The standards of the foreign defendants notification in the economic disputes resolution

Full Text

Introduction When considering economic disputes involving foreign persons in state courts, the issue of proper and timely[381] notification of the latter (hereinafter referred to as judicial notification) is of fundamental importance. The judicial notification of the defendant is an indispensable attribute of realization of the right of access to justice, guaranteed both by the norms of international[382] and national law[383]. In a number of jurisdictions, notification has a dual function - it is considered not only as a matter of exercising the right of access to court, but also as part of the jurisdiction in personam, in whose absence the court cannot consider itself competent to hear the dispute[384]. The issue of notification was paid close attention by both domestic (Eliseev, 2016, Kostin, 2014; Kostin, 2017, Yarkov, 2012) and foreign experts (Anthimos, 2017, Dodge, 2022, Schack, 2001). The issue of notifications is of particular relevance in the light of the current geopolitical realities as serving court documents is complicated by numerous mutual restrictive measures (sanctions) introduced by states. Arising logistical difficulties (for example, difficulties in accessing courier services[385], an increase in the delivery time of correspondence[386]) develop into difficulties of a legal nature (for example, loss of timeliness by a notification due to delays in the delivery of correspondence, conflict with the plaintiff’s right of access to trial within a reasonable time). In such a situation, it seems important to analyze the existing approaches to the standards for notifying foreign persons in the practice of Russian courts. The article investigates the standards of strictly formal and effective notification in their formation and development and analyzes the impact of sanctions on conventional notification mechanisms on the example of one of the high-profile cases. Conventional channels for forwarding judicial notices First of all, the task of proper and timely notification of a foreign person arises in a forum where the case is considered on the merits. At the same time, states may have different attitudes towards regulation of judicial notifications of foreign proceedings (Hay, 2018). There are two fundamentally different approaches: in accordance with the first, judicial notification is a public legal activity of the state (Yarkov, 2012), while service of a document on a foreign judicial process is “a state act of supremacy that assists a foreign judicial process” (Schack, 2001:287). Under the second approach, procedural notification may be performed privately, by simply sending it by post or courier to the defendant. This option is implemented in the countries of the Anglo-Saxon legal family. Its logic is as follows: if the task of service is the actual notification of a lawsuit in order to exercise the right to be heard in court, then this task can also be well performed by private individuals (for more details, see: Schack, 2001:289). The applicable law for assessing whether the notification of a foreign person was appropriate and timely or not can also be determined in different ways (Kostin, 2014; Kostin, 2017, Eliseev, 2016). A foreign defendant’s notification may be assessed under the law of the country where the dispute is being settled (lex fori), or taking into account two legal systems, where the law of the country where the notification was delivered is additionally taken into account (lex diligentiae), while the latter could potentially become in the future the right of the country to recognize and enforce the expected judgment (lex recognitionis). The forum of the country of subsequent recognition and enforcement (hereinafter referred to as exequatur) of a foreign judgment is also empowered to assess the procedural notification that took place during the resolution of a dispute abroad (Kostin, 2014). Thus, improper and untimely notification will block the exequatur either as an independent basis for refusing to recognize and enforce a foreign judgment[387], or as an element of “procedural public order” (Krokhalev, 2006; Yarkov, 2012), or as a violation of the principle of natural justice[388]. Most jurisdictions in such a situation apply the law of the country of the exequatur, often the same as the law of the country where the notification was served (lex diligentiae) (Kostin, 2014). Thus, the nature of the procedural notification in cases with a foreign element can be assessed several times: at the stage of consideration of the case on the merits of the dispute, at the stage of notice delivery in the country where the defendant is located and at the stage of recognition and enforcement of a foreign judgment. And it is possible that the law enforcement agencies involved may differ in their assessment of the proper nature and timeliness of defendant’s notification. This problem is partially solved by various international treaties - conventional mechanisms[389] aimed both at unifying the standards and procedures for notifications and providing access to information about the trial through channels verified and recognized by the state as suitable for such purposes[390] - methods of transmitting letters of request and (or) documents. It is customary to single out the following main[391] channels: 1) diplomatic[392], 2) interaction through the central authority of the country of notification appointed by the states in accordance with the most famous international standard today - the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 1965[393] (hereinafter referred to as the 1965 Hague Convention), 3) direct communication