The Presidium of the Supreme Commercial Court of the Russian Federation (hereinafter – SCC RF) adopted by the Informative Letter No. 156 dated the 26th of February, 2013 (hereinafter – the Informative Letter) on Review of the consideration by arbitrazh courts of the cases on the implementation of the public order clause as the ground for rejection of the recognition and enforcement of the foreign court decisions and arbitral awards.
Thus the Draft of the Informative Letter (hereinafter – the Draft) was adopted. It was published for public discussion at the SCC RF official website in December, 2012.
In general, the first draft of the Draft varies from the final version of the document.
It is crucial to remember that among the key moments that were not altered in the final version of the Informative Letter are:
- Arbitrazh court is not obligated to revise the arbitral award on the merits, because of the evaluation of its enforcement’s consequences regarding the violation of the public order in the Russian Federation;
- In case arbitrazh court finds the recognition and enforcement of the foreign court decision and arbitral award contradictory to the public order of the Russian Federation it rejects by its own the recognition and enforcement of the above-mentioned decision or award;
- If the contradiction of the recognition and enforcement of the foreign court decision or arbitral award to the public order of the Russian Federation is established, arbitrazh court evaluates the arguments of the parties, providing the evidence of the presence of such contradiction;
- Arbitrazh courts implement the public order clause as the reason for rejection of the recognition and enforcement of the foreign court decision and arbitral award only in exceptional cases. This way presents special grounds for the rejection of such recognition and enforcement, stated in the paragraph 1-6 and part 2 of the article 244 of Arbitral procedural code of the Russian Federation, are not replaced.
Also most of the arguments for the impermissibility of the implementation of such exceptional ground for rejection in recognition and enforcement of the foreign court decision or arbitral award, which the public order is, stated in the Draft, remained in the Informative Letter of SCC RF. These grounds are:
- Cases, when the articles of the applicable foreign law are different from the corresponding articles of the Russian law;
- Cases, when evidences presented by the debtor doesn’t prove that losses (penalty, compound interest) collected on the grounds of the civil contract and approved beforehand are of the punitory nature;
- Cases, when in litigation the liability to pay the bail is transferred by the foreign court to the Russian party. And this is seen as the condition of the appeal;
- Cases, when the foreign legal entity does not obey the order, accepted by the legal entity’s law of incorporation, of the approval of the significant deals;
- Cases, when there is legal order, which includes the regulation in the joint assets of the spouses the possibility of the collection of the assets of one of the spouses on the grounds of the foreign court decision or arbitral award, adopted without the participation of the debtor’s spouse in the court (arbitral) litigation;
- Cases, when there is a misprint in the foreign court decision or arbitral award. But it doesn’t influence its meaning;
- Cases, when arbitrazh court ruled that the procedure of the arbitral proceeding provided that guarantees of independence and impartiality of the arbitrators were secured.
Informative Letter of SCC RF also stipulates situations of the clause on the public order implementation by arbitrazh courts. The clause is used as the ground of unreserved rejection in recognition and enforcement of the foreign court decision and arbitral award such as:
- Cases, when the award was adopted by the arbitrator, which because of his job title and authority could influence the actions of one of the parties;
- Cases, when the award was adopted with the violation of the international law principle of sovereign equality of the states.
The cases, when the award was adopted when the arbitrator, chosen by one of the parties, was absent and the rule of the procedural equality of the parties was broken, did not constitute the final version of the Draft.
In conclusion, SCC RF finally summarized legal practice regarding this issue. By issuing the Informative Letter additional mandatory recommendations were given to the arbitrazh courts of the Russian Federation.