Contributed By BGP Litigation
Publicly Available Information
In Russia, there are several public registers that may be useful in identifying the assets of another party, including:
The Company Register may be used to obtain details in relation to a debtor that is a legal entity, such as the size of share capital, the entity’s address, the names of shareholders, the shares held by them, the licences issued to the company and the name of the director.
The Real Property Register contains information on an immovable property that a person possesses, including its location, value and mortgages. This information is publicly available. The authorised state body (Rosreestr) provides information at the request of any person for a small fee.
The Insolvency Register contains up-to-date information concerning insolvency procedures initiated against companies, sole entrepreneurs and natural persons, and a detailed list of steps that have already been taken in the procedure.
The Register of Judgments’ Enforcement, which is kept by the Federal Bailiff Service, provides information on existing enforcement proceedings.
A creditor is also able to review the publicly available list of patents registered on behalf of the party in the Patent Register that is kept by a state body, Rospatent.
Freezing orders (“arrest orders”) are amongst the interim measures granted by Russian courts. A freezing order can be granted before filing a claim, after commencement of a case and in the course of a judgment’s enforcement. Under the Arbitrazh (Commercial) Procedure Code of the Russian Federation (APC RF), a commercial court may grant interim measures before filing a claim, whereas under the Civil Procedure Code of the Russian Federation (CPC RF), which deals with non-commercial disputes, such measures are available in a limited number of cases. A freezing order may be granted to secure a monetary claim or the proprietary interests of the creditor.
Russian procedural law prescribes a limitation for the sum stipulated in the freezing order. It cannot exceed the amount of the creditor’s claim. It is also possible to impose a freezing order on the monies that will be transferred to the debtor in the future.
However, Russian courts consider a freezing order as an interim measure of last resort and would grant it only if other measures are ineffective for the enforcement of a judgment.
A party requesting a freezing order should prove that the property is owned by the debtor. The Russian Supreme Court has emphasised that a freezing order could be imposed on a property even if it was possessed by a third party but the right of ownership still belongs to the debtor.
According to Russian case law, the chances of success of a motion for a freezing order are relatively high where the following circumstances are in place:
Asset Disclosure Orders
Asset disclosure orders, by themselves, do not exist in Russian legislation. However, courts, upon a motion, may order a party to present certain evidence that the requesting party is unable to obtain on its own.
The motion will be granted if:
If the court agrees that all four above-mentioned prerequisites are met, it will oblige the other party to present the evidence, which may contain a disclosure of assets. The disclosing party may be, in that case, not only the debtor but also a bank or any state body that may present the requested information.
The court’s order is binding for the party against which it is granted and, hence, the party will be obliged to abide by it and present the requested information. Non-performance of the order will entail liability, and the non-performing party will have to pay a penalty.
Moreover, a Russian attorney is entitled to send to state authorities, local bodies and legal entities an official request of information falling within the competence of the said bodies and entities. The recipients of the request are obliged to respond to it in writing within 30 days from the date of its receipt.
Furthermore, one might use special services aggregating data from different publicly available databases. One such service is SPARK-Interfax, which allows receiving the financial statements of companies, their connections with each other, number of employees, etc. Additional information is available in relation to public companies that publish annual and quarterly reports, lists of affiliated persons, etc.
The main type of domestic judgment in Russia is a decision that finishes resolution of the dispute at the court of each instance. The judgment may be primary, which is made on the merits of the case, and additional, which is made upon request of one of the parties if (i) the main decision did not address one of the parties’ arguments, or (ii) having resolved the issue on the law, the court did not specify the amount to be recovered, the property to be transferred or the actions to be taken.
A type of judgment also depends on the type of procedure to be followed. If the parties followed summary proceedings, then a summary judgment will be rendered. The particularity of summary judgments is that an appeal period is 15 days, which is half the period for judgments rendered in ordinary cases.
Default judgments may be rendered only in courts of general jurisdiction where non-commercial disputes are considered. A default judgment is rendered in a case when a defendant has not appeared at the trial. The particularity of this type of judgment is that it may be appealed within seven days if the defendant:
Rulings are made to resolve procedural issues such as distribution of costs and restoration of appeal periods. Generally, they may be appealed within a shorter period of time than the final decisions.