between the courts[394], and 4) the “private law” (or “postal”) notification channel, which involves sending a notice by the postal or courier service or delivery of documents to a foreign defendant by the other party[395]. The last of these channels is directly named as acceptable in famous Article 10 (a) of the 1965 Hague Convention, along with the main channel - notification through the central authority[396]. But states, upon ratification, may make an objection to Article 10. It is important that the Russian Federation has also made such an objection[397]. The system of notification channels developed in the conventions began to create for Russia a problem initially stemmed from the public law nature of the procedural notification. It can be described as follows: Will a deviation from the rules fixed in the conventions, in all cases, mean improper notification? A positive answer to this question creates a standard of strictly formal notification. In contrast, one can single out the standard of effective notification, the essence of which is as follows: a defect in the procedure of the conventional mechanism can be compensated by evidence that the judgment debtor was reliably aware of the foreign litigation, and this awareness can be achieved, among other things, through private law (“postal”) notification channels, i.e., by simple postal transmission of documents, bypassing the formalized channels of referral through the central authority or direct communication of the courts). Strictly formal notification standard in Russian judicial practice Establishment of a strictly formal notification standard in Russian judicial practice can be associated with the well-known and widely discussed (Kudelich, 2015) Nortel case, considered back in 2014 by the Presidium of the Supreme Commercial Court of the Russian Federation. The Supreme Commercial Court of the Russian Federation, in its resolution 3366/13 dated January 28, 2014, formulated the requirement for strict observance of international legal convention mechanisms when notifying the defendant, even if the latter does not deny that he was informed in other ways about the proceedings against him in a foreign court, but still did not appear there. The case brief was as follows. In connection with the failure to fulfill obligations under the main contract, the plaintiffs, guided by the prorogation agreement, appealed to the High Court of Justice of England and Wales. The notice to the defendant was not sent through the central authority under the 1965 Hague Convention, but in accordance with English procedural law by a registered letter with declared value and the list of enclosure to the address of the defendant’s place of registration, as well as its permanent executive body. The English court was presented with evidence of receipt of those notifications by the defendant’s employee, in connection with which the court considered the notification to be proper and, having considered the case in the absence of the notified defendant, made a default judgment in favor of the plaintiffs. At the stage of recognition and enforcement of this decision in Russia, the Supreme Commercial Court of the Russian Federation considered that “the notification of the debtor about the ongoing legal proceedings against him in a foreign court was made in accordance with the rules of English legal proceedings and was effective, since it was actually received by the debtor located in the Russian Federation, which was established by the courts”. But at the same time, the notification did not comply with the 1965 Hague Convention in force in the Russian Federation, taking into account the statements made by it in relation to Article 10 on objections to simplified procedures for sending, forwarding and serving judicial and extrajudicial documents in civil or commercial matters. By virtue of paragraph 2, Part 1, Article 244 of the Arbitration Procedural Code of the Russian Federation, improper notification formed the ground for refusing exequatur. In support of the strictly formal notification standard, a detailed argumentation was expressed by many Russian experts (Yarkov, 2012; Kostin, 2017). A logical development of this position is the thesis expressed by Professor V.V. Yarkov that informing about the trial in any other way than the conventional one “will be deemed illegal and improper, not entailing any legal consequences for Russian citizens, grossly violating the sovereignty of the Russian state, procedural public order and the right to judicial protection in its constitutional and legal interpretation” (Yarkov, 2012). We believe that the main idea of a strictly formal approach may be formulated as follows: outside the channels of transmission and service of court documents agreed upon by the states there may not be any awareness of the process, which obliges a party to take actions to organize the protection of its rights in a foreign process (to involve consultants, etc.). Methods other than conventional channels have not been verified and are not recognized by law enforcement as appropriate, since they do not provide the potential defendant with the necessary guarantees (the language in which the documents are executed, the completeness of the sent package of documents, unified and predictable consequences of no response on servicing, etc.)