Recognition and enforcement of decisions of state courts

Speakers are:
Prof. Dr Tatiana Neshatayeva,
Ms Eleonora Gerasimchuk
and Mr Michael Schmidt

Mrs. Prof. Dr. Tatiana Neshatayeva
is a judge at the Supreme Economic Court of the Russian Federation in Moscow. She heads the Department of Private International Law there and deals with the recognition and enforcement of foreign court decisions in Russia. Prof. Dr. Neshataeva’s lecture will be translated consecutively from Russian into German.

Ms Eleonora Gerasimchuk
is a lawyer in the law firm Clifford Chance, Moscow, and is working intensively on questions of recognition and enforcement in relation to Russia as part of her dissertation at the Max Planck Institute for Comparative and International Private Law in Hamburg.

Mr Michael Schmidt
is presiding judge of Civil Chamber 27 at the Regional Court of Hamburg. As an IPR chamber, this civil chamber is also responsible for proceedings for the recognition of foreign court decisions in Germany. Mr Schmidt is responsible for enforceability declarations in lawsuit proceedings according to the chamber’s business allocation plan as a single judge.

Information:

The question of whether judgments of Russian or German state courts can be enforced in the other country plays a major role in practice. One of the prerequisites for recognition is that reciprocity is guaranteed. So far, we are not aware of any Russian or German state court decision that could be recognised and enforced in the respective other country. If you are aware of any such judgements, please let us know.

A recent judgement of the Hanseatic Higher Regional Court of Hamburg, Ref.: 6 U 89/04 on this problem is listed here as an example:

327 O 158/02 LG Hamburg
28.10.2004

HANSEATIC HIGHER REGIONAL COURT
JUDGMENT

the Hanseatic Higher Regional Court Hamburg, 6th Civil Senate, by … after the oral hearing held on 16 September 2004, found in favour of the plaintiff:

The plaintiff’s appeal against the partial judgment of the Hamburg Regional Court, Civil Chamber 27, of 13 January 2004 (Ref.: 327 O 158/02) is dismissed.

The plaintiff bears the costs of the appeal proceedings.

This judgment is provisionally enforceable. The plaintiff may avert enforcement by the defendant by providing security in the amount of 110% of the enforceable amount, unless the defendant provides security in the amount of 110% of the respective enforceable amount before enforcement.

The appeal against this judgment is not admitted.

Grounds

I.
The plaintiff seeks a judgment for enforcement of an order of the Arbitration Court for St. Petersburg and Leningrad Region, Russian Federation, and in the alternative an order that the defendant pay the amount awarded.

The plaintiff concluded a supply contract for petroleum products with the Russian branch of the defendant on 23 October 1998, whereby it is disputed whether the defendant or only its Russian branch was obligated thereby (Annex K 20). On 6 November 1998, the St. Petersburg branch of the defendant and the plaintiff concluded an agreement as Annex No. 3 to the supply contract of 23 October 1998, according to which the St. Petersburg branch of the defendant had to make subsequent deliveries of diesel oil and pay a contractual penalty in a certain amount (Annex K 22). On 28 April 1999 the managing director of the defendant’s general partner authorised the director of the defendant’s St. Petersburg branch (annexure K 15) for a period of three years. By order of 25 January 2000 the Arbitration Court for St. Petersburg and Leningrad Region accepted a statement of claim filed by the plaintiff on 17 January 2000, set a hearing date for 22 February 2000 and determined that the parties’ appearance before the court was mandatory (Annex K 3). The plaintiff sought an order that the defendant pay 2,927,778.18 roubles. The amount consisted of a partial repayment to the defendant of the advance payment claimed by the plaintiff as well as interest and a contractual penalty. On 22 February 2000 the Arbitration Court for St. Petersburg and the Leningrad Region decided, without the presence of a representative or agent of the defendant, by order that the plaintiff was entitled to 1,204,617.77 roubles as well as a further 602,308.88 roubles as interest and contractual penalty and 26,238.89 roubles as state duty (Annex K 1).

The plaintiff seeks a declaration of enforceability of this foreign title and, in the alternative, payment of the amounts specified in the decision. The defendant opposed the plaintiff’s request. The requirements of § 328 ZPO were not fulfilled. The document instituting the proceedings had not been served on her. Its branch office was also not entitled to receive such documents by virtue of the power of attorney pursuant to Annex K 15. With regard to the facts of the case and the dispute at first instance, reference is made to the facts of the contested judgment.

