Dmitry Dyakin, Evgeny Raschevsky, Dmitry Kaysin, Maxim Bezruchenkov and Veronika Lakhno, Egorov Puginsky Afanasiev & Partners
This is an extract from the first edition of GAR’s The Guide to Challenging and Enforcing Arbitration Awards. The whole publication is available here.
Applicable requirements as to the form of arbitral awards
Applicable legislation as to the form of awards
1 Must an award take any particular form (e.g., in writing, signed, dated, place, the need for reasons, delivery)?
An applicant must submit an original award or a certified copy thereof. An award must be rendered in writing and must contain the date and place of its rendering. An original award must be signed by all arbitrators (or by a sole arbitrator).
According to Article 237(4) of the Commercial Procedure Code of the Russian Federation (the CPC) and Article 35 of the Law of the Russian Federation on International Commercial Arbitration (the ICA Law), a certified copy of an arbitral award shall be attested by a permanent arbitration institution (if any) or shall be certified by a notary (for an ad hoc arbitration).
Applicable procedural law for recourse against an award
Applicable legislation governing recourse against an award
2 Are there provisions governing modification, clarification or correction of an award?
Under Article 33 of the ICA Law, any party may request an arbitral tribunal to correct or clarify an award, to give an interpretation of a specific point or part of an award within 30 days of receipt of the award. If an arbitral tribunal considers the request to be justified, it shall make the correction or give the clarification within 30 days of receipt of the request.
Moreover, any party may request an arbitral tribunal to make an additional award as to claims submitted in arbitral proceedings but not resolved in an award, within 30 days of receipt of the award. If an arbitral tribunal considers the request to be justified, it shall deliver an additional award within 60 days. An arbitral tribunal may correct any of its errors on its own initiative within 30 days of rendering an award.
Appeals from an award
3 May an award be appealed to or set aside by the courts? If so, on what grounds and what procedures? What are the differences between appeals and applications for set-aside?
Courts in the Russian Federation are not empowered to hear appeals from arbitral awards. Awards are immune from judicial review on the merits or on the point of Russian law that applied to the merits of the dispute. At the same time, Russian courts can set aside arbitral awards in a limited number of cases within the procedure under Chapter 30 of the CPC.
Article 233 of the CPC provides that an award can be set aside if any of the following grounds exist:
- a party to an arbitration agreement was under some incapacity or the agreement was not valid under the applicable laws;
- an award deals with disputes falling outside an arbitration agreement;
- the composition of an arbitral tribunal or an arbitral procedure was not in accordance with the valid agreement between the parties or imperative requirements of applicable laws;
- a party was not given proper notice of the appointment of an arbitrator or of arbitral proceedings, or was unable to present its case for other valid reasons; or
- an arbitral award may also be set aside if the subject matter of the dispute could not have been resolved by arbitration under the federal law of Russia or an arbitration award is contrary to Russian public policy.
Applicable procedural law for recognition and enforcement of arbitral awards
Applicable legislation for recognition and enforcement
4 What is the applicable procedural law for recognition and enforcement of an arbitral award in your jurisdiction? Is your jurisdiction party to treaties facilitating recognition and enforcement of arbitral awards?
Two separate sets of rules apply to the recognition and enforcement of arbitral awards. Articles 236 to 240 of the CPC, Articles 423 to 427 of the Civil Procedure Code, and the Federal Law on Arbitration (Arbitration Proceedings) in the Russian Federation relate to domestic arbitral awards, whereas Articles 241 to 246 of the CPC, Articles 416 and 417 of the Civil Procedure Code, and the ICA Law apply to international arbitral awards.
The Russian Federation is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 and the European Convention on International Commercial Arbitration 1961. Like some former members of the Council for Mutual Economic Assistance, Russia is still a party to the Moscow Convention on the Settlement by Arbitration of Civil Law Disputes Arising from Relations of Economic, Scientific and Technical Cooperation 1972. Russia is also a signatory to the Washington (ICSID) Convention 1992, but this treaty is not yet ratified.
