The article analyzes possible advantages and obstacles of the Russian Federation acceding to Hague convention of 2 july, 2019, underlying political, legal and other impediments to its ratification in the near future. It sheds some light on differences of regulation, provided be the Convention and the Russian Federation, which could affect the Convention’s ratification.
Key words: the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, recognition and enforcement of foreign judgments, Hague Conference, indirect jurisdiction, exclusive competence.
The question of possible signing of the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters [1] (hereinafter referred to as “the 2019 Сonvention”, “the Convention”) and Russia's accession to it triggered wide and vivid discussions both in the scientific community and among practicing lawyers immediately after the news about the adoption of the Convention’s text in The Hague on July 2, 2019 has appeared. In this regard most authors highlight the importance of the Russian Federation integrating into international processes, increasing the effectiveness of the Russian justice system, protecting interests of investors who invest in the Russian economy, as well as interests of foreign counterparties. It is also noted that Russian entrepreneurs and businessmen will benefit considerably from ratification of the 2019 Convention, that will enable them to request enforcement of Russian court’s decisions in the jurisdiction of any other foreign Contracting state that supports values of the Convention.
Basing on the analysis and generalization, the following possible advantages of Russia's accession to this Convention can be distinguished. Firstly, one of such advantages is provision of protection guarantees, certainty and predictability, which can contribute to increase of Russia’s investment attractiveness, as well as ensuring Russian entrepreneurs’ interests. The international regime for recognition and enforcement of foreign court decisions will provide both foreign and Russian businessmen with an adequate level of guarantees to protect legal rights and interests in the course of legal proceedings, create a predictable mechanism for protecting such rights, and, which is extremely important, will reduce legal costs. Such certainty is provided, inter alia, through Article 5 of the Convention, which contains an exhaustive list of indirect grounds of jurisdiction, Article 7, concerning the grounds for refusal of recognition and enforcement of foreign judgments. Along with the provision of rights protection guarantees, the second consists in increasing investment attractiveness of the Russian Federation, development of international commercial relations, harmonization of the investment and business climate of the Russian Federation.
Thirdly, ratification of the Convention by Russia will contribute to internal regulation improvement and increase trust level for the Russian judicial system. As such Minister of Foreign Affairs of the Kingdom of the Netherlands, Stef Blok, in his speech devoted to signing of the Final Act of the 2019 Convention, emphasized that “the Convention, providing certainty and legal security in cross-border transactions and litigation, will have a positive economic effect for members of the Hague Conference and will inspire confidence in decisions rendered by courts in other Member States. In addition, the 2019 Convention will also help to avoid duplication of procedures in several countries, thus giving the parties the opportunity to stick to more informed approach to the choice of jurisdiction” [7].
The 2019 Convention is aimed at building a global system of the recognition and enforcement of foreign judgments, which the modern world, participants of foreign economic transactions and large transnational players certainly need. So, one can go on describing numerous advantages of possible ratification of the Convention, but it is necessary to assess the situation in an objective way and take factors hampering wide ratification of the Convention into account.
As of April 21, 2020, the 2019 Convention was signed (but not ratified) by two states: Uruguay (July 2, 2019) and Ukraine (March 4, 2020), which is not very promising. The possibility of achieving goals set forth in the Convention remains an open question which is still to be discussed. In this regard, two groups of potential “obstacles” to global ratification of the Convention can be distinguished: political and legal.
Political obstacles stem from, inter alia, lack of mutual trust in states, in particular, in judicial systems. A prerequisite for the free movement of judicial decisions is mutual trust in each other's judicial systems. And if it is possible within the framework of regional integration and exists within the framework of the “Brussels regime” in the EU, with periodic criticism of the regime, it is difficult to imagine existence of such trust on a global scale, between countries of different legal systems, economic and legal development with different legal traditions in near future. Taking the current situation into account, when the international scene is riven by political and economic contradictions, it is too early to talk about a possible and extensive ratification of the Convention in the near future. Although authors of the Convention have provided a mechanism (Article 29), which allows not to establish contractual relations with certain Contracting states, it is not obvious whether it can mitigate some considerable political contradictions. Opinions concerning the future of the Convention among representatives of both the scientific community and “practitioners” are extremely ambiguous. At the same time, in March 2019 the Ministry of Justice together with the Ministry of Foreign Affairs of the Russian Federation began discussions on the feasibility of signing the Convention.
