In the beginning of May, 2013 a draft of the Information Letter No. 158 (hereinafter – Information Letter) of the Presidium of the Supreme Commercial Court of the Russian Federation (hereinafter – Russian SCC) was released for public discussion. On July 9, 2013 the Information Letter was finally approved and officially published.
It should be noted that final edition of the Information Letter was amended to some extent comparing with its initial draft.
The Information Letter has covered the following important issues in respect to cases involving foreigners:
- Jurisdiction of the Russian commercial courts;
- Methods of definition of applicable law;
- Defining the foreign law content;
- Methods of definition of the legal status of foreign companies;
- Application of interim relief measures.
The Russian SCC provides for the following recommendations in respect to jurisdiction of the Russian commercial courts in cases involving foreigners:
- Agreement made between foreigners on definition of a Russian commercial court as competent to consider any current or future dispute is recognized as arbitration clause under Article 249 of the Arbitrazh Procedural Code of the Russian Federation (hereinafter – APK RF);
- Forum selection clause under which disputes between the parties are considered in the state of origin of claimant/respondent is recognized valid and enforceable;
- Jurisdiction and venue of a Russian commercial court is defined on the basis of the APK RF provisions, if forum selection clause does not specify the particular Russian commercial court;
- Mandatory provisions of the APK RF on jurisdiction and venue of the Russian commercial courts cannot be modified by a forum selection clause;
- In case of assignment of the claims arising out of an agreement containing a forum selection clause, such forum selection clause remains effective both for debtor and assignee (new creditor);
- If a party claims existence of an enforceable arbitration clause on exclusive case consideration by a foreign tribunal, the statement of claim shall be dismissed by a Russian commercial court without further consideration;
- Party’s intent to have a dispute considered by a particular court could be confirmed by absence of its objections on court jurisdiction before its first statement in the process of case consideration;
- Existence of close connection of the case with the Russian jurisdiction is established in each particular case based on its factual background.
Comparing with the initial draft, the Information Letter does not contain clarifications concerning asymmetrical forum selection clauses under which only one of the contracting parties is entitled to trigger off litigation in a competent foreign court (as an alternative to the Russian commercial courts) while another is deprived of such right.
Previously, the Russian SCC intended to qualify such forum selection clauses as partly invalid and entitle the deprived party to trigger off litigation in a competent foreign court on equal grounds.
It seems that complication and ambiguity of the issue (for more detailed critics of the Russian SCC’s approach see Lidings’ article “Prorogation of jurisdiction. In the case when the problem could arise from unequal conditions of parties” published in “Arbitrazh Practice” magazine, vol. No. 5, 2013) made it impossible for the SCC of Russia to elaborate a uniform and effective approach on asymmetrical forum selection clauses.
The Information Latter contains clarifications on application of Article 247 para. 2 of the APK RF under which jurisdiction of the Russian commercial courts enlarges to the cases involving foreign company’s management body, subsidiary or representative office, if a claim arises out of their activity.
The Russian SCC has found that such approach is more adequate to court practice than the one based on recognition of jurisdiction in the cases involving foreign company’s management body, subsidiary or representative office even in de facto absence of their activity in Russia.
Additionally, the Russian SCC has elaborated certain tests on finding whether subsidiary/representative office of a foreign company actually exists in Russia. For this purpose the permanent place of activity test could be applied instead of the incorporation test: permanent place of activity of a foreign company in Russia is equated to a subsidiary/representative office even in case of de jure absence of such subsidiary/representative office state registration.
The Information Letter also contains the following conflict of laws resolution issues:
- The Russian commercial courts are required to rely on the provisions of the ratified international treaties containing relevant conflict of laws provisions;
- The mere parties’ consent on a competent foreign court does not imply that they also have consented on substantive law of the state of such foreign court;
- The Russian commercial courts shall recognize a choice of law clause if both disputing parties refer to it in their litigation documents;
- Parties are entitled to use any terms and statements for indication of applicable law in choice of law clauses;
- Super-mandatory provisions of the Russian legislation (Article 1192 of the Russian Civil Code) shall always apply irrespective of applicable law consented on by the parties.
Additionally, the Information Letter contains the following recommendations on defining the foreign law content:
- Requirement to provide information on content of foreign law may be imposed on the disputing parties by a separate court ruling;
- Failure to meet such requirement deprives a party of the right to invoke objections to defining the foreign law content by the commercial court if the letter has assumed sufficient measures for its defining;
- Parties are entitled to provide expert opinion on foreign law content;
- It is considered that foreign law content does not need further defining if the relevant expert opinion contains necessary and sufficient information and is not objected by another disputing party;
- In case of a contradiction between the foreign law content defining by the disputing parties a Russian commercial court may address authorized agencies or competent experts for their own interpretation of the foreign law content;
- Court decision/ruling may be modified or reversed if a Russian commercial court has failed to define foreign law content properly.
The Information Letter indicates the following approaches on definition of the legal status of foreigners.
- The Russian commercial courts are required to apply provisions on foreign company personal jurisdiction for defining its legal status, legal standing and legal capacity;
- Evidence on foreign company’s residence for the taxation purposes is not enough for finding foreign company’s personal jurisdiction;
- Official documents confirming the foreign company status shall come from an authorized foreign agency and contain actual information as for the date of case consideration as well as be properly verified, legalized, apostiled and translated into Russian;
- Power of attorney on behalf of a foreign company/person in simple written form made within the territory of a foreign state does not require mandatory legalization or apostil;
- The title of a foreign legal entity shall be considered in different languages (including state language of the foreign company place of incorporation, transliteration and translation).
It should be noted that the Russian SCC’s approach to demanding legal inscription or apostil exclusively on original legal documents (not their copies) confirming the foreign company legal status was excluded from final version of the Information Letter.
Instead, the Russian SCC has stood for more practically rational approach under which legal inscription or apostil on notary certification note confirming official’s signature to legal documents confirming the foreign company legal status is considered sufficient to comply with the requirements of Article 255 of the APK RF.
Finally, the Information Letter contains the following clarifications on application of interim relief measures:
- If an international commercial arbitration is competent to consider a dispute, interim relief measures may be taken by a Russian commercial court at the place of residence or location of the respondent or his property;
- If a foreign state court is competent to consider a dispute, interim relief measures may be taken by the Russian commercial court only if it has effective jurisdiction, namely, at the place of residence or location of the claimant or his money/property or at the place of breach of claimant’s rights;
- The Russian commercial courts shall not execute foreign state court orders on legal assistance if they are intended for recognition and enforcement of interim relief measures;
- Anti-suit injunctions made by foreign state courts against case consideration in Russia are non-enforceable in Russia.
It appears that the recommendations provided by the Russian SCC herein are intended for elaborating unified approach and providing legal certainty in cases involving foreigners as well as making the commercial proceedings in the Russian courts more predictable and clear for foreign companies and individuals.