The New York Convention
5 Is the state a party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under Article I(3) of the Convention?
Yes, it is. In 1960, this Convention entered into force for the USSR, which made a reservation that reciprocity shall apply to non-parties to the Convention.
6 Which court has jurisdiction over an application for recognition and enforcement of arbitral awards?
Both foreign and domestic arbitral awards can be recognised and enforced in Russia by commercial courts of first instance at a debtor’s location or, if a debtor’s location is unknown, at the location of property owned by the debtor.
7 What are the requirements for the court to have jurisdiction over an application for recognition and enforcement of arbitral awards? Must the applicant identify assets within the jurisdiction of the court that will be the subject of enforcement for the purpose of recognition proceedings?
As described in question 6, an application for recognition and enforcement of both domestic and foreign arbitral awards shall be filed by an applicant with the commercial court of the constituent entity of the Russian Federation at a debtor’s location or, if a debtor’s location is unknown, at the location of property owned by the debtor. The latter is the case when an applicant shall specify debtor’s property that can be the subject of enforcement at that particular location. Generally, an applicant is required to identify assets within the jurisdiction of the court.
As regards domestic arbitration, parties also can agree that an application may be filed with the commercial court of the constituent entity of the Russian Federation in which territory the arbitral award was rendered, or with the commercial court of the constituent entity at the location of the party to arbitration proceedings in whose favour the arbitral award has been delivered (Article 236(3) of the CPC).
Form of the recognition proceedings
8 Are the recognition proceedings in your jurisdiction adversarial or ex parte?
All proceedings on recognition and enforcement of arbitral awards are adversarial.
Form of application and required documentation
9 What documentation is required to obtain the recognition of an arbitral award?
According to Articles 237 and 242 of the CPC, an applicant shall provide the following documents:
- an original of an arbitral award or its properly certified copy;
- an original arbitration agreement or its properly certified copy;
- a document confirming payment of the state fee in the manner and amount established by a federal law;
- proof of delivery or another document confirming that a copy of an application for the recognition and enforcement of an arbitral award has been sent to the other party of the arbitration proceedings; and
- a certificate of authority or another document confirming the powers of the person to sign an application.
Translation of required documentation
10 If the required documentation is drafted in a language other than the official language of your jurisdiction, is it necessary to submit a translation with an application to obtain recognition of an arbitral award? If yes, in what form must the translation be?
Proceedings in commercial courts are carried out in Russian only. All documents, including arbitration awards and arbitration agreements, shall be translated into Russian and a translator’s signature shall be certified by a public notary. This requirement is mandatory in all cases. In practice, it is possible to submit translations of excerpts from supportive documents.
Other practical requirements
11 What are the other practical requirements relating to recognition and enforcement of arbitral awards?
An application for recognition and enforcement of arbitral awards can be filed by the successful party with the competent court within three years of the date when the award became effective. The application must also be accompanied by a document confirming payment of the state fee (3000 roubles). Other costs can include charges for legal representation, which may be borne by an award debtor if enforcement is successful.
Recognition of interim or partial awards
12 Do courts recognise and enforce partial or interim awards?
Russian courts do not recognise interim awards. In refusing to recognise such awards, the courts rely on Article V(1)(e) of the New York Convention, which – in its Russian translation – provides that a court may refuse enforcement if the award has not yet become ‘final’ (rather than ‘binding’ as in the English text of the Convention).
Court practice in regard to partial awards is less consistent. For example, in Case No. A55-27265/2010, the courts recognised and enforced a ‘partial final’ award rendered by a London Court of International Arbitration tribunal. However, in Case No. A54-3603/2016, the courts refused to enforce the second partial award rendered by a German Arbitration Institute tribunal. Having enforced the first partial award produced in the same arbitration several years earlier, the courts refused recognition of the second partial award, holding (quite controversially) that enforcement of the second partial award would upset the ‘finality’ of a court judgment and affect the earlier judgment in the same dispute.
Grounds for refusing recognition of an award
13 What are the grounds on which an award may be refused recognition? Are the grounds applied by the courts different from the ones provided under Article V of the Convention?