Historical experience is not on the side of the Convention either and does not give much hope. So, the 1971 Convention on the Recognition of the Enforcement of Foreign judgments [2] was ratified by only 4 states, the Hague Convention on Court Selection Agreements of 2005 [3] failed to repeat the success of the New York Convention as was originally expected [4]. The 2005 Convention is aimed at creating a global system for the recognition and enforcement of judgments made on the basis “forum selection agreements”. However, over 14 years, it was ratified by only 31 states and the European Union, and China, USA, Canada are not among them. It is noteworthy that Russia did not sign the Convention on Agreements on the Choice of a Court, although it also signed the Final Act, thus approving its text.
Legal obstacles constitute contradictions and inconsistencies between the legal regulation of any issues by the Convention and the Russian Federation legislation. Based on the analysis of the 2019 Convention and Russian legislation provisions, it can be concluded that there are no significant contradictions that could affect the decision to ratify the Convention. So, a significant issue when deciding on ratification of the Convention is its scope and exclusion from it. The issue of exclusions from the scope of the Convention, contained in Article 2 of the convention, is important in relation to the exclusive jurisdiction of the Russian Federation courts, which is regulated by Articles 248 of the Arbitration Procedure Code of the Russian Federation and 403 of the Civil Procedure Code of the Russian Federation, since questions referred to the exclusive competence of the courts are considered “sensitive” and should be examined in the Russian court in view of their particular importance. So, all issues related to the exclusive competence of the Russian Federation are excluded from the Convention, which fully ensures its interests.
The most significant differences between the regulation of recognition and enforcement of foreign judgments contained in the Convention and the legislation of the Russian Federation arise regarding the conditions of recognition contained in Article 5 of the Convention. This situation can be put down to peculiarities of regulating the conditions for the recognition and enforcement of foreign court decisions in the Russian Federation and the non-application of indirect jurisdiction concept that is applied in many foreign countries. So, in the Russian Federation, the procedure for checking the competence of a foreign court is limited only to application of exclusive competence norms, specified in Article 248. Article 5 of the Convention focuses on indirect jurisdiction regulation, which are intended at checking the competence of a foreign court that has issued a decision. However, given the fundamental differences in the regulation of the recognition conditions contained in the Convention (in particular, in Article 5, which regulates issues of indirect jurisdiction) and the legislation of the Russian Federation (in particular, in Articles 248 of the Arbitration Procedure Code of the Russian Federation and 403 Code of Civil Procedure of the Russian Federation, which regulate issues of exclusive jurisdiction), the signing and subsequent ratification of the Convention will not entail a conflict of this institution regulation. In addition, the necessity to introduce the institution of indirect jurisdiction in the Russian Federation has been discussed for a long time, as it would help to make the system of recognition and enforcement of foreign court decisions in the Russian Federation more efficient and progressive.
In addition, it seems important to analyze the grounds for the refusal to recognize and enforce foreign judgments contained in article 7, since according to paragraph 1 of article 4 of the Convention, the refusal to recognize execution is possible only on the grounds listed in article 7 of the Convention. The grounds for the refusal to recognize and enforce foreign judgments in the Russian Federation are governed by the provisions of Articles 412 of the Code of Civil Procedure of the Russian Federation and 244 of the Russian Arbitration Procedure Code. As a result of comparing the relevant provisions of the Convention and norms of the Russian legislation, it can be concluded that provisions are fundamentally similar except for some differences.
In particular, the following grounds for refusal coincide:
– Untimely and improper notification of the defendant on the lawsuit (clause 2 of article 412 of the Code of Civil Procedure of the RF, clause 2 of article 244 of the APC of the Russian Federation, clause “a” clause 1 of article 7 of the Convention);
– Contradiction to public policy (Clause 7, Article 244 of the Arbitration Procedure Code of the Russian Federation, Clause 5, Article 412 of the Code of Civil Procedure of the Russian Federation, Clause “b”, Clause 1, Article 7 of the Convention);
– the judgment is inconsistent with a judgment given by a court of the requested State in a dispute between the same parties (clause 4, article 412 of the Code of Civil Procedure of the Russian Federation, clause 4 of article 244 of the APC of the RF, clause “e” clause 1 of article 7 of the Convention);
– the court of the requested State was seised before the court of origin (clause 4 of article 412 of the Code of Civil Procedure of the Russian Federation, clause 4 of article 244 of the APC of the RF clause “a” clause 2 of article 7 of the Convention).