[398]. The problem with such approach lies in the fact that it creates risks of abuse of the right to a conventional notification by those who are informed about the foreign process in alternative ways. As a result, foreign judgment debtors, defending themselves from exequatur, refer to the improper nature of their notification on the basis of international treaties, in fact, having reliable information about the opening of a lawsuit against them and the decision that was made. This matter was noted by experts (Kudelich, 2015) and influenced the subsequent development of judicial practice. Effective notification standard in the Russian judicial practice After the Nortel case discussed above, the Supreme Court of the Russian Federation began to “soften” the standard of a strictly formal notification in a number of cases[399]. This trend in 2017 was consolidated in a large-scale document on generalization of judicial practice in the field of international civil procedure - in the Resolution of the Plenum of the Supreme Court of the Russian Federation No 23 of June 27, 2017 On Consideration by Commercial Courts of Economic Disputes Involving Cross-Border Relations. Paragraph 36 of the document established the standard of the so-called effective notification. It runs as follows: “taking into account that the persons participating in the case must use all their procedural rights in good faith (Part 2, Article 41 of the ComPC RF), the absence of evidence of receipt of court notifications forwarded in the manner stipulated in the corresponding international treaty or federal law, cannot by itself serve as grounds for unconditional reversal of the judicial act, if the court session was attended by an authorized representative of the foreign person, and (or) if the court received from the foreign person the statement of defense, evidence, motions, or if there is other evidence that the foreign person knew about the trial”. From the content of this paragraph, it follows that rehabilitation of the defect of formal notification is possible in the case of evidence of the party’s awareness of the process, among which two groups are distinguished: first, those that confirm the actual participation in the court session (participation of a foreign person’s representative in court hearing and (or) submission of the statement of defense, evidence, motions) and secondly, other evidence of the party’s awareness of the trial. The rule that the actual participation in the trial (appearance of a representative and presentation of arguments on the merits of the dispute, etc.) exonerates improper notification was enshrined in judicial practice much earlier[400] and is widely recognized. But the position that “other evidence of the party’s awareness about the trial” is also considered appropriate but requires a balanced assessment of notification. The point is that such awareness of the party about the trial may be achieved using private law methods of serving court documents and postal channels. The consequence of such approach may be a departure from direct compliance with the requirements of international treaties of the Russian Federation, including the objection clause in relation to Article 10 of the 1965 Hague Convention, as well as Article 5 of the Kyiv Agreement. It seems that this risk of leveling the effect of international agreements was recognized by the law enforcer, and in 2019 the Supreme Court of the Russian Federation in its decision dated April 30, 2019, case No. A35-2592 / 2018, explained the procedure for applying the effective notification standard, emphasizing that it is not aimed at overriding the effect of international agreements: when notifying, it is necessary to comply with conventional mechanisms, including those provided for in Article 5 of the Kiev Agreement of 1992, if applicable. The court specified that “notifications of a trial sent in violation of the norms of an international treaty of the Russian Federation providing state guarantees of protection to persons under its jurisdiction on its territory, cannot be considered appropriate”. But the bona fide party has the right to prove that the other party was aware of the lawsuit, had the opportunity to defend its rights, but, acting in bad faith, solely in order to overcome the execution of a foreign judgment, refers to non-compliance with an international treaty when notified. The Supreme Court of the Russian Federation noted that in such a situation the court establishes the circumstances of the actual notification and the absence of abuse on the part of all participants in legal relations. It is noteworthy that later in the Review of Judicial Practice of the Supreme Court of the Russian Federation No. 3 of 2019[401], the standard of effective notification was enshrined as an alternative to proper notification under conventional mechanisms without appealing to the principle of good faith: “notification of a trial in a foreign court is appropriate if the notification procedure established by the norms of international treaties is followed, or there is evidence of effective (actual) notification of a party to litigation in a foreign court (provided that it was aware of such litigation)”. Further in practice, this approach was confirmed by the Supreme Court of the Russian Federation. Thus, in the decision of the Supreme Court dated 03.12.2021, case A40-162711/2020 on recognition and enforcement of the decision of the High Court of Justice of England and Wales on the recovery of court costs, the Supreme Court of the Russian Federation again emphasized the independent importance of effective notification standard in relation to the formal conventional mechanism[402]. Thus, the Russian judicial practice has formed an approach to verify, among other things, the effective notification of a foreign defendant. On the one hand, this allows to overcome the problem of abuse of the right to lengthy and complicated conventional notification channels in a situation where the foreign defendant was aware of the trial but refers to the absence of notification under an