The grounds for refusing recognition or enforcement of arbitral awards are stipulated in Article 36 of the ICA Law (as referred to by Article 244(3) of the CPC) and are the same as those provided under Article V of the New York Convention.
Effect of a decision recognising an award
14 What is the effect of a decision recognising an award in your jurisdiction? Is it immediately enforceable? What challenges are available against a decision recognising an arbitral award in your jurisdiction?
The decision on recognition and enforcement of an award enters into force on the day when it was rendered. It is thus immediately enforceable.
A decision recognising an arbitral award can be challenged in several instances. Although most disputes need to be taken to a court of appeals, this step is excluded for judgments dealing with enforcement or set-aside proceedings of an arbitral award. A decision recognising an arbitral award may be appealed to a cassation circuit court within one month of the decision being rendered. In high-stake disputes, parties then very often appeal judgments of cassation circuit courts to the Supreme Court. These appeals are subject to a separate admissibility review and only a fraction of cases are revised by the Supreme Court on the merits.
Decisions refusing to recognise an award
15 What challenges are available against a decision refusing to recognise an arbitral award in your jurisdiction?
The decision refusing recognition and enforcement of an arbitral award can be challenged in the same manner as described in question 14.
Stay of recognition or enforcement proceedings pending annulment proceedings
16 Will the courts adjourn the recognition or enforcement proceedings pending the outcome of annulment proceedings at the seat of the arbitration? What trends, if any, are suggested by recent decisions? What are the factors considered by courts to adjourn recognition or enforcement?
As is established in Article 233(5) of the CPC, if an application to set aside or suspend the enforcement of a foreign arbitral award is pending in a foreign court, the court that considers an application for recognition and enforcement of this award may, at the request of one of the parties, stay the recognition or enforcement proceedings pending the outcome of annulment proceedings.
The court considers only one relevant factor – proof of the existence of pending annulment proceedings at the seat of the arbitration.
For example, in Case No. A76-26938/2018, the courts stayed enforcement of a Stockholm Chamber of Commerce award pending annulment proceedings initiated by the award debtor in Sweden.
17 If the courts adjourn the recognition or enforcement proceedings pending the annulment proceedings, will the defendant to the recognition or enforcement proceedings be ordered to post security? What are the factors considered by courts to order security? Based on recent case law, what are the form and amount of the security to be posted by the party resisting enforcement?
Article VI of the New York Convention provides a court that is adjourning a decision on enforcement of an arbitral award with the discretion, upon an application by the award creditor, to order the award debtor to provide suitable security. Russian law has the same provision in Article 243(6) of the CPC.
The court shall consider the same factors as for any other interim measure, namely:
- whether a failure to issue these measures may make it difficult or impossible to execute the decision; and
- whether the appellant would suffer significant damage in the absence of such measures.
We were able to locate only one reported case in which the applicant, pending the annulment proceedings, sought the defendant to be ordered to post security (in the amount of US$16,691,176.95, a sum equal to the amount of award). The outcome of that case was negative as the court found that the appellant failed to prove that the debtor took measures to evade further execution of the award; a person’s subjective fear about the future impossibility or difficulty of the execution of an award is not a good enough reason for the court to take interim measures.
Moreover, the court considered the debtor’s quarterly report, the balance sheet and the financial results report, and concluded that there was no risk that the debtor would not be in a position to pay under the award. In these circumstances, the court considered that the funds that could be gained from the sale of the debtor’s fixed assets would be sufficient to satisfy the interests of the applicant if the award were not to be set aside.
Recognition or enforcement of an award set aside at the seat
18 Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? If an award is set aside after the decision recognising the award has been issued, what challenges are available against this decision?
Arbitral awards set aside at the seat of arbitration may not be recognised and enforced by the Russian courts (Article 36(1)(6) of the ICA Law).
Formally, there are no challenges available against a decision on the recognition and enforcement of an award under these circumstances. However, one possibility could be to try for a ‘revision based on new circumstances’ in the court that granted the enforcement. The decision setting aside the award could be presented as the ‘new circumstance’ (Article 311(3)(1) of the CPC). However, this is likely to be unsuccessful, as the list of permitted ‘new’ circumstances contained in Article 311(3) of the CPC is a closed one and a decision setting aside an arbitral award is not included.
