On July 14, 2019 by Lorraine Monteleone

 

Recognition and enforcement of a foreign court 

 

Full description In the conditions of development of contractual relations, quite often the parties to the contract are citizens and legal entities of different countries and in case of non-fulfillment of contractual obligations, appeal to judicial bodies is inevitable. In this regard, the question arises of recognition and enforcement of deions of foreign courts in the territory of the federation

Actions to recognize and enforce deions of foreign courts are regulated by a number of regulations, both international and Russian.

The main international instruments include:

• Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958;
• Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters of January 22, 1993 (hereinafter referred to as the “Convention”);
• Agreement on the procedure for resolving disputes relating to the implementation of economic activities, dated March 20, 1992;
• bilateral treaties of the federation with foreign countries.

These international acts provide for the recognition of arbitral awards and their enforcement in accordance with the legislation in force in each country. So, by virtue of art. 7 of the Agreement on the procedure for the settlement of disputes related to the conduct of economic activities of March 20, 1992, the member states mutually recognize and execute the effective deions of the competent courts. Deions rendered by the competent courts of one member state are subject to enforcement on the territory of other member states. Deions rendered by the competent court of one member state in terms of foreclosure of the defendant’s property shall be enforceable in the territory of another member state by bodies designated by the court or determined by the legislation of that state.

In the Russian legislation, the rules on recognition and enforcement of deions of foreign courts are contained in ch. 31 of the APC of the federation and in the Federal Law of 02.10.2007, No. 229-FZ “On Enforcement Proceedings”. In addition, the Presidium of the Supreme Arbitration Court of the federation provided clarifications on this issue in Information Letter No. 96 dated December 22, 2005 “Review of the practice of arbitration courts reviewing cases on recognition and enforcement of deions of foreign courts, on contesting deions of arbitral tribunals sheets for the enforcement of deions of arbitration courts. “

The procedure in question includes the recognition and enforcement of foreign judgments by the arbitration court of the federation The use of such terminology is due to the different categories of cases and the allocation in the procedural law of claims for recognition and award. Thus, with respect to deions on claims for recognition, arbitration courts recognize deions of foreign courts and foreign arbitral deions taken on the merits of these claims. It should be clarified that the claimant’s claim to the defendant to recognize the presence or absence of a disputed right will be the subject of a claim for recognition. The basis of the claim for recognition consists of the legal facts with which the claimant relates his claim to the defendant. In the lawsuit on awarding the subject of the lawsuit, the claimant’s substantive claim to the respondent to perform an action in favor of the claimant or to refrain from committing an action that violates the law or the legally protected interests of the claimant. The basis of the claim for award is made by the legal facts testifying to the emergence of the right, and the facts testifying that this right is violated. Therefore, in respect of deions on claims for award, it is necessary not only the recognition of such deions, but also their enforcement in the federation

With regard to the procedure for the recognition and enforcement of deions of foreign courts, established in ch. 31 of the APC of the RF, it is necessary to indicate that the arbitration court does not consider the deion of the foreign court on the merits, but decides whether there are or no grounds for its recognition. The arbitral tribunal is not entitled to investigate and assess the circumstances that took place at the stage of consideration of the dispute and established by a foreign arbitration court (the definition of the Supreme Arbitration Court of the federation No. 12652/07 dated November 30, 2007 in case No. A67-2560 / 05).

The grounds for recognition are the presence and submission to the court of all necessary documents, a list of which is contained in Art. 242 APC RF. The established court practice allows to make a conclusion on the satisfaction of applications for recognition and enforcement of deions of foreign courts in the provision of documents provided for by current legislation (for example, the Definition of the Moscow Arbitration Court of 02.02.2.2012 in case number A40-8940 / 12-141-80 ).

In Art. 244 of the APC of the federation separately stated the reasons for the refusal to satisfy the application for recognition. The court practice is also uniform with regard to the grounds for refusal to satisfy the application. Thus, the absence of a document duly certified and confirming that the debtor was duly notified of the proceedings in a foreign court in a timely manner, the recognition and enforcement of the deion of which the recoverer is requesting, is grounds for refusing to grant such a statement on the basis of Part. 2 p. 1 Art. 244 of the APC of the federation (Resolution of the Federal Antimonopoly Service of the Urals District of September 28, 2010 No. F09-7497 / 10-C5 in case No. A47-2947 / 10).

