Unlike the New York Convention 1958, which provides a straightforward procedure for enforcement of arbitration awards in another signatory state, there is no single unifying international treaty or convention when it comes to court judgements. Enforcement of foreign judgments is often covered by bilateral or multilateral treaties which vary from country to country. However many judgements are being enforced on the bases of reciprocity principle. In essence, an English court judgment can and should be recognised in Russia with relative ease.
Background of the case
Avanen Holdings Limited applied to the Arbitrazh Court of Moscow for the recognition and enforcement of the judgment of the High Court of Justice dated 05.07.2019 in case No CL-2019-000205 against Verden Capital Limited.
The Arbitrazh Court of Moscow granted the application with a ruling dated 17.07.2020. The High Court of Justice of England and Wales ordered the recovery from Verden Capital Limited of an amount owed to Avanen Holdings Limited in the amount of $161,789,441.21, interest of $18,944,965.57 and £72,000 in costs.
As Verden Capital Limited had not paid, Avanen Holdings Limited applied to the court for recognition and enforcement of the foreign judgment.
According to p. 1 Art. 241 of the Arbitrazh Procedure Code of the Russian Federation foreign court decisions and foreign arbitral awards are recognised and enforced in the Russian Federation, if the recognition and enforcement of such is stipulated by an international treaty of the Russian Federation and federal law. The United Kingdom and the Russian Federation have not concluded any such treaty. However, the Arbitrazh Court considered that the Russian Federation is a party to numerous international conventions and agreements that provide for the rights of individuals to a fair and public hearing by an independent and impartial court. Thus a foreign court decision may be recognised and enforced in the territory of the Russian Federation on the basis of an international treaty, in this case – the 1994 Partnership Agreement between the European Union and the Russian Federation.
Irrespective of any international treaties or federal laws, a foreign court decision may be recognised and enforced in the Russian Federation on the basis of generally recognised principles of international law – the principles of reciprocity and international comity. In Russian substantive law, the principle of reciprocity is reflected in Article 1189 of the Russian Civil Code. In the substantive law context the principle of reciprocity should be understood as a rule that foreign law is subject to reciprocal application in order to develop cooperation between states.
In view of the above, the Arbitrazh Court of Moscow found no reasons why the decision should not be recognised. The defendant filed an appeal to the Arbitrazh Court of the Moscow Region, which was rejected on 29.09.2020. No further appeal to the Russian Supreme Court was attempted.
This ruling is in line with a number of previous decisions in respect of judgement rendered by the High Court of England and Wales (for example in the matters A41-32587/2014, A23-5044/2014 and A40-202676/2015), so with respect to decisions from the United Kingdom, one can safely say that there is established case-law about the recognition and enforcement in Russia.
And recently, there have also been similiar decisions in respect of Dutch and Belgian judgements, which we have commented in our Blog:
The reasoning of the Russian courts in respect of English, Dutch and Belgian decisisions would also apply to German judgements, however, there is no positive practice of recognition of Russian judgements in Germany, so one side needs to make the first step to establish the principle of reciprocity.