Moreover, the Convention contains two grounds for refusal, which are absent in the Russian legislation:
– Obtaining a court decision by fraud (para “b”, para 1, Article 7 of the Convention;
– the proceedings in the court of origin were contrary to an agreement, or a designation in a trust instrument, under which the dispute in question was to be determined in a court of a State other than the State of origin (paragraphs “d”, clause 1 of article 7 of the Convention) (due to the absence of the institution of a trust in Russian law).
It is important to determine the grounds for refusal contained in the Code of Civil Procedure of the Russian Federation, but absent in the Convention:
– the judgent hasn't entered into force in accordance with the law of the state of origin of the judgment (paragraph 1 of article 412 of the Code of Civil Procedure of the Russian Federation, paragraph 1 of article 244 of the APC of the RF);
– the question of the judgment falls within exclusive competence of the Russian Federation (Clause 3, Article 244 of the Arbitration Procedure Code of the Russian Federation and Clause 3 of Article 412 of the Code of Civil Procedure of the RF);
– The expiration of the limitation period to enforce the judgment (Clause 6, Article 244 of the Arbitration Procedure Code of the Russian Federation, Clause 6, Article 412 of the Code of Civil Procedure of the Russian Federation).
When analyzing the grounds for refusal, which are not contained in the Convention, but are contained in the legislation of the Russian Federation, it is important to consider clause 3 of Article 4 of the Convention, according to which “A judgment shall be recognised only if it has effect in the State of origin, and shall be enforced only if it is enforceable in the State of origin”. With regard to the provision on the exclusive competence of the Russian Federation, regulatory contradictions cannot arise, since issues referred to the exclusive competence of the Russian Federation are excluded from the scope of the Convention. Consequently, there is only one problem remained unresolved by the Convention — the issue of the expiration of the limitation period to enforce a foreign judgment.
Conclusions
Thus, it can be stated, that the modern world and the participants of the transnational market need a global system of the enforcement of foreign judgments, which would ensure stability and predictability of relations. The accession of the Russian Federation to the Convention could bring many advantages both to the judicial system and the economy of the Russian Federation, and to Russian entrepreneurs. The 2019 Convention triggered a positive response among Russian and foreign scientists and experts. However, given the political situation and growing political contradictions in the world, including the “closed nature” of the system of recognition and enforcement of foreign judgments in the Russian Federation, the Russian Federation is unlikely to accede to it in the near future. It should also be underlined that the Convention is based on the concept of “indirect” jurisdiction, which is not widely used in Russia. Perhaps it is necessary to consider the adoption of this approach in the framework of the Russian legislation, which would ensure the harmonization of the legislative approach with European countries.
In general, the system of recognition and enforcement of foreign judgments in the Russian Federation is gradually moving away from the “closed” system, in which the absence of an international treaty makes it impossible to enforce a foreign decision, adapting the concept of “international politeness and reciprocity”. Whether the Russian Federation will be able to make a “sharp leap” towards a cross-border system of recognition and enforcement of decisions remains a significant and open question.
References:
- The Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters // The Hague Conference on international private law. URL: https://www.hcch.net/en/instruments/conventions/full-text/?cid=137
- Convention of 1 February 1971 on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters // The Hague Conference. URL: https://www.hcch.net/en/instruments/conventions/full-text/?cid=78
- The Hague Convention of 30 June 2005 on Choice of Court Agreements // The Hague Conference. URL: https://www.hcch.net/en/instruments/conventions/specialised-sections/choice-of-court
- Justyna Regan. Recognition and Enforcement of Foreign Judgments — A Second A empt in the Hague? // Richmond Journal of Global Law & Business. — 2015. — № 14. — P. 67.
- The Arbitration Procedure Code of the Russian Federation. URL: http://www.consultant.ru/document/cons_doc_LAW_37800/.
- The Civil Procedure Code of the Russian Federation. URL: http://www.consultant.ru/document/cons_doc_LAW_39570/.
- Speech by the Minister of Foreign Affairs, Stef Blok, at the closing ceremony of the signing of the Final Act of the 2019 Convention on Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters // Government of the Netherlands. URL: https://www.government.nl/ministries/ministry-of-foreign affairs/documents/speeches/2019/07/02/speech-by-the-minister-of-foreign-affairs-stef-blok-at-the-closing-ceremony-of-the-signing-of-the-final-act-of-the-2019-convention-on-recognition-and-enforcement-of-foreign-judgments-in-civil-or-commercial-matters (28.04.2020).