Rulings are also rendered on the issue of the enforcement of arbitral awards in Russia. Such rulings are not subject to appeal and are challenged directly to the court of cassation. Most rulings do not impose enforcement-related consequences (such as rulings on staying proceedings) but some (such as rulings granting interim measures) can do so.
Court orders are issued when there is no legal dispute between the parties. They are available in some simple cases; for instance, where there is a claim for money that can be proven by documents, such as a claim for debt. The court order simultaneously constitutes a court judgment and a writ of execution that can be enforced in ten days after its issuance.
The peculiarity is that the court order may be easily revoked – the debtor only needs to state its disagreement with the court order without providing any justification. However, the debtor should exercise this right within ten days after the issuance of the court order. Otherwise, the debtor is to go directly to the court of cassation. Generally, court orders may be issued only if the sum claimed does not exceed RUB500,000.
Generally, enforcement proceedings in Russia are governed by:
As a rule, the enforcement of a domestic judgment against a solvent person is possible only after the judgment enters into legal force, which usually happens after the expiry of the appeal period or after the court of appeal (the court of second instance) renders its judgment.
When the judgment has entered into legal force, the party obtains a writ of execution at the court and has two options:
Generally, the writ is delivered to the bank when the judgment creditor knows where the judgment debtor’s account is opened.
The writ is a standard document that contains the following information:
If the judgment creditor loses the writ, a separate court hearing will take place in order to issue a new writ. Additionally, the judgment creditor will be subject to a penalty for losing the writ.
Russian law provides for several enforcement measures. The measures shall be applied only if the decision to commence enforcement proceedings is not voluntarily performed by the judgment debtor within the prescribed time period. The list of these measures is exhaustive and is provided in the Federal Law on “Enforcement Proceedings”.
Enforcement of monetary claims
Under a monetary claim, a judgment debtor has to pay a sum of money. The measures that can be used to enforce the monetary claims include:
Not every asset of a judgment debtor is available for enforcement. For instance, under certain circumstances, the debtor's residential premises that are used for residential purposes by them and their family members cannot be sold in the course of enforcement proceedings.
Seizure (charging) orders in relation to assets
Different assets may be subject to seizure, including cash and money in a bank account, shares, securities, receivables, real property and some intellectual rights. The assets can be seized by the court bailiff.
The aim of this measure is to preserve the right of the judgment creditor to enforce the judgment. The seized assets cannot be disposed of and sold to third parties, and in some cases, the debtor is even forbidden to use them. The seizure orders might be sent directly to banks. As a result, the banks would be not allowed to transact with the assets.
Attachment of money placed in a bank account
Money seized in a bank account of the judgment debtor is transferred to a deposit account of court bailiffs and is then transferred to the judgment creditor.
Sale of assets subject to seizure (charging) orders
Generally, an auction takes place in order to sell the seized assets of a judgment debtor. It is held by a specialised entity in accordance with the rules stipulated by the government of the Russian Federation. The assets are evaluated in order to establish the starting price. Then the specialised entity publishes a notice of the sale of assets.
If the auction fails, the specialised entity holds a second auction, where the starting price is lowered by 15%. If the second auction fails, the bailiff proposes that the judgment creditor accept the asset to discharge the judgment debt. In this scenario, the price is lowered by 25%. If none of the judgment creditors accepts the proposal, the asset returns to the judgment debtor.
Attachment of earnings
Attachment of earnings is possible only in the following cases:
The writ is transferred to the judgment debtor’s employer, who performs the payment on behalf of the debtor.
Third-party debt orders
A third-party debt order might be made by a court bailiff. Upon receipt of the order, a person owing money to a judgment debtor is obliged to pay the sum due to the court bailiff. The latter transfers the money received to the judgment creditor. This measure is applicable subject to the consent of the judgment creditor. Without such consent, the debt owed to the judgment debtor is to be assigned as a result of the auction.
Enforcement of judgments for injunctive relief
Some domestic judgments are of non-monetary nature and oblige a party to perform or not to perform certain actions. In this regard, the actions to be performed (not to be performed) are specified in the writ of execution. The writ itself is submitted to the bailiffs, and then the bailiffs commence enforcement proceedings. If the judgment debtor does not perform the obligation specified by the court, the bailiff establishes the new period of performance and imposes a penalty on the debtor.
