MUTUAL RECOGNITION OF DECISIONS OF FOREIGN COURTS: HOW TO OVERCOME THE DISTIRTION OF THIS PRINCIPLE?

The main normative legal act that regulates the bankruptcy procedure in the Russian Federation is the Federal Law «On Insolvency (Bankruptcy)». [2] Article 2 Bankruptcy complicated by a foreign element is defined as cross-border in paragraph 3 of Art. 29 of the Law on Insolvency. The problems of legal regulation of cross-border bankruptcy have recently been the subject of active discussion [6]. In this article, it seems interesting to pay attention to the problem of recognition of decisions of foreign courts in cross-border insolvency cases. [7; 8; 9].

Decisions of foreign courts of in insolvency cases are recognized in accordance with international treaties of the Russian Federation. The problem is that there are no international treaties with the participation of the Russian Federation on the settlement of cross-border insolvency. It would seem that in such situation it is necessary to apply the principle of reciprocity of recognition of decisions. It is designed to foster collaboration. At the same time, as Aleshina E., Baranov I., Baskhaev Ch., Mokhova E. rightly note in their works, this principle does not work in the Russian Federation [4; 5]. The logical question is: why is this happening?

The first reason seems to be: there is no common understanding on an international scale of what is a court decision. Russian courts proceed from the possibility of recognizing only the final judicial acts in cases of cross-border bankruptcy (they recognize the judgment on the merits and do not recognize, for example, the judicial act on the appointment of a liquidator) [7; 8]. At the same time, foreign courts do not consider it necessary to divide the court decision into types. On the one hand, the classification of court decisions is expedient. On the other hand such division negatively affects the consideration and resolution of cases.

Another reason is that in Russian judicial practice there is a tendency to distort the principle of «reciprocity of recognition of decisions of foreign courts». Analyzing this problem, Mokhova E.V. writes: if earlier it was necessary to prove the absence of reciprocity, now - its presence [5]. This means that now Russian courts require evidence of the execution or the possibility of execution of Russians court’s decisions in similar cases in the foreign states. Until evidence is presented, they refuse to recognize the decisions of foreign courts. Probably, this situation is a consequence of the desire to protect the interests of Russian debtors and the Russian Federation. At the same time, such a prioritization casts doubt on the fairness of justice (Article 123 of the Constitution of the Russian Federation), within the framework of which not the court case itself is now considered, but how the decision of a Russian court in a similar case has been assessed by a foreign court [1].

So, it seems that the solution of these problems can be facilitated by the implementation of the following proposals:

1. Ideally, there is a need to ensure a uniform understanding of the concept of «court decision» at the international level. Directly for bankruptcy cases, this is possible, for example, by consolidating the legal definition of the concept of «judgment» in the UNCITRAL Model Law [3]. In particular, I propose to understand the decision as an act passed on the merits and other judicial acts. This will allow to counteract the approaches of partial recognition of decisions of foreign courts that are taking shape in Russian judicial practice, which reduce the effectiveness of the process.

2. In addition, it is advisable to amend the provisions of the Law on Insolvency and include into this law a section of cross-border insolvency.

3. Return from a distorted perception of the principle of reciprocity to a positive one. It seems that the most effective option for abandoning the existing trends in the judicial practice of the Russian Federation on this issue will be to change the provisions of paragraph 2 of paragraph 6 of Article 1 of the Law on Insolvency. It is necessary to supplement the provision of this article with the phrase: reciprocity of recognition of decisions of foreign courts implies recognition of decisions of foreign courts, except for cases when there is evidence of non-application of the principle of reciprocity by this foreign court in a similar case in relation to the Russian Federation.

References:

1. «Constitution of the Russian Federation» // Collection of legislation of the Russian Federation.- 04.08.2014. - No. 31. - Art. 4398.  
2. Federal Law of 26.10.2002 N 127-FZ (as amended on 08.06.2020) «On insolvency (bankruptcy)» (as amended and supplemented, entered into force on 19.06.2020) // «Rossiyskaya Gazeta». - 02.11.2002. - N 209-21.
3. UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation. 1997. URL: https://uncitral.un.org/en/texts/insolvency/modellaw/cross-border_insolvency. (date of access: 08 december 2020).
4. Aleshina E. Insolvency of individuals and legal entities: a tutorial. / E. Aleshina, I. Baranov, C. Baskhaev (ect), - M: Justicinform, 2017. - 476 p.
5. Mokhova E.V. Basic concepts of legal regulation of cross-border insolvency of legal entities: the unsolved problem of finding an optimal model. / E.V. Mokhova // Bulletin of the Tambov University. Series: Humanities. - 2007. - No. 1. S. 101-107.
6. St. Petersburg International Legal Forum. International Bankruptcy Forum. URL: https://spblegalforum.ru/ru/2017_International_Insolvency_Forum (date of access: 08 december 2020).
7. Determination of the Supreme Arbitration Court of the Russian Federation of June 23, 2008 N 11934/04 in case N A56-7455 / 2000.
8. Resolution of the Federal Arbitration Court of the North-West District of August 28, 2008 in case No. A56-22667 / 2007).
9. Determination of the Arbitration Court of the Krasnodar Territory dated May 26, 2016 in case No. А32-747 / 2015.