international agreement. On the other hand, the question arises concerning the conditions for applying the effective notification standard and distinguishing between the cases of using conventional and alternative notification channels in the light of compliance with obligations from international treaties and the principle pacta sunt servanda. Conditions for applying the effective notification standard The standard of effective notification as an opportunity for non-conventional informing of a foreign defendant was supported by a number of Russian experts as acceptable, but under certain circumstances (Eliseev, 2016; Kudelich, 2015). It seems that fixation of the standard of effective notification in Russian law enforcement practice does not at all imply that international conventional notification channels, including the 1965 Hague Convention together with the Russian clause on the non-application of Article 10, maysimply be replaced in cross-border judicial notificationby alternative procedure forforwarding information about the trialto the defendent. The applicability of conventional mechanisms is established, first of all, by the international treaties that provide for them, but not arbitrarily by the national law of the States Parties to the international treaty. It is important that in relation to the 1965 Hague Convention, its exceptional nature is recognized, i.e., its channels are only available for use where the convention is applicable[403]. Accordingly, the convention mechanism remains the main standard for judicial notification of foreign persons, which, due to the developed judicial practice in Russia, does not exclude, under certain conditions, application of the effective notification standard. We can identify several such situations. First, we can fully agree with the position that in cases where an international treaty providing for a certain conventional notification channel does not apply, other notification rules can be used, including those not related to international legal mechanisms (Eliseev, 2016). For example, the 1965 Hague Convention under paragraph 2, Article 1, does not apply if the address of the recipient of the document is not known[404]. Moreover, the same Hague Convention in paragraph 1, Article 1 outlines the scope of its application as follows: it is applicable in civil or commercial matters in all cases where a judicial or extrajudicial document must be forwarded or serviced abroad. Some legal systems proceed from the fact that this provision requires international legal interpretation, as established by the convention norm, but others proceed from the fact that this provision is interpreted by the court in accordance with the national law of the country where the dispute is resolved. The second approach was supported by the experts at the Hague Conference as an established one[405], which was also noted in Russia (Eliseev, 2016). This allowed national systems of justice to interpret in a special way situations where notices are not required to be forwarded abroad, which raised the issue of practice of so-called substitute notices. Substituted service (Dodge, 2022) and/or notification fictions known as the remise institute au parquet - the presumption of due notice of the defendant upon the fact of serving the documents to a competent official (for example, prosecutor in the previously used (until 2005) French model[406], or secretary of state - in the American), who then takes on the task of subsequent transfer of documents to other competent authorities for delivery to their final addressee. But such approach is recognized by experts as colliding with the international standards of the 1965 Hague Convention[407] and with the law of the European Union[408] (Anthimos, 2017). A number of countries, such as Belgium, considered the remise notification au parquet contrary to public policy (Gössl, 2016:88). US experts also see a contradiction of remise au parquet to the principle of due process, guaranteed by the Fourteenth Amendment to the US Constitution (Dodge, 2022), and the removal of the contradiction requires notification under the 1965 Hague Convention (Dodge, 2022). In other words, the fiction of service ceases to be a proper substitute notice and requires the document to be forwarded abroad, which means it falls under the scope of the Hague Convention. It is noteworthy that in the situation of the substituted service of a different kind known to the United States - the service of a document to an affiliate of the defendant or its subsidiary, provided that the degree of their proximity and interaction with the defendant is such that one could clearly rely on the transmission of notice to him[409] - courts and experts do not see such contradiction with the principles of due process, believing that such substitute notice is legitimate within the interpretation; accordingly, they do not find essential to invoke the 1965 Hague Convention in the manner of interpreting its Paragraph 1 of Article 1 (Dodge, 2022). Thus, a number of countries retain a national legal approach in interpreting the limits of application of the 1965 Hague Convention and the range of situations in which forwarding a notice abroad is not required. The question of the excluding application of the 1965 Hague Convention by agreement of the parties, including the situation when the parties, for example, include a provision on electronic notification of the trial in the contract and indicate an e-mail address for such a purpose, remains controversial (Tamayo, 2000). Countries following the public law concept of judicial notification, as a rule, do not recognize such a possibility of contractual exclusion of the public law obligation of the