CIS Regional Conventions on Cross-Border Litigation and Its Application by Russian Courts

Recognition and enforcement of foreign court judgments in Russia generally require the existence of a treaty between the issuing state and the recognising state; otherwise, the principle of reciprocity applies.

On the CIS level this procedure is relatively facilitated by a number of conventions. This post looks at the main features of these CIS regional treaties and how they have been applied in recent Russian court practice.

Among the most frequently arising legal issues are: the scope and subject matter of these treaties; the standards of service of process in disputes with foreign respondents; and the procedure for recognising foreign court judgments.

Framework for judicial cooperation between the courts of CIS states

The judicial cooperation in transnational commercial disputes between the CIS member states is based primarily on two multilateral treaties:

• 1992 Kiev Convention on Settling Disputes Related to Commercial Activities (the “Kiev Convention“); and
• 1993 Minsk Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters (the “Minsk Convention“).

The conclusion of these treaties was a logical step shortly after the dissolution of the USSR, when there was a need to create a framework for international cooperation between the state courts that used to be parts of the single judicial system.

There is another multilateral treaty with a subject matter identical to the Minsk Convention, namely, the 2002 Chisinau Convention, which is not yet in force for Russia. After its ratification by the Russian Federation, it will replace the Minsk Convention as between its members. Also, there are a number of bilateral treaties in the field of judicial cooperation between the CIS member states.

Regimes Provided by Kiev and Minsk Conventions

Generally speaking, the Kiev and Minsk Conventions provide national treatment in the matters of legal and judicial protection for individuals and legal entities of its member states. In particular, they set out rules for jurisdiction of member states’ courts in transnational disputes and legal cooperation between them, recognition and enforcement of foreign court judgments, conflict of law rules etc.

Although some provisions of these two treaties are to a certain extent similar, their scope is not entirely the same: the Minsk Convention has a more extensive scope as, in addition to commercial disputes, it also covers family and criminal matters. Moreover, the Minsk Convention provides a more detailed framework for judicial cooperation between member states’ courts, while the Kiev Convention deals primarily with jurisdiction, recognition and enforcement and conflict of law matters.

Both conventions provide relatively simplified procedures for recognition and enforcement of foreign court judgments, setting forth similar, but not identical mechanisms and grounds for its refusal.

In practice, there is still some ambiguity regarding the interrelation between certain rules of these treaties, particularly regarding the judicial cooperation of member states’ courts and enforcement of foreign court judgments. This prompted the CIS Economic Court, at the request of the Supreme Economic Court of Tajikistan in 2007, to give its interpretation of the discrepancies between these treaties.

Since Article 30 of the Vienna Convention on the Law of Treaties was considered not applicable to these treaties, due to the differences in their subject matter, the CIS Economic Court noted that the discrepancies between these treaties should be resolved according to the principle lex generalis derogat lex specialis. It stated that the Kiev Convention, having a more limited scope of application, is lex specialis in relation to the Minsk Convention, and thus the Kiev Convention is applicable for commercial disputes in cases of discrepancies.

Application of Kiev and Minsk Conventions in Russian Court Practice

The Russian courts apply both conventions quite extensively, most frequently in the context of the enforcement of foreign court judgments. However, the analysis of the recent court practice (2014-2016) has revealed that there is still some consistency in the application of the Kiev and Minsk Conventions.

Also, it is still not uncommon to find the misapplication of the rules of these treaties in transnational commercial disputes. Below is the overview of the selected legal issues arising in Russian court decisions that refer to the Kiev and Minsk Conventions.

• Non-Application of Kiev and Minsk Conventions for Enforcement of Foreign Arbitral Awards

One of the most striking examples of the misapplication of the Kiev and Minsk Conventions is the reference to its rules in proceedings on the recognition and enforcement of foreign arbitral awards. Until quite recently several courts (primarily the first and second instances) refused to enforce foreign arbitral awards due to the improper notice of the party in arbitration, referring to the non-compliance with the mechanisms of service of process set forth in both treaties (ie via request for legal assistance to the competent foreign state court).

