Enforcing foreign arbitral awards Grounds and Procedure

1. Enforcing foreign arbitral awards Grounds and Procedure KATERINA HASLAM-JONES PADVA, HALSLAM-JONES & PARTNERS khj@phjpartners.com www.phjpartners.com Padva, Haslam-Jones & Partners LLP

2. Grounds and Procedures • Grounds: • New York Convention 1958 • Federal laws (reciprocity/начало взаимности) • Procedure: • Upon Application (Art 242 APK); • The duly authenticated original award or a duly certified copy; and • The original arbitration agreement (arbitration clause) or a duly certified copy thereof (Art II and IV Convention 1958). • Art 242 APK – sets up the procedure • Forum shopping/Forum execution Padva, Haslam-Jones & Partners LLP

3. Convention 1958, Art 5 • 1. Recognition and enforcement of the award may be refused: • Incapacity of a party , or invalidity of the agreement • Not proper notification or party was unable to present the case • Matters beyond the scope of the arbitration • The composition of the tribunal or the procedure was not in accordance with the parties’ agreement, or law • No binding award 2. May also be refused if the competent authority finds that: • Matter is not capable of settlement by arbitration • Public Policy Padva, Haslam-Jones & Partners LLP

4. Art 244 APK RF • 1. No binding award • 2. No proper notification/Party unable to present the case • 3. Exclusive competence of Russian court • 4. Existing decision between the same parties on the same issue • 5. The decision is pending • 6. Statute of Limitation • 7. Public Policy Padva, Haslam-Jones & Partners LLP

5. - No binding award - Not proper notification or party was unable to present the case - Matters beyond the scope of the arbitration - Matter is not capable of settlement by arbitration - The composition of the tribunal or the procedure was not in accordance with the parties’ agreement, or law - Incapacity of a party , or invalidity of the agreement - Public Policy No binding award No proper notification or party unable to present the case Exclusive competence of Russian court Existing decision between the same parties on the same issue The decision is pending Statute of Limitation Public Policy Convention 1958 /Art. 244 APK Padva, Haslam-Jones & Partners LLP

6. Differences between the Grounds • Procedural v. Substantive (Public Policy) • Defined v. Discretionary, open for interpretation (Public Policy) • Burden of proof: • Part 1, Art V: On the Party against whom the award is issued • Part 2, Art V: On the Party against whom the award is issues OR could be established by the Court Padva, Haslam-Jones & Partners LLP

7. What Courts cannot do • Review the merits of the case, to establish the matter to be proven, evaluate the evidence • Check lawfulness and reasonableness of the judgment itself (10 Bulletin of the Supreme Court of the RF, 1995). • Therefore: • Infringement of public policy would take place only if enforcement of foreign judgement would lead to results contradicting public policy. • Does not matter whether the applied norms of the foreign substantive law correspond to the Russian legislation or not. • Is it really the case? Padva, Haslam-Jones & Partners LLP

8. Public Policy Rule (PPR) • Understanding the PPR: • No uniform understanding • Contrary to public policy – PP in procedural law, substantive law and in the law of conflict. • Matter was considered on the basis of Russian law • Interpretation and application of the PPR: • The legal construction of “contradiction to public policy” carries an evaluative character • Concepts derived from Russian judicial practice • Case law – from the case law comes understanding and interpretation of PPR Padva, Haslam-Jones & Partners LLP

9. Конституция РФ • Глава 1: «Противоречие основам правового строя нашей страны, определенным в Конституции РФ». Под противоречием публичному порядку РФ понимается противоречие основам конституционного строя России (ст 1-15), например, положениям о признании частной собственноси, в том числе и на землю, о единстве экономического пространства, свободе перемещения товаров, свобода экономической деятельности. • Глава 2: Так же противоречие главе 2 Конституции – «права и свободы человека и гражданина», противоречия общественному правосознанию и фундаментальным принципам права. Padva, Haslam-Jones & Partners LLP

10. Russian Constitution • Chapter 1: Contradiction to public policy – understood as contradiction to the principles of the constitutional basis of the Russian state: for example, contradiction to provisions on recognition of private property, including land; on unity of economic territory of the RF; on freedom of movement of goods, services and financial assets; freedom of economic activities (Art 8 and 9). • Chapter 2: “Rights and freedoms of person and citizen” include contradiction to the public sense of justice and fundamental principles of the law. Padva, Haslam-Jones & Partners LLP

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12. Wider interpretation of PP includes • Anti-dumping legislation • Legislation on privatisation • Fundamental legal principles of commercial turnover • Legislation on competition • Bankruptcy • City-forming enterprises • Etc. Padva, Haslam-Jones & Partners LLP

13. Some specific examples • Principles of Russian law: • Fault of the defendant • An award of a monetary sum in a foreign currency against a Russian company • “Punitive damages” principle – strong ground for escaping liability under PPR [TXO Production v. Allians Resources] • Nationalisation – confiscation of property for state purposes without reimbursement Padva, Haslam-Jones & Partners LLP

14. PPR Summary • No reference should be made to public policy if the matter was considered by the foreign court or arbitral tribunal on the basis of Russian law and enforcement is sought in Russia. • Improper application of norms of the substantive law by a foreign court and application of norms contrary to the norms of the Russian law applicable to similar relations cannot be used to refer to the PP of Russia as the Russian court has no right to review the substance of a foreign arbitral award. • The subject of evaluation as regards the PPR should not be the arbitral award itself, but the results of its enforcement, which man be contrary to PP. Padva, Haslam-Jones & Partners LLP

15. Issues of most importance • Thinking about enforceability of a contract before drafting the contract (Choice of law). • Arbitration v. Litigation v. Mediation • Forum shopping/Execution shopping • Multiple claims on enforcement (allocation of assets) • Remedies available to the parties (i.e.injunctions) • Settlements – must be in the award to be enforceable Padva, Haslam-Jones & Partners LLP