state[410]. At the same time, the Russian doctrine expressed the premise in support of the right of the parties to an agreement on the procedure for serving court documents (Eliseev, 2016). The following position on this issue is noteworthy: a contractual exception to the application of the 1965 Hague Convention is not allowed by the treaty, since it is imperative in cases subject to application, i.e., when a court document must be forwarded outside the court jurisdiction (Paragraph 1 of Article 1 of the Convention). However, if the agreement of the parties to send a notice is such that it does not require servicing abroad - for example, a local representative is appointed or an address in the country of the trial is indicated - then the Convention no longer applies (Coyle, Effron & Gardner, 2019). The Supreme Court of the Russian Federation has yet to develop an attitude towards this issue. Thus, if the conventional channel is not applicable due to the provisions of an international treaty providing for it, the state will use alternative options for serving court documents. Subsequently, upon receipt of an exequatur for a judgment, the court of the state where its recognition and enforcement is sought will evaluate both the question of applicability of the Convention (which may differ concerning the limit to its operation and may recognize refusal to use it as unreasonable), and the question of whether the manner of service complies with the standards of due process and public policy in Russia, i.e., the standard of effective notification developed in judicial practice. An exception from a strictly formal standard in favor of an effective one may be a situation where, on the contrary, the exercise of the right to trial, guaranteed by the norms of both national and international law, will be suspended for the plaintiff. In this context, the experience of Great Britain is noteworthy. Under Article 6.8. of the UK Civil Procedure Rules 1998[411] the court, both in case of notifying within the national litigation, and in case of foreign persons notification (RSC Order 69, Rule 3(5)), has the right to deviate from the formal methods of notifying the parties to the trial and move on to alternative methods, properly justifying thеm. In the request to use the chosen method, the applicant must have a good reason and attach evidence confirming it (Part 1 Article 6.8). According to experts, in judicial practice, exceptional and permissible only in special cases derogation from the convention channels is possible if notification in the manner prescribed by an international treaty takes a very long period of time, up to a year (Eliseev, 2016). In the United States, at one time, access to notification by an alternative conventional method was provided in relation to Russian defendants, since cooperation between Russia and the United States under the 1965 Hague Convention was suspended due to the introduction of a paid procedure for serving documents by the United States[412] (Willig, 2009). Finally, another of the possible conditions for applying effective notification standard is set out in case No. A35-2592/2018 discussed above, from which it follows that this standard is applied only in situations of bad faith of the party avoiding exequatur by referring to non-compliance with the conventional judicial notice mechanism. Thus, it appears that effective notification does not act as a simple alternative to conventional mechanisms, but as permissible under certain conditions, for example, in cases where conventional mechanisms are not applied in virtue of the provisions of an international treaty; in case of proven abuse by the defendant; in exceptional cases, when the right to trial on the part of the plaintiff will be suspended, for example, when the court is unable to notify the defendant under the Convention. It is especially significant that conventional channels for court notificationrequire compliance with procedural guarantees of the notified person (the appropriate language of the document, completeness of information, etc.) and serve to ensure, among other things, the recording of the delivery, acting both as a method and evidence of notification. In an effective notification situation, there will be no such formal confirmation of notification receipt from the competent authority. Accordingly, the standard of effective notification, firstly, in all cases, should assume that legitimate awareness of the trial is possible only if the basic procedural rights of the notified person are observed, and secondly, it requires an assessment of the evidence of such service[413]. These issues should be under the judicial control when assessing the effective notification of the defendant. It is especially relevant in the light of digitalization and the widespread use of electronic means of communication. The question arises as to whether e-mail notice of a lawsuit meets the standard for effective notification. Abroad, this issue is being actively investigated (Hedges, Rashbaum & Losey, 2009; Lewis, 2008; Tamayo, 2000) in the light of developing judicial practice, and the issue is looked at both from the point of view of compliance of e-mail notification with the 1965 Hague Convention[414], and in terms of its applicability a’s an alternative notification channel. For example, e-mail notice in the Rio-International case[415] was held to be permissible by US courts because the company had created a business model where it could only be contacted by e-mail. In another case, Ehrenfeld v. Salim a bin Mahfouz[416] the court found that the defendant’s email address was only used as an informal means of communication, and, thus, was not a sufficiently reliable