RU

Recognition and enforcement of Russian court judgments and arbitral awards in the former Soviet Union states

September 4, 2021

The establishment and development of a common economic space between the states of the former Soviet Union has led to an increase in cross-border disputes. Current experience shows that recognition and enforcement of foreign court judgments and arbitral awards are among the top problems which business and professional communities participating in cross-border disputes face. To a certain extent, this issue is the cornerstone for achieving a fair dispute resolution since all previous proceedings may lose any purpose without recognition and enforcement. This article focuses on the procedure of recognition and enforcement of Russian court judgements and arbitral awards in the former Soviet Union states, save for the Baltic countries (i.e. Latvia, Lithuania and Estonia).

LEGAL FRAMEWORK

Generally, international practice knows two models of recognition and enforcement of court judgements: a contractual model and a model based on the principle of reciprocity. The contractual model requires an international treaty (bilateral or multilateral) between the state of adjudication and the state of enforcement to recognize the authority of the foreign court to resolve the dispute with legal implications in the contracting states. The principle of reciprocity holds that despite the absence of a treaty between the state of adjudication and the state of enforcement, court judgements may be still recognized and enforced if there is evidence of legal mutuality between the states. In Russia, both models may apply.

To date, the Russian Federation is a party to a complex set of multilateral, international treaties with the states of the former Soviet Union on recognition and enforcement of court judgements and arbitral awards. These include:

  • the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (the "New York Convention");[1]

  • the Kiev Treaty on the Procedure of Settling Disputes related to Economic Activity of 20 March 1992 (the "Kiev Treaty");[2] and

  • the Minsk Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters of 22 January 1993 (the "Minsk Convention").[3]

In practice, the complicated structure of the contractual relations may lead to confusion and misunderstandings on how these treaties connect with each other and which treaty applies in a particular situation. Starting with what is relatively easy, the New York Convention applies to recognition and enforcement of arbitral awards, while the Kiev Treaty and the Minsk Convention provide for recognition and enforcement of court judgements. The interrelation between the Kiev Treaty and the Minsk Convention was considered by the Economic Court of the Commonwealth of Independent States. According to the Ruling of the court No.01-1/2-06 of 21 February 2007, the Kiev Treaty and the Minsk Convention have different subjects of regulation and apply independently. The Kiev Treaty regulates recognition and enforcement of court judgements related to economic disputes, while the Minsk Convention applies to civil, family and criminal cases.

In addition to the multilateral, international treaties, the Russian Federation has entered into a number of bilateral treaties similarly regulating inter alia the issues of legal assistance, and recognition and enforcement of court judgements. Currently, the Russian Federation is a party to legal assistance treaties providing for recognition and enforcement of court judgements with Azerbaijan, Belarus, Georgia, Kyrgyzstan and Moldova. However, how do they interrelate with the multilateral treaties? According to the general principle of international public law, bilateral treaties on the same matters will prevail since they reflect specifics of relations between the contracting states to a greater extent than multilateral treaties. However, in the case of recognition and enforcement, it is not that simple. In order to resolve the conflict between multilateral and bilateral treaties properly, the type of relations regulated by a bilateral treaty will matter. For example, the Treaty on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters of 22 December 1992 between Azerbaijan and the Russian Federation applies to relations arising from civil, family and criminal cases, while the Treaty on the Procedure of Reciprocal Enforcement of Judicial Acts of the Arbitrazh Courts of the Russian Federation and Economic Courts of the Republic of Belarus of 17 January 2001 between Belarus and the Russian Federation applies in the area of economic disputes. Thus, the treaty with Azerbaijan will have priority over the Minsk Convention, while the treaty with Belarus will prevail over the Kiev Treaty. Accordingly, the treaty with Azerbaijan does not affect the issues regulated by the Kiev Treaty and the treaty with Belarus has no impact on issues regulated by the Minsk Convention.

Despite the existing contractual relations between the Russian Federation and the states of the former Soviet Union, the principle of reciprocity still remains relevant. As an example, the principle applies to recognition and enforcement of the court judgments on bankruptcy of individuals and legal entities since there is no treaty regulating this specific area. Russian courts recognize reciprocity between the Russian Federation and Belarus in bankruptcy cases,[4] while reciprocity between Azerbaijan and the Russian Federation is not considered to be yet established.[5] Reciprocity between jurisdictions is not assumed in the Russian courts and should be proved in each particular case.

FILING APPLICATION

The Kiev Treaty and the New York Convention suggest that an application on recognition and enforcement should be submitted in the state where recognition and enforcement is sought. In contrast, the Minsk Convention additionally provides for an option to file an application through a court of first instance which issued the judgment. In all cases, the competent court to consider the application is determined in accordance with the law of the state where recognition and enforcement is sought. The list of documents to be attached to the application is set out in the table below.

