Execution of Russian judgments outside
A court or arbitration decision is only of value to a business if it can actually be enforced (otherwise what's the point of it all?). Nevertheless, in practice this can be a challenge, especially when dealing with foreign partners. Clearly, the events of 2022 have had a significant impact. Let's take a look at how the enforcement of Russian awards in the current environment is handled abroad.
A brief study of the enforceability of Russian arbitral and, especially, judicial awards outside the country would be incomplete without taking into account the specific jurisdiction where enforcement is sought. At the same time, despite the fact that many Russian companies are creditors of foreign firms from so-called unfriendly states, the practice is rare. Given these circumstances, we will present some examples that illustrate general trends in this area.
According to the New York Convention, recognition and enforcement of Russian court judgments is still not a myth in most countries. However, foreign judiciaries may interpret the notion of public policy differently, taking into account, among other things, local sanctions. For example, Czech and Ukrainian courts have come to different conclusions regarding the possibility of recognizing ICAC awards rendered in favor of Rosneft after February 2022. The Supreme Court of Ukraine found that the recovery of money in favor of Rosneft violates Ukrainian public policy, taking into account the sanctions imposed by Ukraine against the company in 2021 (Decision of the Supreme Court of Ukraine No. 824/138/21 of 22.12.2022 in case No. 61-16245av21). This may also happen due to violation of contractual jurisdiction and transfer of the dispute in accordance with Article 248.1 of the APC (Exclusive competence of arbitration courts in the Russian Federation in disputes involving persons subject to restrictive measures). According to the general approach, an award rendered by an improper court or arbitration institution constitutes a violation of subpar. “e”, paragraph 1, Article 5, paragraph 1 of the New York Convention, to which many countries, including Russia, have acceded. If there are such violations, recognition and enforcement of the award may be refused.
At the same time, Czech courts, such as the Supreme Court, confirmed the legality of the ICAC award in Rosneft's favor, rejecting arguments that the enforcement of the awards was inconsistent with Czech public policy (Decision of the Supreme Court of the Czech Republic of 17.07.2023 20 Cdo 136/2023-362). The judges noted that the imposition of EU sanctions against Rosneft is not an obstacle for the Czech Republic to enforce arbitral awards in its favor.
There are also cases where arbitral awards made by other Russian arbitration institutions were recognized after February 2022. For example, decisions of the Arbitration Center of the Russian Union of Industrialists and Entrepreneurs (RSPP), which were recognized in England and Wales (information is available at: https://arbitration-rspp.ru/news/17-05-2022/), as well as decisions of the Russian Arbitration Center (RAC) in Uzbekistan (by the Decision of the Appellate Instance of the Judicial Board of Economic Disputes of the Supreme Court of Uzbekistan dated March 2, 2023 in case No. 4-10-2225/540). It should be noted that Uzbekistan is not among unfriendly states.
It is important to take into account the political aspect. Recognition of the decision of the Russian court may be perceived as support of the entire state, especially if it concerns a large and systemically important for the economy foreign business.
In this situation, it is desirable to examine each jurisdiction separately; what country - such and such an order, we can say so now.
We hope that in the near future there will be more relevant practice for a more in-depth analysis.
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David Glickstein, manager. I write articles, looking for interesting information and suggesting ways to use it in practice. I believe that through quality legal analytics, clients come to the law firm, not the other way around. Wouldn't you agree?
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