communication channel to ensure that the defendant would receive the email (Hedges, Rashbaum & Losey, 2009). We note that the Russian courts considered the proven e-mail notice sufficient to meet the standard of effective notification[417]. On the other hand, there were also cases where discrepancies of the e-mail notification (a letter from an unknown person and/or a link to a file that could not be opened)[418] were not recognized as proper notification. Among the alternative channels, notification through social networks and instant messengers[419], through the return form on the site[420], as well as through blockchain technology[421] are gaining popularity abroad. These notification options are subject to scrutiny by experts (Tamayo, 2000, Upchurch, 2016), including in terms of their compliance with due process standards (due process), taking into account the technological features of the platforms and the specific circumstances of the case. The prospects for the use of information technologies in the framework of the 1965 Hague Convention are being discussed (Bessonova, 2021). However, this issue requires further reflection and research. The impact of sanctions on the conventional mechanisms of notification: Sovfracht case and the problem of notifying a sanctioned person in the event of an anti-suit injunction under Art. 248.2 APC The case of the Commercial Court of the City of Moscow No. A 40-179775 / 2021, known as the case of the Sovfracht company is interesting in terms of the issue under study. Its brief is as follows. By the decision of the Commercial Court of the City of Moscow dated 08.09.2021, case No. А40-156736/2020, in accordance with Article 248.2 of the Arbitration Procedural Code of the Russian Federation, the application of the Sovfracht company on the prohibition to initiate or continue proceedings in a foreign court located outside the territory of the Russian Federation on the dispute between the applicant and its counterparty was satisfied. However, the latter continued the proceedings initiated in accordance with the prorogation agreement in the UK court. Subsequently, the foreign court attempted to notify the Russian company Sovfracht under the 1965 Hague Convention. The writ for service of documents was sent by the Ministry of Justice of the Russian Federation to the Commercial Court of the city of Moscow, which, by a ruling dated September 22, 2021 established the impossibility of executing the order for reasons beyond the control of the court, since the applicant's representative refused to receive documents from the foreign court. But the Supreme Court of the Russian Federation, in its ruling dated June 29, 2022, rejected this approach, noting that the court of first instance did not check the foreign writ for compliance with the grounds for execution and refusal of execution provided for in Part 2, Article 256 of the APC, for example, such as a contradiction to public policy, taking into account Articles 248.1 and 248.2 of the APC of the Russian Federation, the exclusive international jurisdiction of the Russian court in relation to a dispute pending in a foreign court and an anti-suit injunction prohibiting from continuing proceedings in a foreign court. The Supreme Court held that the court of first instance, by its ruling, actually executed the foreign order, while it was necessary to check whether there were any grounds for refusing to execute the court order, and if there were any, then refuse to execute it. Accordingly, further on, when re-considering the issue, the court of first instance, the Moscow Commercial Court, by its ruling dated November 7, 2022, predominantly duplicated the position of the Supreme Court of the Russian Federation and found that the execution of the foreign court order violates the fundamental principles of Russian law, is contrary to the public policy of the Russian Federation, and in accordance with paragraph 1 Part 2 Art. 256 of the Arbitration Procedural Code of the Russian Federation is not enforceable. Thus, the Russian sanctioned person, who received an anti-suit injunction against procedural opponent prohibiting to continue proceedings in a foreign court due to the exclusive jurisdiction of the dispute to the Russian court, could not be notified in accordance with the conventional mechanisms of the “prohibited” trial, since the execution of the writ on such notification is contrary to public policy. It is noteworthy that in this case, the Russian court, in the reasoning part of the judicial act, relied to a greater extent on the national legal norms on refusal to execute a foreign court order due to its contradiction to public policy, while the conventional norm (Article 13 of the 1965 Hague Convention), regulating the final refusal to execute a foreign writ for service of judicial notice in connection with possible damage to sovereignty or security of the requested state, was only mentioned inter alia. On the one hand, the provisions of paragraph 1, Part 2, Article 256 of the Arbitration Procedural Code of the Russian Federation and Article 13 of the 1965 Hague Convention are somewhat similar (Doryaev & Kryazhevskikh, 2012), but one cannot but pay attention to differences in terminology: Article 13 speaks of preventing damage to sovereignty or security. The 2007 Practical Guide notes that the concept of “sovereignty”, as conceived by the authors of the convention, is equivalent to the concept of “international public order” and generally excludes reservations based on the state’s internal public policy[422]. In the practice of national courts, there have been various approaches to interpreting these conventional provisions[423]. Let us note that there are cases in foreign