Russian SCC Says Service under the Hague Convention is a Prerequisite of an Enforceable Foreign Judgment

Supreme Commercial Court

A 28 January 2014 ruling of the Russian Supreme Commercial Court (the “SCC”) will have significant repercussions for international litigation involving Russian parties. According to the SCC a foreign judgment will be enforceable in Russia only if the proceedings were served on the Russian party through official channels provided by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents (the “Hague Convention” or the “Convention”).

As we have reported, the main issue to decide was whether a Russian party may object to recognition and enforcement of a foreign judgment if it had in fact received notice of the proceedings (e.g. via courier).

Facts of the Case

In 2010, the claimants Nortel Networks Ireland Ltd. and Nortel Networks UK Ltd. commenced recognition and enforcement proceedings regarding a High Court of England and Wales judgment against CJSC UNI Corporation (the “UNI”). UNI objected arguing that it had not been served with the proceedings in accordance with the Hague Convention.
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After several rounds of litigation before the lower commercial court, the SCC’s three-judge panel decided to refer the case to the Presidium for supervisory review.

Two Possible Approaches to Service

In referring the case to the Presidium the three-judge panel explained that two approaches to service of documents on Russian parties are possible.

Under the conservative approach any service on Russian parties should comply with the Hague Convention requirements.
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The documents should be served through the official channel (i.e. the Ministry of Justice) and any alternative service (e.g. via post or courier) is insufficient. Both the literal meaning of the Hague Convention and the reservation Russia lodged with respect to Article 10 (permitting alternative service) support this approach.
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Under the liberal approach alternative service is permissible provided it properly brings the proceedings to the notice of the respondent party. The purpose of the Convention is to ensure that judicial and extrajudicial documents are brought to the notice of the addressee in sufficient time, and to simplify and expedite the procedure. Accordingly, alternative service (i.e. not listed in Article 10) that achieves these purposes complies with the Convention.

Only Hague Convention Compliant Service Acceptable

While the full reasons are not yet available, the SCC apparently decided to adopt the conservative approach. It refused to recognise and enforce the High Court of England and Wales’s judgment in Russia due to lack of proper service.

The decision comes somewhat as a surprise, as, in October 2013, the SCC permitted the enforcement of a High Court of Justice of Northern Ireland judgment against Russian companies which had not been served in accordance with the Hague Convention. Particularly, the Presidium stated that alleged lack of proper service is not a ground to refuse recognition of a foreign judgment. However, in that case the Presidium relied on the fact that Northern Irish law did not require the Russian parties to be served at all.

Practical Effect of the SCC’s Decision

The SCC’s decision means that a foreign judgment would not be enforceable in Russia unless the Russian party was served through the official channel in compliance with the Hague Convention. It follows that in pursuing claims before foreign courts against Russian parties which choose not to participate in the proceedings, claimants should ensure proper service.

Yulia Raizer

CIS Arbitration Forum