District court of the Hague on Wednesday admitted that the dispute between Russia and the former Yukos shareholders were outside the jurisdiction of the Hague Permanent court of arbitration. This international arbitration court in July 2014 ordered Russia to pay the Yukos oil company $50 billion.
The court verdict in Moscow welcomed. Although the court’s decision does not remove arrests from immovable property of Russia abroad, said the Ministry of justice, it “creates an unconditional reason to demand the abolition of interim measures”. The President’s press Secretary Dmitry Peskov said Moscow understands — it’s not “end of history”.
The head of the GML Tim Osborne admitted that the decision of the court in the Hague for former Yukos shareholders have been extremely unexpected. According to him, the former shareholders will be to appeal. Osborne stressed that the verdict of the court in the Hague does not mean automatic termination or suspension of court proceedings in the “case of Yukos” in all countries where they are already. Now it is known about these processes at different stages, in Belgium, France, USA, UK, Germany and India.
To admit it or not?
“There is a rule that the arbitration decision of the arbitration court shall be entitled to revise the national courts of the country where geographically it [arbitration] is” — that is exactly what happened in the Netherlands, the partner of the international law firm Herbert Smith Freehills Alexei Panich. In such cases it is necessary to do the courts of other countries, where the beneficiaries of the award have already started the procedure of its execution? Most often, when the award is void in the jurisdiction where it was rendered, execution thereon in other countries ceases, say experts.
The order of execution of international arbitration awards in more than 150 countries set the new York Convention 1958. In article 5 of the Convention provides that enforcement proceedings may be terminated, if the award is annulled by the court of the country where it was made. On this and will refer Russia.
However, lawyers for the Yukos shareholders highlight: the Convention stated that the Executive manufacture “can”, not “must” stop because of the decisions of third countries. “Automatic suspension of enforcement proceedings will not be. The most extreme case is France, where in law enforcement do not look at the process for revocation of an arbitral award in the country where the arbitration is based. Simply put, each court in each jurisdiction will have to decide what to do with today’s decision,” he told journalists during a conference call counsel Shearman & Sterling Emmanuel Gaillard, representing the interests of GML.
France may not recognize
France Gaillard allocated by chance. In this country shareholders of Yukos managed to arrest the Russian assets of about €1 billion we are Talking about the property of the Russian Federation and Federal state unitary enterprises such as “Space communications” and “Goszagransobstvennost”. These assets remain under arrest, despite the fact that last week the court of Paris acknowledged the arrests assets of at least €500 million to be unfounded. Arrests have not been removed, as the former shareholders of Yukos appealed against this decision.
In the recognition of arbitral awards France stands apart among other countries. In 1994, in fact, similar to the Yukos case, the French court of cassation refused to take into account that the court of the Swiss Canton of Geneva has invalidated the decision of the Geneva arbitration, even though the decision to cancel was later confirmed by the Federal court of Switzerland. Then French judges referred to the fact that the Civil code lists the grounds for refusing recognition and enforcement of the arbitral award, and the act of a foreign court in the list of these grounds is not included. Since then, French courts have rendered many of the same solutions. The new York Convention is rarely applied in France, came to the conclusion the attorneys of King & Spalding LLP Cedric Sul, Eric Schwartz and Eloise Herve.
One of these solutions, for example, in 2012, JSC “Novolipetsk metallurgical plant” was recognized by the debtor of one of the founders of JSC “Maksi-groups” Nikolay Maksimova. Made in 2007 the decision of the International commercial arbitration court at the Russian chamber of Commerce was held invalid at first, the Moscow court of arbitration, then the Arbitration court of the Moscow district, and then and the Supreme arbitration court. However, in may 2012, the Paris court recognized the award is valid on the territory of France, opening the enforcement proceedings in the amount of 9.6 billion rubles.
In the UK, USA, Belgium and Germany, most likely, the judiciary will listen to the decision of the Hague district court. In all of these countries, the former shareholders of Yukos is now trying to enforce the decisions of the Hague arbitration. Of these countries, the arrests of the Russian property have been imposed only in Belgium (the exact list of affected assets is not).
U.S. courts have repeatedly refused to support the execution of arbitral awards, recognized invalid in the country of issuance. This applies both to disputes between American companies (e.g. supplier of equipment for drilling on the shelf of the Baker Marine, sudivshihsya with the oil company Chevrоn in 1999 — their relationship is regulated by the Nigerian arbitration), and between foreign companies (case TermoRio and LeaseCo Group against Electranta 2007 — were considered in the Colombian arbitration).
In Britain the same approach. “The British courts have traditionally held that where the arbitration claim was annulled by the court at the place of arbitration, they may not recognize or enforce the award,” said lawyer Mike McClure from the office of Herbert Smith Freehills LLP.
However, known cases where this rule did not work, in particular, even with one of the “Yukos Affairs”. Considering one of disputes Yukos Capital and Rosneft in the summer of 2014, judge peregrine Simon of the High court of England and Wales concluded that the recognition of a foreign judgment, which “violated the basic principles of honesty, natural justice and domestic concepts of public policy”, it would be “inappropriate and contrary to the principles” (it was about the decision of the Russian courts, which invalidated the decision of the Russian International court of commercial arbitration 2006). Thus, English common law recognises that in exceptional circumstances the claim may “survive” their revocation in jurisdiction of arbitration, said attorney Andrew Tweddell from Corbet & Co International Construction Lawyers, indicating that to prove it will still cost a lot of effort.
The Belgian court will review the decision of the Hague district court on June 9, told “RIA Novosti”, the law Bureau partner Hanotiau & van den Berg, representing the interests of Russia, Niusha Bassiri. She hoped that under the new York Convention, the judge will announce the withdrawal of the arrest. A court in Belgium will likely remove the injunction, suggested in an interview with the representative of the international law firm Mena Chambers, arbitrator, Adnan Amkhan to Buy. Similarly, in Germany. “Resolution providing for the adoption of coercive measures which are now cancelled and is not grounds for such measures [in Germany],” explained a partner at international law firm Mayer Brown mark Kilgard.