practice when the anti-suit injunction of a local court undermined the effect of a foreign judicial act. For example, the high-profile Zetta Jet Pte Ltd and Others case (2018), where a Singapore court found that recognition of a foreign bankruptcy proceeding would override a Singapore court’s earlier anti-suit injunction, which would undermine the administration of justice in the country and therefore be contrary to public policy. In such a situation, the Singapore court made a truncated recognition in respect of only those powers of the foreign bankruptcy administrator that would allow to challenge the Singapore court's anti-suit injunction, so that, if it is successful, in the future, return to the issue of recognition of the entire foreign bankruptcy proceedings[424]. Thus, the cross-border effect of the consequences of a foreign lawsuit in a country where an anti-suit injunction against such litigation was previously issued will be limited, as it is regarded as undermining the administration of justice, i.e., the exercise of sovereign powers by the state. The Russian courts appear to have taken a similar approach with respect to the cross-border effect of a foreign litigation subject to anti-suit injunction but not at the exequatur stage; it is practiced at an earlier stage of serving notice on the defendant. Another argument of the Supreme Court of the Russian Federation in its position on the case under study was as follows: a potential refusal to execute a foreign court order in connection with its contradiction to public policy could lead to the cessation of further progression in the case on the issue of company’s participation in the relevant foreign court proceedings on the basis of submitted foreign judicial notice, therefore, would prevent the further progression of the case on this issue (this argument was used to justify the possibility of appealing the court ruling on the execution of a foreign court writ). Meanwhile, recognizing as contrary to public policy execution of writs for notification of foreign proceedings against “sanctioned persons” in a situation where an anti-suit injunction was previously obtained to continue conducting a foreign proceedings due to the recognition of the dispute exclusively under the jurisdiction of the courts of the Russian Federation, may lead foreign courts to use alternative mechanisms for notifying sanctioned persons to the conventional ones. In the future, this will not raise before the Russian courts the question of assessing such notification for its compliance with the standard of effectiveness, since the exequatur of such judicial acts will, as follows from the logic of Articles 248.1 and 244 of the Arbitration Procedural Code, be blocked on other grounds (contradiction of exclusive international jurisdiction). But the question of how this situation may be assessed by third states, on whose territory attempts to recognize and enforce such a court decision may be made, remains open. Conclusions Thus, Russian judicial practice, in contrast to the strictly formal standard of notifying a foreign defendant, understood as non-deviation from conventional notification mechanisms and preventing the postal channel for serving documents to domestic defendants, has formed a standard of effective judicial notification, based on evidence of party’s factual awareness of the foreign litigation. In fulfilling its useful function, the effective notification standard should not lead to leveling of international agreements on the procedure for notifying foreign persons - they remain binding and exclusive (1965 Hague Convention) for those situations where they should be applicable due to their subject, object and goals. Accordingly, in the light of compliance with international legal obligations and the principle of pacta sunt servanda, it is important to highlight the conditions for applying the effective notification standard. These include cases where the conventional mechanisms are not applied due to the conventional provisions themselves; in case of proven abuse on the part of the defendant under a court decision, in exceptional cases when, adversely, the right to a fair trial on the part of the plaintiff will be suspended (for example, due to impossibility to notify the defendant under convention). In all cases, the standard of effective notification, firstly, must ensure compliance with the basic procedural rights of the notified person, and secondly, it requires an assessment of the evidence of notification. These issues should be under judicial control when assessing the effective notification of the defendant. The sanctions affected the conventional notification mechanisms: a Russian sanctioned person subject to an anti-suit injunction against a procedural opponent prohibiting it from continuing proceedings in a foreign court due to the exclusive jurisdiction of the dispute in a Russian court could not be notified in Russia of the “prohibited” trial through conventional channels, since execution of judicial writ for such notification is contrary to public policy.

About the authors

Elena V. Mokhova

Higher School of Economics (HSE University)

Author for correspondence.
Email: emokhova@hse.ru
ORCID iD: 0000-0001-9729-6546
SPIN-code: 8084-5013

Candidate of Legal Sciences, Associate Professor of the Department of Legal Regulation of Business, Faculty of Law

3 Bolshoy Trekhsvyatitelsky lane, Moscow, 109028, Russian Federation

Iana S. Butakova

Higher School of Economics (HSE University)

Email: yanabutakova@yandex.ru
ORCID iD: 0000-0002-8686-5384
SPIN-code: 7327-2494

postgraduate student of the Graduate School of Law

3 Bolshoy Trekhsvyatitelsky lane, Moscow, 109028, Russian Federation

References