New York Convention

Kiev Treaty

Minsk Convention

A duly authenticated original award or its duly certified copy

A duly certified copy of the judgment

An original judgement or its duly certified copy

A duly signed arbitration agreement (an agreement with an arbitration clause) or its duly certified copy

An official document confirming the judgement has become effective, unless this is evident from the judgement

An official document confirming the judgement has become effective or it is subject to enforcement before it becomes effective, unless this is evident from the judgement

A duly certified translation of the arbitral award and the agreement into the language of the state where the recognition and enforcement is sought

Evidence of notification of the other party about the process

Evidence of notification of the other party which did not participate in the process and proper representation of the other party in the process in case of procedural legal incapacity of the other party

An enforcement document

A document confirming a partial performance of the judgement at the time of its delivery

A document confirming agreement of the parties on jurisdiction of the court

A certified translation of the application and the attached documents into the language of the state of enforcement or into Russian

As opposed to the New York Convention and the Minsk Convention, under the Kiev Treaty all documents are provided in the language of the state where the judgement is made or in Russian.

GROUNDS FOR REFUSAL

The New York Convention contains the broadest list of grounds for refusal of recognition and enforcement. There are 3 main groups of such grounds:

violation of rights of a party during the arbitration proceedings (e.g. incapacity of a party, failure to give proper notice of the appointment of the arbitrator or of the arbitration proceedings, the party was otherwise unable to present the case);

lack of authority of the arbitral tribunal to consider the dispute (e.g. invalidity of the arbitration agreement under its governing law or the law of the country where the award was made if there is no governing law, failure to comply with provisions of the arbitration agreement in relation to the composition of the arbitral tribunal or the arbitral procedure or the law of the country where the arbitration took place if there are no such provisions in the arbitration agreement, or inability of the dispute to be settled by arbitration under the law of the country where recognition and enforcement is sought); and

flaws of the arbitral award itself (e.g. the award deals with a dispute not contemplated by or not falling within the terms of the arbitration agreement, it contains decisions on matters beyond the scope of the arbitration agreement, it has not yet become binding, has been set aside or suspended in the country in which, or under the law of which, the award was made, violation of public policy).

By contrast to the New York Convention, the Kiev Treaty and the Minsk Convention include relatively shorter lists of grounds for refusal of recognition and enforcement. Under the Kiev Treaty, the court refuses to recognize and enforce a judgement if:

1.     there is already an effective judgment issued by a court in the state where the enforcement is sought in relation to a dispute between the same parties, on the same matter and the same grounds;

2.     there is already a recognized judgment of an authorized court from another state in relation to a dispute between the same parties, on the same matter and the same grounds;

3.     the dispute is considered by a court which is not authorized to do that under the Kiev Treaty;

4.     the other party was not notified of the proceedings; and

5.     the 3-year limitation period has expired.

The Minsk Convention permits refusal to enforce if:

1.     under the law of the state where the judgement is made the judgement has not become effective or not subject to enforcement yet, unless the judgement is subject to enforcement before it becomes effective;

2.     the defendant was not notified properly and did not participate in the proceedings;

3.     there is already an effective judgment issued by a court in the state where the recognition and enforcement is sought, or an initiated procedure in the same state, or a recognized judgment of a court from another state, in each case in relation to a dispute between the same parties, on the same matter and the same grounds;

4.     under the terms of the Minsk Convention or the law of the state where the recognition and enforcement is sought, only courts of that state are authorized to consider the dispute;

5.     there is no document evidencing agreement of the parties to refer disputes to the relevant court; and

6.     the limitation period for enforcement in the state where the enforcement is sought has expired.

In practice, however, the lists of grounds for refusal under the Kiev Treaty and the Minsk Convention are not exhaustive. The procedural codes of the post-Soviet states contain provisions allowing refusal to recognize and enforce a judgment if the court in that state finds that enforcement of the foreign court judgment may breach its public policy (e.g. Article 465.1.5 of the Civil Procedure Code of Azerbaijan, Articles 255 and 256 of the Economic Procedure Code of Uzbekistan, Article 244(1) of the Arbitrazh Procedure Code of the Russian Federation etc.). Violation of public policy appears to be one of the most common grounds for refusal of recognition and enforcement, along with violation of the requirements for notifying the parties. The concept of public policy is broadly interpreted by courts in the states which leads to some unpredictability of recognition and enforcement of court judgments and arbitral awards.

Summarizing, there is an extensive set of rules in relation to recognition and enforcement of Russian court judgements and arbitral awards in the states of the former Soviet Union. However, the procedures do not guarantee an effective performance of obligations and protection of violated rights in all cases. There are still challenges and uncertainties which a claimant may face.

Vyacheslav Horovsky,
Managing Partner,
GRATA International, Moscow


[1] All states of the former Soviet Union, save for Turkmenistan, are parties to the New York Convention.

[2] Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Russian Federation, Tajikistan, Turkmenistan, Ukraine and Uzbekistan are parties to the Kiev Treaty.

[3] Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russian Federation, Tajikistan, Turkmenistan, Ukraine and Uzbekistan are parties to the Minsk Convention.

[4] Ruling of the Arbitrazh Court of the Voronezh Region No. А14-10699/2011 dated 28 December 2011.

[5] Resolution of the Arbitrazh Court of the Moscow District No. Α40-185979/2017 dated 8 November 2018