Insolvency of a Debtor
As a rule, if a legal entity is insolvent, a commercial court introduces a procedure of supervision in relation to the debtor. In such a case, the court bailiff should suspend the enforcement proceedings commenced against the debtor (with certain exceptions). The enforcement proceedings are terminated after the commencement of the liquidation insolvency procedure. There are exceptions for certain claims; for instance, for claims that arose in the course of insolvency proceedings. Similar rules are applicable in relation to debtors who are natural persons.
Sale of pledged assets
Claims against solvent debtors secured by pledges might be enforced by way of a sale of the pledged assets. There is judicial and non-judicial sale.
The judicial sale shall be approved by the court and, generally, is performed through a public auction in accordance with the Federal Law on “Enforcement Proceedings”.
As for the non-judicial procedure, the pledged asset may be sold by auction following the contractually stipulated rules agreed by the parties. Additionally, if the pledger is engaged in entrepreneurial activity, the parties may permit the pledgee to accept the pledged asset as discharge of the debt or to sell the pledged asset to a third party.
As a rule, a court bailiff shall enforce a judgment within two months from the commencement of enforcement proceedings. This period, however, does not include the following periods:
In addition, the period of enforcement depends on the enforcement measure chosen by the judgment creditor. For instance, an auction to sell a real property will take longer than the attachment of earnings. The location of assets held by the judgment debtor is also a significant factor that might influence the length of proceedings. A judgment made against a solvent judgment debtor may be enforced relatively quickly (in two to three weeks). It is advisable to send the writ of execution directly to a bank in such a case. Where the judgment debtor has liquidity problems and its assets should be sold, the enforcement proceedings will last at least six months. The length of insolvency proceedings depends on the size of the debtor, but the average length is three years.
The Federal Bailiff Service is a state body rendering the services out of charge. No duties shall be paid when a writ of execution is filed with the Federal Bailiff Service or a bank. When the judgment debtor is insolvent, there are no duties to be paid by a creditor as well for the filing of the respective application with the court (excluding potential appeals). The legal fees of lawyers representing the judgment creditor depend on the scope of services to be provided as well as on the region where the enforcement or insolvency proceedings are pending.
In order to identify the assets of a judgment debtor, a court bailiff can file requests with certain state authorities. This option is available if the court bailiff has commenced the enforcement proceedings and the judgment debtor failed to comply with the bailiff’s demand for payment (this demand is ordinarily inserted into the decision of the court bailiff on the commencement of enforcement proceedings). As a rule, the judgment debtor has five days to comply with the demand of the court bailiff from the day of receipt of the demand. The bailiff ordinarily files the requests with:
A decision of the court bailiff on the commencement of enforcement proceedings may be challenged by the parties to the proceedings and third parties whose rights are affected by it. There are two ways to challenge the bailiff’s decision:
An administrative challenge presupposes filing a complaint with a senior court bailiff who is in command of the bailiff that made the decision. This complaint may be filed only within ten days after a certain act has been undertaken.
A judicial challenge is, generally, more efficient. In this scenario, if a party believes that its rights and legitimate interests have been violated, it may file a complaint.
The court can also, upon request, order deferral of enforcement or enforcement by instalment if there are circumstances that impede the enforcement of the judgment. Among these circumstances are financial difficulties of the judgment debtor and the existence of a real possibility to enforce the judgment after the expiry of the deferral.
The judgment debtor may also suspend the enforcement of a judgment if it proves in the cassation proceedings that it would be impossible or onerous to exercise the reversal of enforcement.
There is no specific type of judgment that cannot be enforced in Russia. However, issues may arise during the enforcement of the judgment ordering specific performance by the judgment debtor where such performance is objectively impossible.
In Russia, judgments are publicly available. There are two registers: a register of commercial courts (Kad.Arbitr) and a register of courts of general jurisdiction (GAS Pravosudie). Both these registers provide information, including the following data:
The information contained in the register of courts of general jurisdiction is more limited because court clerks delete a lot of personal data from the judgments. For instance, a lot of judgments do not contain names, addresses and sums claimed.
