Recognition and enforcement of foreign judgments and arbitral awards in Russia

1. Recognition and enforcement of foreign judgments and arbitral awards in Russia Roman Zaitsev, PhD, Partner

2. Presentation plan • General overview of the Russian judicial system • Recent arbitration reform in Russia • Main legal sources regulating recognition and enforcement of foreign judgments and arbitral awards • Preconditions for recognition and enforcement • Process of recognition and enforcement

3. Court system in Russia Constitutional Court Supreme Court of Russia Intermediate Courts at subject level (oblastnye, etc.) Arbitrazh (Commercial) Circuit Courts Constitutional Charter courts District Courts (raionnyeigorodskie) Arbitrazh (Commercial) Appellate Courts Justices of the peace Arbitrazh Courts

4. Some features of Russian judicial system • Short terms for consideration of cases • System of “Electronic Justice” • Possibility to participate hearings via video-conferencing system

5. Recent arbitration reform in the Russian Federation The new law on Arbitration in the Russian Federation entered into legal force in September 2016. The main tasks of the reform were: • To reduce the number of unfair actions in this area (to exclude activity of so-called “pocket arbitration institutions”) • To create a modern, transparent and effective system of arbitration justice • To develop cooperation between state courts and arbitration institutions

6. Main international agreements of Russia relevant to enforcement of foreign money judgments • Convention on the Procedure for Resolving Disputes relating to Business Activities of March 20, 1992 • Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters of January 22, 1993 • New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 • Around 30 bilateral agreements on legal assistance in civil matters, including the Agreement between the Russian Federation and the People’s Republic of China on Legal Assistance in Civil and Criminal Matters of June 19, 1992

7. Main legal sources: national regulation • If the debtor and claimant are legal entities, or have sole proprietor status, the enforceability of the money judgment is resolved by state arbitration courts of the first instance in accordance with the RFArbitration Procedure Code. • If the claimant or debtor is a natural person not registered as a sole proprietor, the application for enforcement of the money judgment shall be considered by a court of general jurisdiction at the regional level in accordance with the RF Civil Procedure Code.

8. Preconditions for recognition and enforcement • In accordance with art. 6.3 of the Federal Constitutional Law of the Russian Federation on the Judicial System of the Russian Federation, judgments of foreign courts, international courts and arbitration tribunals are enforceable in the Russian Federation in accordance with international treaties of the Russian Federation. Therefore, since Soviet times and in the Russian Federation today there is a principle that recognizing and enforcing a foreign money judgment in Russia requires an international treaty providing for such enforcement. • At the same time, exceptions can be found in the practice of Russian courts where the courts have held that enforcement of foreign judgments was possible on the basis of reciprocity without an international agreement, although this practice is not uniform.

9. Filing an application seeking recognition and enforcement • Most international treaties concerning enforcement of money judgments do not establish separate terms and procedures for enforcement, so the rules established by national procedural law apply. • In accordance with the RF Arbitration Procedure Code, applications for recognition and enforcement of foreign court judgments or arbitration awards are filed by the party that won the decision with the debtor’s local court, or if the debtor has no address or its address is unknown, local to the debtor’s property. • In accordance with the RF Arbitration Procedure Code, this application also can be filed by way of filing a special form on the official website of the court, and enclosed documents can be also sent in electronic format. * Practical problems connected with direct application on the basis of the Agreement between the Russian Federation and the People’s Republic of China

10. Consideration of the application • According to the RF Arbitration Procedure Code, applications for recognition and enforcement of foreign judgments and foreign arbitration awards are considered in a court session by the judge alone following the rules of the procedure code, unless otherwise provided by an international treaty. • The arbitration court notifies the parties to a case of the time and place of the hearing. Failure of duly notified parties to appear is not an obstacle to consideration of the case. • The arbitration court establishes whether there are any grounds for recognition and enforcement of the foreign judgment or arbitration award by examining the evidence and substantiation for the claims and objections presented in the arbitration court.

11. Grounds to reject an application for recognition and enforcement: national level The RF Arbitration Procedure Code establishes the following grounds for refusal to recognize and enforce the judgment of a foreign state court: • The judgment has not entered into force in the country of origin. • The party against which the judgment was made was not duly notified of the time and place of the hearing, or for other reasons was unable to present its case in court. • The case was in the exclusive jurisdiction of a Russian Federation court in accordance with an international treaty or federal law of the Russian Federation. • A Russian Federation court decision on the same dispute between the same parties and on the same grounds has already entered into force. • The same dispute between the same parties and on the same grounds is before a Russian Federation court in a case that was initiated before the foreign proceedings, or a Russian court first accepted the claim for proceedings in a case between the parties in the same dispute on the same grounds. • The statute of limitations on enforcement of the foreign judgment has expired and has not been reinstated by the arbitration court. • Enforcement of the foreign judgment would be contrary to Russian Federation public order. The RF Arbitration Procedure Code also establishes that an application for enforcement of a foreign arbitration award may be denied on the grounds provided in an international treaty of the Russian Federation, or the federal law on commercial arbitration, or if enforcement of the foreign court judgment would be contrary to Russian Federation public order.

12. Grounds to reject an application for recognition and enforcement: international agreement between Russia and China (art. 20) • The judgment has not entered force or not enforceable. • The case was in the exclusive jurisdiction of a requested party. • The party against which the judgment was made was not duly notified of the time and place of the hearing. • In the requested country a court decision on the same dispute between the same parties and on the same grounds has already entered into force, or the same dispute between the same parties and on the same grounds is before a requested country court, or a decision of a third country in a case between the parties in the same dispute on the same grounds has already been recognized. • Enforcement of the foreign judgment would be contrary to the sovereignty, safety or public order.

13. Court ruling on recognition and enforcement • Having heard the debtor and examined the evidence, the court issues or denies a ruling on enforcement of the foreign judgment. An arbitration court ruling on enforcement of a foreign judgment or award enters into force immediately and may be appealed to the cassation instance within one month. • Rulings by the court of general jurisdiction may be appealed to the higher authority (appellate unit) within 15 days of issuance. • On the basis of the foreign judgment and the valid court ruling on enforcement of that decision, a writ of execution is issued for execution in accordance with the general procedure provided in the law on Enforcement Proceedings.

14. Interim measures in support of foreign arbitration proceedings • The Arbitration Procedure Code provides that provisional measures may be granted upon the application of a party to arbitral proceedings at the location of the arbitral tribunal, or at the location or place of residence of the debtor, or at the location of the debtor's property. • The law enforcement practice assumes that it is allowable for a Russian arbitration court to grant provisional measures at the location of the debtor or its property upon the application of a party to arbitral proceedings regardless of whether the proceedings are in Russia or outside of Russia. • According to the clarifications of the Supreme Arbitrazh (Commercial) Court of Russia, provisional measures under a claim being considered on the merits in a foreign court may be granted by the arbitration court in the Russian Federation if it has effective jurisdiction, namely: at the location of the applicant, or at the location of the monetary assets or other property in respect of which the applicant requests that measures securing the property interests be granted, or at the place of violation of the applicant's rights.

15. Thank you Roman Zaitsev, PhDPartner, Russia Email: roman.zaitsev@dentons.comT: +7 495 644 05 00