Israeli Court Recognises a Russian Judgment on the Basis of Reciprocity

Tel Aviv Court HouseWe have already reported on the building up of Russian case law on the recognition of foreign court judgments on the basis of reciprocity and international comity.

An important advantage of this practice for Russian parties and courts is that it creates a basis for the recognition and enforcement of Russian court decisions in foreign states which require reciprocity as a condition for enforcement.

This post reports on a 2012 decision of the Tel Aviv District Court to enforce a judgment of the Moscow Commercial Court on the basis of reciprocity. According to media reports an appeal may have been lodged against it with the Supreme Court of Israel. Nevertheless the decision serves as an important indicator of the growing “international mobility” of Russian court decisions.

The Case

In 2000 Severgazprom (later succeeded by Gazprom transgaz Ukhta (“Gazprom Transgaz”)) agreed to supply gas condensate to Double K Oil Products 1996 Ltd (“Double K”).

Gazprom Transgaz commenced proceedings in the Moscow Commercial Court seeking recovery of approximately 5,000,000 euro for gas supplied in 2007. In 2009 the Moscow Commercial Court reached a judgment awarding the entire amount claimed to Gazprom Transgaz. This judgment was upheld by the appellate and cassation instance courts and Double K’s application for supervisory review by the Supreme Commercial Court was rejected.

Decision to Enforce on the Basis of Reciprocity

Double K is an Israeli company and Gazprom Transgaz applied to have the Russian judgment recognised and enforced in Israel. There is no treaty between the Russian Federation and Israel providing for the enforcement of foreign judgments. This, however, is not critical as under Israeli law foreign monetary judgments may be enforced in the absence of a treaty, provided that the foreign state would in principle enforce Israeli judgments on reciprocal basis.

Accordingly the central issue before the Tel Aviv court was whether Russian law permits the enforcement of foreign court judgments in the absence of a treaty to that effect. The court’s analysis of this issue can be divided into three stages.

The court looked at the recent practice of Russian courts permitting the enforcement of several English court decisions and a Netherlands court order on the basis of inter alia reciprocity and international comity. It concluded that this practice indicated that reciprocal recognition and enforcement is in principle ensured.

The court went on to examine the relevant provisions of Russian law (Arbitrazh Procedure Code), which do not expressly mandate the enforcement of foreign judgments on the basis of reciprocity. At the same time the Russian courts recognised that the lack of an express provision in the applicable law does not preclude enforcement as the principles of reciprocity and international comity are general principles of international law and apply directly by virtue of the Russian Constitution.

Next, the court had to deal with a 2008 case decided by the Moscow Commercial Court (and the Federal Arbitrazh Court for the Moscow Circuit), where enforcement of an Israeli judgment was refused due to lack of a treaty providing for its enforcement as well as lack of evidence of Israel’s reciprocity on the recognition and enforcement of Russian judgments.

The Tel Aviv District Court concluded that this case was not decisive. Russian courts had acknowledged that an Israeli judgment may be enforced on the basis of reciprocity, but had refused to enforce it for lack of evidence of reciprocity.

The court concluded that Russian law permitted recognition of Israeli judgments on the basis of reciprocity and, given that all other conditions for the recognition and enforcement of the judgment had been satisfied, granted Gazprom Transgaz’s application.

Recognition of Russian judgments in other countries

There has recently been a flurry of decisions dealing with the enforcement of Russian judgments in different countries.

On 30 January 2013 the French Cour de Cassation confirmed that a judgment of a district court in Moscow rendered against a French national should be recognised and enforced in France.

According to a recently published decision of the Munich Court of Appeal (OLG) enforcement of a Russian judgment was refused since enforcement had been sought on the basis of the New York Convention. However, it has been argued that enforcement of Russian judgments in Germany would be problematic as there is no evidence of German judgments being enforced in Russia (save for decisions made in the course of insolvency proceedings).

This creates a rather paradoxical and counterproductive situation where courts of both countries are waiting for their respective counterparts to take the first step. This is exemplified by 2009-2011 proceedings before the Krasnodar Arbitrazh Court concerning the enforcement of a German judgment.

There the court had decided to write to the German Supreme Court to request information on the enforcement of Russian judgments in Germany during the preceding three years. It is not clear whether any response was ever received but the proceedings were terminated due to the applicant’s loss of interest in their prosecution.

On 30 October 2012 the English High Court dismissed an application for the recognition and enforcement of two Russian district court judgments. However, the judgment was based not on the lack of a treaty (or reciprocity) permitting their recognition and enforcement, but rather on the fact that the High Court had decided that the judgments violated the principle of finality.

The decision of the Tel Aviv District Court is available here (in Hebrew).

Sergey Usoskin

About the Author:

Sergey Usoskin is an advocate (member of the Russian bar) and a senior associate at Ivanyan&Partners. He has experience advising clients on and representing them in commercial and investment arbitration matters as well as before the Russian court (including the Supreme Commercial Court). He is a graduate of St Petersburg State University, Faculty of Law and University College London Faculty of Laws.

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