It is impossible for a judgment debtor to remove the judgment from the courts’ registers after enforcement.
The Federal Bailiff Service holds a separate Register of Judgments’ Enforcement. If the judgment is enforced, the court bailiff will delete the data from this register.
Russia is a party to a number of bilateral treaties on the provision of legal assistance in civil and criminal matters. These treaties usually provide for the recognition or enforcement of foreign judgments. The most widely known international multilateral instruments are:
Additionally, the Russian Federation is a party to over 30 bilateral treaties on legal assistance in civil law matters that contain provisions on the recognition and enforcement of foreign judgments. For instance, there are treaties with Greece, Spain, Lithuania, etc. However, there are still no agreements on the recognition and enforcement of foreign judgments with multiple states, such as Germany, the USA and the United Kingdom.
In 2019, Russia’s representatives signed the Final Act of the Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. At the moment, the Convention has only been signed by three states: Israel, Ukraine and Uruguay. No further steps have been taken by Russia.
The law on the enforcement of foreign judgments is uniform throughout the country by virtue of being a matter of federal legislation, as set out by Article 71(o) of the Constitution of the Russian Federation.
On a statutory level, the legal framework for the enforcement of foreign judgments consists of:
The rules of the two procedural Codes are similar for the most part, with only some differences, usually related to specific categories of foreign judgments. In addition, Federal Law No 127-FZ “On Insolvency (Bankruptcy)” provides for the recognition and enforcement of foreign court judgments in bankruptcy cases on the basis of an international treaty or reciprocity.
If there is no international treaty or federal law, foreign judgments can be enforced on the basis of reciprocity. However, the number of judgments enforced on the basis of reciprocity is very limited. If a party argues for the enforcement of a foreign court judgment on the basis of reciprocity, it must provide proof that the foreign courts of the relevant jurisdiction enforce Russian judgments (eg, the relevant foreign case law).
Notably, the Decree of the Presidium of the Supreme Council of the Union of Soviet Socialist Republics (USSR) of 21 June 1988, No 9131-XI “On the recognition and enforcement of decisions of foreign courts and arbitrations in the USSR” remains in force with respect to the enforcement of foreign judgments. In practice, its provisions are entirely superseded by the rules of the two procedural codes.
In addition to the above-mentioned legislation, there are different instruments passed by the highest courts in Russia that interpret the law and emphasise exemplary cases resolved by the courts. They provide guidelines for the lower courts on the interpretation of statutes and sometimes effectively create new legal rules.
Once a Russian court has ruled that the foreign court judgment will be enforced, that ruling is subject to enforcement proceedings in the same way as a Russian domestic court judgment (see 2.2 Enforcement of Domestic Judgments). Foreign judgments that do not require enforcement are recognised automatically based on an international treaty or a federal law if their recognition is unopposed.
Note, however, that a specific enforcement regime shall be applied to the judgments of the courts of Belarus under the Belarus–Russian Federation Treaty on Reciprocal Execution of Judgments of Commercial Courts. According to this treaty, the judgments of Belarusian courts do not require a special procedure for enforcement within Russia and shall be proceeded as domestic judgments, on the basis of the executive documents of the courts that made the decisions.
Article 241 of the APC RF provides for the enforcement of foreign court decisions in commercial disputes. Article 409 of the CPC RF deals with the enforcement of foreign court decisions in non-commercial civil matters, including consent orders as well as those parts of criminal judgments that concern damages caused by a crime. Decisions of foreign courts are only enforceable if they resolve the case on the merits.
Both codes require the relevant foreign judgments to enter into force in accordance with the law of the relevant foreign state. Multilateral and bilateral treaties usually specify the types of judgments enforceable under them. For example, the Minsk Convention provides for recognition and enforcement of the following types of judgments:
Interim and provisional court decisions are not enforceable under Russian law.
The procedure for enforcement of a foreign court’s judgment is generally simpler than the standard court procedure for resolving a case on the merits, but it requires the summons of the parties and a hearing. An interested party can file objections to the recognition of a foreign judgment within one month of the date when it became aware of the judgment.