Separately in Art. 242 of the APC of the federation established the jurisdiction of the consideration of cases of this category, namely by the location or place of residence of the debtor or by the location of the property, if the location or residency is unknown.

Consideration of an application for recognition and enforcement of a deion of a foreign court is generally carried out by the judge alone within a period not exceeding three months from the date of its receipt by the arbitration court at a court session calling the parties according to the rules of the APC RF, unless otherwise provided by the international treaty of the federation. However, the absence of duly notified parties is not an obstacle to the consideration of the case (part 2 of article 243 of the APC RF).

A court ruling recognizing a foreign court’s deion means giving this deion legal significance on the territory of the federation The determination of the arbitral tribunal in the case of recognition and enforcement of a deion of a foreign court enters into force immediately and can be appealed to the arbitration court of cassation within one month from the date of its adoption.

The order of execution of the deion of a foreign court by the arbitration court of the federation in accordance with Art. 11 FZ of 02.10.2007, No. 229-FZ “On Enforcement Proceedings” (hereinafter – FZ of 02.10.2007, No. 229-FZ) is established by the relevant international treaties of the federation, procedural legislation of the federation and this Federal Law. According to Art. 12 FZ of 02.10.2007, No. 229-FZ, the executive documents sent (presented) to the bailiff are the executive orders issued by arbitration courts on the basis of judicial acts adopted by them. Moreover, the procedure for obtaining an executive document for the enforcement of a deion of a foreign court in the territory of the federation is set forth in Art. 246 APC RF.

Of particular interest in practice is the situation in which the application for recognition of a foreign court deion on the territory of the federation has not yet been satisfied, and a bankruptcy procedure has been introduced for the debtor – an insurance organization. It should be noted that the bankruptcy procedure of insurance organizations has its own characteristics, namely, prior to filing an application to the arbitration court for declaring the organization bankrupt, a temporary administration is introduced. The temporary administration assesses the financial condition of the organization, identifies its assets and liabilities, and, in cases provided by law, takes measures to prevent bankruptcy. If the purpose of the temporary administration is not achieved, then in this case an application is submitted to the arbitration court for the recognition of the organization as insolvent. Within the framework of this article, the procedure for recognition and enforcement of a foreign court deion regarding an organization with a temporary administration and bankruptcy procedure is considered separately.

Provisional Administration acts

The Provisional Administration acts on the basis of the Federal Law No. 127-FZ dated October 26, 2002 “On Bankruptcy (Insolvency)” (hereinafter – the Federal Law dated October 26, 2002 No. 127-FZ). The term for which the temporary administration is appointed is set forth in Art. 183.12 FL of October 26, 2002 No. 127-ФЗ and ranges from three to six months with the possibility of extension to nine months. Thus, during this period, the applicant may submit an application to the arbitration court of the federation for recognition and enforcement of a foreign court deion in respect of the insurance company, which introduced a temporary administration. The specified application is subject to consideration in a separate proceeding.

There is another situation in which the bankruptcy procedure has already been introduced for an insurance organization. An application for recognition and enforcement of a foreign court deion made against a person in respect of whom an application for recognition of his bankruptcy has been filed and a deion to introduce observation has been made is considered in a bankruptcy case.

The following case is given as an example. The foreign company appealed to the arbitration court considering the insolvency (bankruptcy) of a limited liability company (hereinafter – the debtor), with a statement recognizing and compulsory execution of a deion rendered by a foreign court, to recover from the debtor the amount of the debt for improper execution of the contract. The debtor in response to the application requested to leave the application without satisfaction, indicating that this requirement is independent and should be considered in a separate proceeding.

