign arbitral awards shall be enforced in Russia also by state courts in a similar order as foreign judgments. A party in favour of whom an award was made files a petition with a proper copy of arbitral award attached to court at the centre of debtor’s location (as a general rule) wherein it requests to enforce an award.

 

3                    Further to the aforesaid grounds for refusal of recognizing and enforcing of foreign judgments Russian laws provide some in respect of foreign arbitral awards:

 

3.1               request of the party against whom an award was invoked if that party furnishes to Russian state arbitration court proof that there are:

 

-          defects of arbitration clause, in particular incapability of the signatory;

 

 -          failure to timely and properly notify of the date and place of the case;

 

-          the bench or arbitration proceedings contradicted to arbitration clause or agreement;

 

-          an award has not become binding for the parties, was rescinded or its execution was ceased by the court made an award     

 

 

3.2                Ascertainment by the court of the following facts:

-          subject matter of arbitration proceedings in arbitrational tribunal cannot be subject to state arbitration proceedings;

 

-          recognizing and enforcing of an award will contradict to public order of Russia.