The process of enforcing foreign judgments is mainly the same with respect to the APC RF and CPC RF, differentiated only by the competent court. An application for the enforcement of a foreign judgment shall be made in writing and must be signed by the judgment creditor or their representative.
In accordance with the APC RF and CPC RF, an application for recognition and enforcement of a foreign judgment must provide the following information:
Further, an application for the enforcement of a foreign judgment shall be accompanied with:
One should not forget to attach the document certifying the payment of the state fee. To be accepted as certified, a copy of a foreign judgment must be issued by the foreign court, and be legalised or apostilled. If the documents provided are in a foreign language, they must be translated and the signature of the translator must be certified by a notary public.
If duly notified parties have failed to appear at the hearings, it does not prevent the court from resolving a matter of recognition and enforcement of a foreign judgment. Notably, the Russian court is not entitled to review the merits of the foreign case.
A foreign judgment can be referred to the Russian courts for recognition and enforcement within three years starting from the day the foreign judgment entered into force. To enforce the foreign judgment, a party must file an application with a competent court for recognition and enforcement. According to the Tax Code of the Russian Federation, the state fee for the filing of this application is RUB3,000. Other costs may include legal fees and costs connected with the certification and translation of documents.
An application for enforcement of a foreign judgment shall be considered by a judge solely in accordance with the rules of the first-instance court within a period not exceeding one month from the date of the application’s receipt by the court. In reality, the resolution of such applications may last one year and more, especially if the ruling of the court of first instance is appealed.
In order for foreign judgments to be enforced, several conditions should be met (vice versa, the absence of the conditions below would lead to non-enforcement).
A Russian court may deny the recognition and enforcement of a foreign judgment based on the last five grounds even where the party opposing enforcement does not invoke these grounds.
At the same time, as the application for enforcement is to be accompanied with both proof of the foreign judgment's entry into force and proof of notification of the other party of the foreign court proceedings, in practice, the courts review compliance with these requirements even without the relevant objections of the other party.
Russian courts pay great attention to the service of proceedings when deciding on the challenge. They will examine whether the defendant had a right to be heard in foreign proceedings; in particular, whether they received a proper notification of the proceedings. In assessing due service, the courts consider the requirements of both domestic law and international treaties; for example, the 1965 Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters.
Under Article 244 of the APC RF and Article 412 of the CPC RF, a Russian court shall refuse the recognition and enforcement of a foreign judgment if it was rendered on a matter that was within the exclusive jurisdiction of the Russian court. The Russian court will also consider whether legal proceedings have already been initiated in Russia between the same persons, on the same subject matter and on the same grounds, and if so, will refuse recognition and enforcement.
Recognition and enforcement of a judgment can be refused on grounds of public policy. In practice, public policy is not limited to procedural deficiencies and can include substantive issues. However, the court cannot invoke public policy to review the case on the merits. Russian legislation does not set out an exhaustive list of criteria to define public policy. The courts consider public policy to encompass fundamental legal principles of public significance that form the basis for the economic, political and legal system of a state. The court can raise public policy issues on its own initiative.
A ruling of a Russian commercial court on the matter of recognition and enforcement of a foreign judgment may be appealed directly to the court of cassation, excluding the appeal to the court of second instance. The appeal period is one month.
In addition to the APC RF and CPC RF, the two primary statutes on arbitration are the International Commercial Arbitration Law (ICAL RF), which governs international arbitrations seated in Russia (even though several provisions apply to arbitrations seated abroad), and the Federal Law on Arbitration in the Russian Federation (AL RF), which governs domestic arbitrations. Both laws were substantially influenced by the UNCITRAL Model Law, as well as by international principles and guidelines.
Some of the AL RF’s provisions equally apply to international Russian-seated arbitrations (eg, those on the retention of case materials for a period of time, the establishment of domestic and the licensing of foreign arbitral institutions, mediation procedure and the liability of arbitrators and arbitral institutions).
The Russian Federation is a party to the New York Convention dated 1958 that was signed by its predecessor, the USSR. The USSR declared that it would apply the provisions of the New York Convention in respect of awards made in the territories of non-contracting states only to the extent to which they grant reciprocal treatment. This declaration remains in effect. Russia is also a party to the European Convention on International Commercial Arbitration of 1961 and the Moscow Convention on the Settlement by Arbitration of Civil Law Disputes Arising from Relations of Economic, Scientific, and Technical Cooperation of 1972.
