THE LUGOVOY AWARDS: ARE THEY ENFORCEABLE IN CENTRAL ASIA?

I. The Lugovoy law

 The Lugovoy law refers to the 2020 amendments to the Russian Arbitrazh (i.e. Commercial) Procedure Code under Articles 248.1-248.2. It allows Russian arbitrazh courts to:

 1) claim exclusive jurisdiction over disputes involving Russian sanctioned parties if a) foreign courts or international arbitration are not indicated as a dispute settlement forum by an agreement of the parties or in an international treaty of Russia (part 1 of Article 248.1) and b) irrespective of the competence of a foreign court or international arbitration chosen by an agreement of the parties, if sanctions make such agreement unenforceable limiting Russian sanctioned parties access to justice (part 4 of Article 248.1); and

2) issue an anti-suit injunction to prevent the other party to the dispute to commence parallel proceedings in foreign courts or international arbitration or further pursue such parallel proceedings once commenced (part 1 of Article 248.2); and

3) levy a fine up to the disputed amount on the other party if the other fails to follow the anti-suit injunction (part 10 of Article 248.2).

 The full text of the Articles is available in Russian here.

 Details of the cases involving the Lugovoy law can be found at Global Arbitration Review’s website.

 You can read more about the development of the Lugovoy law application here and here. 

II. Can Russian courts request to recognize and enforce the Lugovoy awards in Central Asia?

1. The grounds for refusal to recognize and enforce court awards within the Commonwealth of Independent States

All five of the Central Asian states are members of the Commonwealth of Independent States (CIS) (Turkmenistan remains as an associate member of the CIS since 2005). Recognition and enforcement of court awards within the CIS member countries are regulated, mainly, by two conventions:

1) the 1993 Minsk Convention on legal assistance and legal relations in civil, family and criminal matters and the 1997 Moscow and 2025 Protocols to it (the 1993 Minsk Convention). The full text of the Convention is available in Russian here;

2) the 2002 Chisinau Convention on legal assistance and legal relations in civil, family and criminal matters and the 2025 Protocol to it (the 2002 Chisinau Convention). The full text of the Convention is available in Russian here.

The 2002 Chisinau Convention replaced the 1993 Minsk Convention for the CIS countries which have ratified it and became full members of it. Meanwhile, the 1993 Minsk Convention will remain in effect for the CIS countries who have not acceded to the 2002 Chisinau Convention. Relations between a Chisinau member state and Minsk member state are regulated by the 1993 Minsk Convention (Article 120 of the 2002 Chisinau Convention). 

Uzbekistan, Kazakhstan, Kyrgyzstan, Tajikistan and Russia participate in the 2002 Chisinau Convention. Turkmenistan participate in the 1993 Minsk Convention in its 1993 edition since it has not acceded to the 1997 Moscow protocol. Thus, a request to recognize and enforce court awards in the first four Central Asian states has to rely on the 2002 Chisinau Convention, while in Turkmenistan such request has to refer to the 1993 Minsk Convention.

The 1993 Minsk Convention provides for relevant provisions to request recognition and enforcement of court awards in another member state. According to the Convention, awards on civil matters (including commercial) are subject to recognition and enforcement in other members states (Article 51) and courts of a member state in which enforcement is sought are limited to establish whether the requirements of the Convention are met, i.e. they cannot reconsider the case at substance (Article 54). Article 55 of the Convention provides for the following exhaustive list of the grounds for refusal to recognize and enforce court awards in the 1993 Minsk Convention member states:

1) the finality requirement to the award is not met;

4) the defendant is not notified to appear in court in a timely and proper manner;

5) there is ongoing case or an award of the court in the member state in which recognition and enforcement of the award is sought; or recognized award of a third state involving the same parties on the same subject matter and on the same grounds in the member state in which recognition and enforcement of the award is sought;

6) the dispute is within the exclusive jurisdiction of the member state under the Convention or the laws of the member state in which recognition and enforcement of the award is sought;

7) a document confirming the agreement of the parties on contractual jurisdiction is not presented;

8) limitation period for enforcement of the award established by the laws of the member state is lapsed.

The 2002 Chisinau Convention additionally provides that recognition and enforcement of court orders on interim measures, more specifically, orders to seize property, including funds in bank accounts, as a measure to secure claims, can be recognized and enforced in other member states (Article 54). Similarly, the 2002 Chisinau Convention provides for additional grounds for refusal to recognize and enforce court awards:

1) the award is not compliant with the provisions of the 2002 Chisinau Convention;

9) the recognition and enforcement of the award would be contrary to the public order of the member state.