The arbitration court considered the application on the merits, according to the following. In accordance with paragraph 1 of Art. 63 FZ of 10.27.2002 No. 127-FZ “On Bankruptcy (Insolvency)” from the moment the court of arbitration issued a ruling on the introduction of supervision in connection with the adoption of an application for declaring a debtor bankrupt, all property claims against a debtor can be made only in compliance with the procedure established by the Law.

Since at the time of consideration of the application for recognition and execution of a foreign judgment by an arbitration court considering an application for declaring a debtor insolvent (bankrupt), a determination was made to introduce supervision, property claims against the debtor should be submitted to the arbitration court considering its insolvency (bankruptcy). In this case, they will be included in the register of creditors’ claims and, if the debtor is declared bankrupt, are satisfied in the manner prescribed by the Act. The register of creditors’ claims also includes foreign court deions legalized in a separate proceeding.

In addition, the introduction of a monitoring procedure against the debtor excludes the possibility of satisfying the application for the issue of the writ of execution and entails the need to consider such a statement in a bankruptcy case. This rule is contained in clause 3 of the RF Supreme Court letter No. 96 dated December 22, 2005 “Review of the practice of arbitration courts review cases on recognition and enforcement of deions of foreign courts, on challenging deions of arbitration courts and issuing a writ of execution to enforce deions arbitration courts. “

In the case of the introduction of bankruptcy proceedings against the debtor, the legalization of a foreign court deion is necessary for the applicant to be included in the register of creditors’ claims against the debtor. And the reason for such inclusion will be the deion of the arbitration court on recognition and enforcement of the deion of a foreign court in the territory of the federation For this procedure in art. 183.26 FZ of 10.27.2002 No. 127-FZ establishes the procedure and terms. So, in order to participate in a bankruptcy case of an organization, creditors are entitled to declare their claims to the organization:

1. during the observation within thirty calendar days from the date of publication of the report on the introduction of observation;
2. during the bankruptcy proceedings within two months from the date of publication of information about the recognition of the financial organization bankrupt.

These requirements are sent to the arbitration court, the financial organization and the arbitration manager with attachment of documents confirming their validity. The register of creditors’ claims is subject to closure after two months from the date of publication of information on the recognition of the debtor bankrupt and the opening of bankruptcy proceedings.

We should also pay attention to the following. At the stage of bankruptcy proceedings in relation to the debtor, the law provides for the possibility of selling the property complex of an insurance organization, which includes all types of property, including the insurance portfolio. A number of requirements set forth in Art. 184.7 FZ of 10.27.2002 No. 127-FZ, including the presence of a corresponding license. Such a purchase means the transfer to the buyer of all rights and obligations under the contracts concluded by the insurance company – bankrupt, under which the insured event has not occurred. According to art. 184.5 ФЗ dated 10.26.2002 No. 127-ФЗ Insurers or beneficiaries under insurance contracts under which an insured event occurred, retain the right to demand payment of the insured amount due to them. This rule regulates the process of succession in the case of sale of the property complex.

Based on the above, we can draw the following conclusions:

1. the possibility of legalizing deions of foreign courts in the territory of the federation is provided for by international and Russian legislation and is carried out by recognizing and enforcing deions based on the definition of the arbitration court of the federation;
2. with regard to the statement of recognition and enforcement of the deions of foreign courts, the arbitration court of the federation does not assess the circumstances of the case and does not consider it on the merits, but decides whether there are or no grounds for recognizing the deion;
3. in the case of a bankruptcy procedure introduced by the Russian insurance organization regarding the debtor or the provisional administration’s activity, there are peculiarities of considering the application for recognition and enforcement of a foreign court deion;
4. During the period of validity of the temporary administration, the applicant may submit an application to the arbitration court of the federation for recognition and enforcement of a foreign court deion in respect of the debtor. This application is subject to review in a separate proceeding;
5. an application for recognition and enforcement of a foreign court deion issued against a Russian insurance organization, in respect of which an application for recognition of its bankruptcy has been submitted and a deion to introduce surveillance has been issued, is considered in a bankruptcy case;
6. legalization of a foreign court deion in the event of bankruptcy of the debtor is necessary, since acts as a basis for claims on the inclusion in the register of creditors’ claims.