Russian law differentiates between domestic and foreign arbitral awards. In fact, the difference in legal provisions is insignificant.
Domestic Arbitral Awards
The legislative framework for the enforcement of domestic arbitral awards in Russia is as follows:
Foreign Arbitral Awards
The recognition and enforcement of foreign arbitral awards is governed by:
Any arbitral award that decides a case on its merits and requires actual enforcement is enforceable, subject to the grounds for a refusal to enforce (see 4.6 Challenging Enforcement of Arbitral Awards). Decisions on preliminary matters are not enforceable. There is no prohibition on enforcing awards containing final mandatory or prohibitory injunctions. Declaratory awards are not subject to enforcement proceedings if no actual enforcement measures are required under them. Decisions or awards of arbitral tribunals (including emergency arbitrators) granting provisional measures are not enforceable. An interested party can file objections against the recognition of a foreign arbitral award.
A winning party must receive a writ of execution in a state court in order to enforce an arbitral award. The application for the issuance of the writ of execution is made with a court of general jurisdiction (for non-commercial matters) or commercial court of the region at the debtor's place of residence or location, or, if its place of residence or location is unknown, at the location of the debtor's property. The parties to domestic commercial arbitration can agree to submit the application to the competent court at the place of rendering of the award or at the location of the creditor. The application for recognition and enforcement of a foreign commercial arbitral award can be filed within three years of the date on which the award became effective.
The ruling of a first-instance court on the issuance of, or refusal to issue, a writ of execution can be appealed to the cassation court within one month of its rendering (within three months for non-commercial matters). A resolution of the cassation court can be further appealed to the Supreme Court of Russia (second cassation) within two months of its rendering (within three months for non-commercial matters). Supervisory review by the Supreme Court is available within three months from the date of entry into force of the judgment of the second cassation instance (for both commercial and non-commercial matters).
There is no express provision against enforcing only part of an arbitral award. A court can refuse to enforce part of an award.
An application to enforce a foreign arbitral award shall be accompanied with the same documents and information as the application to enforce a foreign judgment (see 3.4 Process of Enforcing Foreign Judgments). Additional information to be provided includes the names of arbitrators, the seat of arbitration, the name of the arbitral institution that administered arbitral proceedings (for institutional arbitration) and its location, etc.
The application for enforcement of a foreign arbitral award, unless an international treaty of the Russian Federation provides otherwise, shall be accompanied with:
According to the Tax Code of the Russian Federation, the state fees for the enforcement of arbitral awards are insignificant and do not exceed RUB3,000 for commercial awards. Other costs may include legal fees and costs connected with the certification and translation of documents.
The APC RF and CPC RF specify that the proceedings in a first-instance court are to be run up to one month. However, this term can be easily extended. The resolution of such applications may last one year and more, especially if the ruling of the court of first instance is appealed.
The grounds for refusing enforcement can be found in both codes (the APC RF and CPC RF) as well as in the AL RF and ICAL RF. These grounds, generally, correspond with the ones that are enshrined in the New York Convention:
The enforcing court will always review on its own initiative whether the subject matter of the dispute was arbitrable under Russian law and whether the enforcement of the dispute is contrary to the public policy of the Russian Federation.
Russian courts may adjourn the enforcement proceedings at the request of one of the parties if an application to set aside or suspend the enforcement of a foreign arbitral award is pending in a foreign court. For the requesting party, it is sufficient to prove the existence of pending proceedings at the seat of the arbitration because these proceedings may affect the legal effect or finality of the enforced arbitral award.
An arbitral award shall not violate the public policy of the Russian Federation. The courts use the same approach irrespective of whether the award is domestic or foreign.
Parties are entitled to indicate to the court the address at which they are ready to receive judicial documents. By default, the judicial documents are served to the address of the legal entity’s incorporation or to the residence address of an individual. If that place is unknown, the documents are sent to the last known place of residence. Parties bear all the risks of non-receipt of the judicial documents when the documents have been sent to the proper address. Russian law does not contain any specific provisions regarding the service of extrajudicial documents.