On 30 July 2012, the Presidium of the Supreme Commercial Court of the Russian Federation (the “SCC”) released its Review of rulings of the Presidium of the SCC (the “Review”) on major issues of private law for June 2012. In particular, the Review highlights that in bankruptcy proceedings a creditor’s claim upheld by an arbitration ruling may be included in the list of creditors without a writ of execution.
Circumstances of the case
A construction company (the “Debtor”) failed to fulfil its obligations under a series of contracts with a security firm (the “Claimant”). The arbitration court confirmed the breach of contract by the Debtor, and ruled in favour of debt recovery.
A bankruptcy procedure was initiated against the Debtor by a third party, and the Claimant appealed to the commercial court to be included in the creditors’ list based on the ruling of the arbitration court.
Approach of the commercial courts
The commercial court of first instance ruled in favour of the Claimant. However, the courts of the second and third instance cancelled the judgment, indicating the lack of a writ of execution to enforce the arbitration ruling in favour of the Claimant.
Position of the SCC
The panel of judges of the SCC indicated that the lower courts’ rulings contravene the uniformity of court practice1, whereby a writ of execution for an arbitration ruling is required only to initiate a bankruptcy procedure. Thus, there is no necessity for a writ of execution to include a creditor in the creditors’ list.
Accordingly, the SCC cancelled the rulings of the appeal and cassation courts and upheld the ruling of the court of first instance.
The SCC’s clarification reflects the consistent trend to support arbitration even in bankruptcy proceedings, remarkable due to the very firm control that the courts have in respect of claims that may be included in a list of creditors for bankruptcy purposes.