By partial judgment of 13 January 2004, the Regional Court dismissed the action insofar as it concerned the application for a declaration of enforceability and essentially stated as grounds that the requirements under which the order of the arbitration court in dispute could be declared enforceable in the Federal Republic of Germany were not fulfilled. The action had not been properly served on the defendant itself. Nor had the Russian branch of the defendant or its director been granted a power of attorney for service. Even if it was no longer relevant whether reciprocity was guaranteed between the Russian Federation and the Federal Republic of Germany, this could not be assumed. For the rest of the details, reference is made to the contested judgement.

On 27 February 2004, the plaintiff filed an appeal against this judgement, which was served on her on 28 January 2004. The statement of grounds of appeal was received on 29 March 2004 (Monday).

The plaintiff criticises the judgement of the Regional Court, repeats and expands on its submissions at first instance. The requirements for a declaration of enforceability were met. The head of the defendant’s branch in St. Petersburg was indeed authorised to receive the statement of claim. Furthermore, it introduced the comprehensive power of attorney of 28 April 1999 (Annex K 28) into the appeal proceedings as newly acquired, previously unavailable evidence. It was also not correct that reciprocity between the Russian Federation and the Federal Republic of Germany was not guaranteed. It had not been able to produce a judgment from the Russian Federation or the Federal Republic of Germany in which judicial decisions from one or the other state had been mutually recognised or declared enforceable. However, it was in accordance with the practice of the supreme courts that, in order to establish reciprocity, it was sufficient that the foreign country recognised and accepted German judgments under approximately the same conditions as the Federal Republic of Germany. Since judgments from Great Britain and Northern Ireland had been recognised by Russian courts (Annex K. 26), a corresponding conclusion could be drawn for the Federal Republic of Germany.

The plaintiff applies

declare the order of the Arbitration Court for St. Petersburg and the Leningrad Region, Russian Federation, of 22 February 2000, file no. A 56-2422/00, by which the defendant was ordered to pay 1,204,617.77 roubles plus 602,308.88 roubles interest and contractual penalty and 26,238.89 roubles state fee, enforceable, amending the judgment of the Hamburg Regional Court of 13 January 2004.

The defendant claims that the court should

dismiss the plaintiff’s appeal.

It contests all of the plaintiff’s submissions on appeal. With regard to the present submission of the power of attorney of 28 April 1999 (Annex K 28), it was a belated submission which was not to be taken into account in the appeal. The Regional Court had rightly decided that the director of its branch in St. Petersburg was not authorised to accept service and that reciprocity was not guaranteed.

For the rest of the details, reference is made to the exchanged pleadings, the annexes on file and the minutes.

II.
The plaintiff’s admissible appeal is unfounded.

The requested enforcement judgment (§ 722 (1), § 723 (1), (2) in conjunction with § 328 ZPO) is not to be granted.

By way of introduction, it must be clarified that the St. Petersburg Arbitration Court is not an actual arbitration court, but a state court (cf. Federal Agency for Foreign Trade, Law, Legal Tips for Exporters – Annex K 12, p. 3), whose designation has only historical reasons. Therefore, the provisions of the New York UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which also applies in the relationship between the Federal Republic of Germany and the Russian Federation (BGBI. 1992 II 1016 in conjunction with BGBI. 1962 II 102), are not relevant.

The prerequisites for the granting of a judgment of execution as standardised in §§ 723 para. 2, 328 ZPO are not fulfilled, whereby an examination of the legality of the decision according to § 723 para. 1 ZPO must be omitted.

The defendant is indeed the defendant named in the order of the St. Petersburg Arbitration Court of 22 February 2000; furthermore, this order has acquired legal force according to the Russian law applicable to this court (§ 723.2 sentence 1 of the Code of Civil Procedure), the courts of the Russian Federation were also competent and – here the Senate does not follow the Regional Court – the document instituting the proceedings was in any case served on the defendant’s authorised representative in sufficient time for the defendant to be able to defend himself (§ 328.1 no. 2 of the Code of Civil Procedure). The authorisation of the director of the St. Petersburg branch to serve the defendant is already apparent from the written power of attorney of 28 April 1999 submitted as Annex K 15. This power of attorney is granted comprehensively. A limitation to the representation of the defendant before organs of the administration (the executives) is neither to be inferred from the text of the written power of attorney nor from the circumstances. In particular, contrary to the view of the defendant, organs of the judiciary, i.e. courts, are also organs of the state. There is also nothing to indicate that the power of attorney should only entitle the defendant to represent the defendant in proceedings that have already commenced, but not to receive a document initiating proceedings.

