The enforcement of foreign court decisions in Russia is especially relevant when the counterparty has assets within the country that can be targeted for collection. Russian courts have developed specific criteria when assessing the recognition of foreign rulings. However current business and political realms tend to have some influence on the approaches applied.
Key Factors Affecting Recognition and Enforcement
Under Russian law, the enforcement of foreign court decisions typically requires an international treaty between Russia and the issuing jurisdiction. This is outlined in the Civil Procedure Code (Article 409) and the Arbitration Procedure Code (Article 241). The minor exception is found in Russia’s Bankruptcy Law.
However, Russian courts have, at times, recognized foreign judgments not based on specific enforcement treaties, but on broader agreements governing legal cooperation. They also have occasionally referred to the principles of reciprocity and international comity as independent legal grounds for enforcement, even in the absence of a formal treaty.
The “Friendliness” test
One of the most critical factors influencing the enforcement of a foreign judgment in Russia is the country in which the ruling was issued. Russian courts are distinguishing decisions from countries with strong economic and legal cooperation with Russia and those deemed “unfriendly.” The list of unfriendly countries is provided in the Government resolution #430-r of March 05, 2022 (with amendments).
The majority of recognized foreign in Russian courts come from jurisdictions with strong legal and economic ties to Russia. Recent data shows that companies from Belarus, Kazakhstan, Uzbekistan, and China frequently succeed in enforcing their court decisions in Russia, though the friendliness is never a guarantee – each ruling is examined in the due manner. However, other decisions have chances to succeed if certain conditions are met.
While the absence of a formal treaty is not necessarily a barrier to enforcement, rulings from “friendly” jurisdictions such as the UAE, China, India, and CIS countries (Kazakhstan, Belarus, Uzbekistan) are more likely to be enforced. Conversely, rulings from the US, UK, EU, and other “unfriendly” states face significant obstacles. Thus, in C. Thywissen GmbH (Germany) v. JSC Novosibirskhleboproduct, the Russian Supreme Court refused to enforce an arbitration award issued in London, arguing that the arbitrators were from the UK, Denmark, and Ukraine.
However, a notable exception to the general trend of restricting enforcement from “unfriendly” jurisdictions is the case of Viavi Solution Deutschland GmbH v. Vilcom SPB where a German court decision was successfully recognized in Russia (note, the next hearing is scheduled for April). Despite the applicant being a company from an unfriendly jurisdiction, the Russian court ruled in favor of enforcement, rejecting arguments that the decision contradicted public policy considerations.
Similarly, in BRARUS LLC v. Honma Industria Cosmetika LTDA (Brazil), the Russian court recognized and enforced a Brazilian court ruling despite the absence of a direct international treaty between the countries. The court justified its decision by referencing the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which both Russia and Brazil are signatories.
The Nationality of Arbitrators and Judges: The Presumption of Bias
Beyond the jurisdiction of the ruling, Russian courts carefully examine the nationality of the judges or arbitrators who issued the decision. A recent judicial trend has emerged in which Russian courts presume a lack of impartiality if the panel includes arbitrators from unfriendly states.
A clear example of this principle was seen in SITA IT Services (Russia) v. Airflot Technics, where a state court refused to enforce an ICC arbitration award after determining that the lead arbitrator, a French national, was not neutral. The court referenced broader economic disengagement of Western entities from Russia as a basis for questioning the arbitrator’s objectivity. While this presumption of bias can theoretically be challenged, in practice, it places an additional burden on companies attempting to enforce foreign awards.
Public Policy and Economic Sovereignty Considerations
Even if a ruling meets formal treaty requirements and comes from a neutral jurisdiction, Russian courts can still deny enforcement on public policy grounds which is a standard practice globally. The concept of public policy in Russia has been broadly interpreted to include: economic security and financial stability, the impact of enforcement on strategically important companies, compliance with Russia’s currency control regulations.
A clear example of this expanded interpretation is seen in Louis Dreyfus Company Suisse SA (Switzerland) v. Infotech Novo (Russia), where a Russian court refused to enforce a decision, arguing that the ruling violated Russia’s financial security and could negatively impact the domestic economy.
Similarly, Russian courts have blocked the enforcement of rulings that require payments from state-affiliated entities or entities under sanctions, arguing that such payments contradict national interest.
Based on recent cases and court decisions, the following practical recommendations should be considered:
Select Arbitration Venues Carefully
• Avoid choosing dispute resolution venues in “unfriendly” jurisdictions (such as the US, UK, or EU), as awards from these locations face significant enforcement risks.
• Opt for arbitration in neutral or friendly jurisdictions like Hong Kong the UAE, or China, which have better chances of enforcement in Russia.
Pay Attention to the Nationality of Arbitrators and Judges
• If arbitration is chosen, nominate arbitrators from neutral or friendly states to minimize the risk of enforcement denial based on presumed bias.
• Consider arbitration institutions that allow party-appointed arbitrators to have greater control over panel composition.
Anticipate and Mitigate Public Policy Risks
• If the counterparty is a strategically important Russian company, be aware that courts may block enforcement based on national security or economic stability arguments.
• Ensure that the ruling complies with Russia’s financial regulations to avoid denial on currency control or sanctions-related grounds.
Secure Russian-Based Assets in Advance
• Having a Russian bank account or local business presence can facilitate execution (however we understand it is a hard task with such a number of Russian financial institutions under blocking sanctions).
Monitor Legal Developments and Work with Local Counsel
• Russia’s approach to recognizing foreign judgments is evolving, so staying informed about changes in legal precedent is essential.
• Engage local Russian legal experts to navigate procedural complexities and address potential enforcement challenges.
And you also should always keep in mind that simply having a valid legal ruling is not enough to enforce it —companies must ensure that the ruling does not conflict with Russian enforcement principles and court practice (which in its turn may shift).