The Supreme Court of the Russian Federation, in rulings in two separate cases dated 22 October 2015 and 5 November 2015, finally clarified this issue for the lower instances. The rules on the service of process of the Kiev and Minsk Conventions are applicable only to the enforcement of foreign state court judgments, and not foreign arbitral awards. It concluded that the application of these rules to arbitration is contradictory to the nature of international judicial cooperation between state courts.

The Supreme Court reversed the previous lower courts’ decisions that refused to enforce the arbitral awards of the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry. It emphasised that the relevant treaty for checking the adequacy of notice in the arbitration is the 1958 New York Convention.

Nevertheless, even after the Supreme Court had rendered this clarification, at least one case repeatedly misapplying the rules of the Kiev and Minsk Conventions was spotted. The Moscow Region Commercial Court, in the decision dated 21 January 2016, upheld the refusal to enforce another arbitral award of the ICAC at the Ukrainian CCI, confirming that the first instance court had rightly relied on the Kiev and Minsk Conventions.

Looking on the bright side, it is quite promising to note that the most recent court decisions (eg the decision of the Moscow Region Commercial Court dated 13 October 2016) followed the Supreme Court’s reasoning.  The court rejected the argument against the enforcement of the arbitral award of the International Commercial Arbitration Court of the Russian Chamber of Commerce and Industry that relied on the Kiev and Minsk Conventions.

• Standards of proper service of process in transnational commercial litigation 

One of the most frequently invoked grounds for refusal to enforce foreign court judgments under the Kiev and Minsk Conventions in Russian court practice is the failure to adequately notify a party of the ongoing dispute against it. Both conventions provide that service of process upon respondents from other member states is implemented via legal assistance by the courts of the relevant member state, with Article 8 of the Minsk Convention providing more details regarding this procedure.

The Russian courts have on numerous occasions pointed out in their decisions that the court’s duty to serve process on the respondent located in the territory of the foreign state cannot be properly implemented only by requesting the relevant foreign state for legal assistance.

Under Article 8(5) of the Minsk Convention, a court, before proceeding to hearings, shall receive from the relevant foreign state the acknowledgement of service or, otherwise, the information about the circumstances precluding the service of process on the respondent (eg decisions of the Moscow Region Commercial Court dated 26 November 2015 (confirmed by the Supreme Court ruling dated 1 March 2016), dated 7 April 2016).

• No need for separate court proceedings for recognising foreign court judgments

Another noteworthy legal issue arising in the application of the Kiev and Minsk Conventions that the Russian courts interpreted relates to the recognition of foreign court judgments. Russian court practice confirmed that foreign court judgments that are not subject to further enforcement shall be recognised without separate judicial proceedings.

The court decisions that are not subject to enforcement in a foreign state most often establish certain facts or legal status. For instance, the decision of the Court for Intellectual Property Rights dated 3 April 2015 confirms that in order to recognise the decision of the Kiev district court – which held illegal the registration of an individual entrepreneur in Ukraine – no separate procedure in the Russian courts shall be initiated. The Court relied on the facts that the Ukrainian court had established in its decision for adjudicating the matter before it, pointing out that Ukrainian court decisions have evidentiary force in the Russian Federation under the Kiev Convention.

Another example is of the inclusion in the creditors’ list in bankruptcy proceedings based on a foreign court judgment establishing the obligation of the debtor. The decision of the Federal Commercial Court of Moscow Region dated 4 August 2014 (confirmed by the Supreme Court ruling dated 13 October 2014) stated that in order to recognise the Almaty court decision, without its subsequent enforcement, for the purposes of getting included in the creditors’ list, there is no need for a special procedure pursuant to Article 8 of the Kiev Convention and Article 52 of the Minsk Convention.

Concluding Remarks

Although the Kiev and Minsk Conventions have been in force for almost 25 years, some inconsistency in their application by the national courts of the CIS member states still persists. Despite court decisions having no precedent value in Russia and other CIS states, as civil law countries, it is still highly advisable for counsels to take into account the interpretations of these treaties by the Russian courts, with all their strong and weak points, to prevent the erroneous application of the treaties in their cases.

One potential mechanism for eliminating inconsistencies between national courts of the CIS states could be interpretations by the CIS Economic Court, similar to the one earlier given at the request of Tajikistan. Moreover, member states can endeavour to eliminate the discrepancies between national court practices by means of joint statements and additional protocols to these treaties.