Service in your jurisdiction
19 What is the applicable procedure for service of extrajudicial and judicial documents to a defendant in your jurisdiction?
Service of judicial documents in Russia is governed by Article 123 of the CPC. A natural person is considered to be duly served if the documents are handed to him or her personally, or to an adult living with this person; a receipt or other document indicating the date and time of service should be returned to court. Documents addressed to a legal entity shall be served to the person authorised to receive the correspondence.
If the recipient’s domicile in Russia is unknown, then the service is considered to be effected if the documents are sent to the last known location or place of residence of the defendant.
Russian law does not contain any specific provisions on the service of extrajudicial documents.
Service out of your jurisdiction
20 What is the applicable procedure for service of extrajudicial and judicial documents to a defendant out of your jurisdiction?
Pursuant to the CPC, foreign defendants will be informed by letter rogatory. The detailed rules for applying the CPC are set out in a 2017 Decree of the Supreme Court of Russia. It provides, inter alia, that for the service of process on foreign parties, a Russian court will issue a letter of rogatory to a foreign court.
Russia is also a party to the Hague Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters. Thus, if the defendant is located in a country that is a party to this convention, the service will be effected according to the mechanism established in the Convention.
Identification of assets
21 Are there any databases or publicly available registers allowing the identification of an award debtor’s assets within your jurisdiction?
A debtor’s assets are identified by bailiffs during the process of execution of the judgment. However, certain registers allow the identification of certain types of debtor’s assets in Russia:
- Uniform State Register of Legal Entities (subsidiary companies); and
- Federal Institute for Industrial Property database (paid version) (trademarks and licences).
Information available through judicial proceedings
22 Are there any proceedings allowing for the disclosure of information about an award debtor within your jurisdiction?
There are no direct mechanisms within the judicial proceedings allowing an award debtor to be ordered to disclose the existence or location of assets.
Availability of interim measures
23 Are interim measures against assets available in your jurisdiction? May award creditors apply such interim measures against assets owned by a sovereign state?
Yes, as provided in Article 91 of the CPC:
- to impose an arrest on cash or other property owned by a defendant and held by the defendant or other persons;
- to prohibit a defendant and other persons from performing certain actions concerning the subject of the dispute;
- to impose on a defendant the obligation to perform certain actions so as to prevent damage to, or deterioration of the condition of , the disputed property;
- to transfer the property for storage to a claimant or another person;
- to suspend enforcement under the executive or other document disputed by the plaintiff, the enforcement for which is carried out in an indisputable (without acceptance) procedure; and
- to suspend the sale of property in the event that a claim for release of property from arrest has been filed.
The court may impose other interim measures, and several interim measures may be imposed at the same time. All interim measures must be proportionate to the amount of debt.
An award creditor may obtain interim measures against assets owned by a sovereign state, provided that the assets are not subject to immunity (for more details, see question 34).
Procedure for interim measures
24 What is the procedure to apply interim measures against assets in your jurisdiction? Is it a requirement to obtain prior court authorisation before applying interim measures? If yes, are such proceedings ex parte?
Interim measures are allowed at any stage of the court proceedings if the failure to take these measures may make it difficult or impossible to execute the judicial act, including if the judicial act is supposed to be performed outside the Russian Federation or to prevent significant damage to the applicant.
An applicant must submit a motion to the court, which must indicate:
- the name of the court with which the motion is filed;
- the name of the claimant and the defendant, and their location or place of residence;
- the subject of the dispute;
- the amount of property claims;
- justification of the reason for filing an application for interim measures;
- the interim measure requested by the claimant; and
- a list of attached documents.
The court will consider an application for interim measures within one day of the date on which the application was submitted to the court, without informing the parties.
Interim measures against immovable property
25 What is the procedure for interim measures against immovable property within your jurisdiction?
The main interim measure against immovable property is an arrest order. The details of the procedure are as discussed in question 24.