A violation of the German ordre public (§ 328 para. 1 no. 4 ZPO) is also not apparent.

However, the appeal must fail because the Senate, in agreement with the Regional Court, does not consider the guarantee of reciprocity within the meaning of 328.1 no. 5 of the Code of Civil Procedure to be given.

Reciprocity in the relationship between the Russian Federation and the Federal Republic of Germany is not regulated by an international treaty. There are also no judgements of German courts that have taken a position on this question and decided it positively.

A guarantee of reciprocity within the meaning of § 328.1 no. 5 of the Code of Civil Procedure exists if the mutual right of recognition and the recognition practice, when assessed as a whole, create essentially equivalent conditions for the enforcement of a judgment of the same kind abroad (BGHZ 141, 286, 289 = NJW 1999, 3198, 3201). In view of the diversity of the national legal systems, a complete conformity of the mutual right of recognition may not be required. In this context, it may also be justified to regard individual complications that the foreign law causes for the enforcement of German judgments as compensated by facilitations in other points (MünchKommZPO-Gottwald, 2nd ed., § 328 marginal no. 107 and footnote 229). The plaintiff bears the burden of presentation and proof of reciprocity. Despite its wording, § 328.1 no. 5 of the Code of Civil Procedure does not regulate exceptions to a regular ability to recognise, but predominantly the prerequisites of any recognition (BGHZ 141, 286, 301 et seq. = BGH NJW 1999, 3198, 3202). In general, no formal and petty standard is to be applied when examining whether reciprocity is guaranteed (BGHZ 42,194,197. = BGH NJW 1964, 2350, 2351).

Applying these principles, the requirement of § 328.1 no. 5 of the Code of Civil Procedure must be negated in the present case. The Senate cannot establish that there is a practice of recognition in the relationship between the two states. According to information from the Moscow Supreme Arbitration Court of the Russian Federation (Annex K 26), which in turn refers to information from the Ministry of Justice of the Russian Federation, Russian courts have not yet had to decide on the recognition or enforcement of German judgments. The Moscow court merely presumes that reciprocity is guaranteed. The fact that two judgments of courts of the United Kingdom of Great Britain and Northern Ireland have been recognised and declared enforceable in the Russian Federation has no effect on the relationship between the Federal Republic of Germany and the Russian Federation. It cannot be said that the conclusion can necessarily be drawn from this that a German judgment is also recognised by the Russian Federation in relation to the Federal Republic of Germany. Accordingly, the plaintiff also stated in the oral hearing before the senate on 16 September 2004 that the investigations of its legal representatives in the Russian Federation had shown that decisions did not exist so far, as far as this could be ascertained. It is not necessary to follow up on the requests for evidence made by the applicant at first instance in this respect. It is a matter of questions of recognition practice, i.e. the determination of facts. These cannot be established by an expert opinion, as requested by the applicant at first instance (e.g. in its written statement of 11 July 2003). There are no concrete indications for a recognition of judgments in the other state. There is a lack of corresponding practice.

The judgement submitted by the plaintiff in her written statement of 27 October 2004 does not change this. The judgment of the Higher Regional Court of Hamm of 21 February 2003 does not comment on the question of reciprocity in the context of enforceability declarations; rather, the decision only bases the decision on an obligation to pay maintenance on a Russian judgment of descent.

It must therefore still be assumed that, in the absence of recognition practice, reciprocity is not guaranteed (so also Zöller/Geimer, ZPO, 24th ed., Annex IV, State: Russian Federation).

The Senate sees no reason not to decide on the appeal for the time being with regard to the plaintiff’s application in the written statement of 19 October 2004. The applicant does not explain in detail the nature of the “official declaration” by the Supreme Arbitration Court, the context in which it will be issued and the legal significance and scope of this official declaration.

The decision on costs is based on § 97 (1) ZPO. The ruling on provisional enforceability complies with §§ 708 no. 10, 711 ZPO.

The appeal is not admissible, as the case is neither of fundamental importance, nor does the further development of the law or the safeguarding of a uniform case law require a decision of the appellate court (§ 543 para. 2 ZPO). The decision was made in compliance with the Federal Supreme Court’s case law on vouching for reciprocity.