Interim measures against movable property
26 What is the procedure for interim measures against movable property within your jurisdiction?
The main interim measure against movable property is an arrest order. The details of procedure are the same as discussed in question 24.
Interim measures against intangible property
27 What is the procedure for interim measures against intangible property within your jurisdiction?
There is no special procedure for interim measures against intangible property, but it could also be arrested. The details of procedure are the same as discussed in question 24.
28 What is the procedure to attach assets in your jurisdiction? Is it a requirement to obtain prior court authorisation before attaching assets? If yes, are such proceedings ex parte?
Attachment (execution) procedures are regulated by the Law on Enforcement Procedure and the CPC.
After a judgment enters into force, the claimant will receive a writ of execution from the court that issued the judgment. Based on the writ of execution, the assets can be attached through either the federal bailiffs’ service or the debtor’s bank. (The federal bailiffs’ service is a state authority responsible for the attachment of assets on all types of claims (both monetary and non-monetary).)
Alternatively, judgments relating to monetary claims can be executed by the bank where the debtor has an account. The bank must debit the amount claimed directly from the account of the judgment debtor within five days of the claimant’s request. If the claimant does not have information about the debtor’s accounts, it can submit an enquiry to the Federal Tax Service, which will provide this information after the debt is confirmed by the court. Executing a judgment through a bank is not a universal way of enforcement and will not help if the debtor has no money in the account, but it is much quicker than executing a judgment through bailiffs.
Attachment against immovable property
29 What is the procedure for enforcement measures against immovable property within your jurisdiction?
There is no special procedure established by the law; see question 28.
Attachment against movable property
30 What is the procedure for enforcement measures against moveable property within your jurisdiction?
There is no special procedure established by the law; see question 28.
Attachment against intangible property
31 What is the procedure for enforcement measures against intangible property within your jurisdiction?
There is no special procedure established by the law; see question 28.
Enforcement against foreign states
32 Are there any rules in your jurisdiction that specifically govern recognition and enforcement of arbitral awards against foreign states?
Yes. The Federal Law on Jurisdictional Immunities of Foreign States and Assets of Foreign States in the Russian Federation (the Law on Jurisdictional Immunities) came into force on 1 January 2016. The Law largely resembles the rules of the UN Convention on Jurisdictional Immunities of States and Their Property, although Russia has not ratified the latter. Unlike the Convention, the Russian legislator embodied the rule of reciprocity, meaning that Russian courts may not apply the favourable Russian regime to a foreign state if the laws of that state provide for a lower standard of protection.
In addition, civil procedure is governed by Chapter 33.1 of the CPC and Chapter 45.1 of the Civil Procedure Code. Chapter 12.1 of the Federal Law on Enforcement Proceedings laid down the particularities of enforcement (execution) proceedings against the assets of foreign states.
Service of documents to a foreign state
33 What is the applicable procedure for service of extrajudicial and judicial documents to a foreign state?
Service shall be executed under an international bilateral or multilateral treaty if there is one is in effect between Russia and the other debtor state. In the absence of any treaty, the Russian Ministry of Justice shall procure the service through diplomatic channels. Russian courts cannot schedule a preliminary hearing or a main hearing earlier than six months before such a hearing.
Immunity from enforcement
34 Are assets belonging to a foreign state immune from enforcement in your jurisdiction? If yes, are there exceptions to such immunity?
Russia follows the restrictive doctrine of sovereign immunity. Essentially, Russian laws protect the same categories of assets as provided for in Article 21 of the UN Convention on Jurisdictional Immunities of States and Their Property. They are declared immune from pre- and post-judgment measures.
Waiver of immunity from enforcement
35 Is it possible for a foreign state to waive immunity from enforcement in your jurisdiction? If yes, what are the requirements of such waiver?
Under Article 6(2) of the Law on Jurisdictional Immunities, foreign states may waive immunity from the jurisdiction of Russian courts trying cases of enforcement of arbitral awards rendered against such states. Having said that, the Russian legislator has specifically provided that such a waiver is not tantamount to a waiver from interim relief or execution. To that extent, and in the absence of developed case law on this point, there are no other regulations in Russia.
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