2. The grounds for refusal to recognize and enforce court awards under the national legislation of Central Asian states

Apart from the grounds provided by the CIS conventions, the national legislation of the Central Asian states also regulate recognition and enforcement of foreign court awards.

Uzbekistan

Recognition and enforcement of foreign court awards are regulated by the 2018 Uzbek Civil Procedure Code and the 2018 Uzbek Economic Procedure Code. The full text of the Civil Procedure Code  is available in Uzbek, in Russian, and in an unofficial English. The full text of the Economic Procedure Code is available in Uzbek, in Russian.

Article 370 of the Uzbek Civil Procedure Code provides a non-exhaustive list of grounds for refusal to recognize and enforce foreign court awards: 

1) the award has not entered into legal force;

2) the party against whom the award was rendered was not duly notified in a timely manner of the time and place of the hearing or was unable to present its explanations to the court for other reasons;

3) consideration of the case in accordance with international treaties or the legislation of Uzbekistan falls within the exclusive jurisdiction of Uzbek courts;

4) there is a decision of a Uzbek court in force, rendered over the dispute involving the same parties, on the same subject matter and on the same grounds;

5) there is an ongoing case involving the same parties, subject matter, and grounds in an Uzbek court initiated prior to the initiation of proceedings in a foreign court;

6) the statute of limitations for enforcing a foreign court is lapsed and has not been reinstated by an Uzbek court;

7) the party has provided evidence that the dispute was resolved by an incompetent foreign court;

8) the decision has been overturned by a competent authority of a foreign state;

9) the decision was rendered by a court of a foreign state and there is no international treaty of Uzbekistan related to the recognition and enforcement of decisions of foreign courts;

10) enforcement of the decision of a foreign court would harm the sovereignty or security of Uzbekistan or would be contrary to the fundamental principles of its legislation.

The grounds for refusal to recognise and enforce foreign court awards provided by the Uzbek Economic Procedure Code is identical to those provided above.

 Kyrgyzstan

Recognition and enforcement of foreign court awards is regulated by the 2017 Kyrgyz Civil Procedure Code. The full text of the Kyrgyz Civil Procedure Code is available in Russian.

 Under Article 432 of the Code, Kyrgyz courts have the right to refuse recognition and enforcement of court awards in the following cases:

 1) the decision has not become legally binding or is not enforceable under the law of the state in which it was made, except in cases where the decision is enforceable before it becomes legally binding;

2) the party against whom the decision was made was not timely and properly notified of the time and place of the hearing or, for other reasons, was unable to present its explanations to the court;

3) the consideration of the case in accordance with an international treaty of the Kyrgyz Republic or the law falls within the exclusive jurisdiction of a court of the Kyrgyz Republic;

4) if there is a final decision of a court of the Kyrgyz Republic or a recognized decision of a court of a third state on a dispute between the same parties, on the same subject matter and on the same grounds;

5) if a case involving the same parties, subject matter, and grounds is pending before a court of the Kyrgyz Republic, the proceedings in which were initiated before the proceedings in a foreign court were initiated;

6) the statute of limitations for the enforcement of a foreign court decision has expired and this period has not been restored by the court;

7) enforcement of the foreign court decision would be contrary to the public policy of the Kyrgyz Republic.

 Kazakstan

 Recognition and enforcement of foreign court awards is regulated by the 2015 Kazakh Civil Procedure Code. The full text of the Kazakh Civil Procedure Code is available in Russian.

 Interestingly, according to Article 504 of the Kazakh Civil Procedure Code, the grounds for refusal to recognise and enforce arbitral awards are also applicable to refusal of recognition and enforcement of foreign court awards. Article 255 of the Kazakh Civil Procedure Code provides for refusal to recognise and enforce arbitral awards which largely reflects the 1958 New York Convention.

 Turkmenistan

Recognition and enforcement of foreign court awards in Turkemistan is carried out under Article 421 Turkmen Civil Procedure code. The full text of the Turkmen Civil Procedure Code is available in Russian.

 According to the above-mentioned Article, a foreign court decision may be recognized in Turkmenistan on the basis of reciprocity. Nevertheless, under the following cases, foreign court award may not be recognized:

 1) the case falls within the exclusive jurisdiction of the courts of Turkmenistan;

2) the defendant was not duly notified of the time and place of the hearing or was unable to present his counterclaims for valid reasons;

3) there is a final decision of a court of Turkmenistan, adopted in a dispute between the same parties, on the same subject matter and on the same grounds, or there is a case pending in a court of Turkmenistan, initiated in a dispute between the same parties, on the same subject matter and on the same grounds, prior to the initiation of the case in a foreign court;

4) the decision contradicts a decision rendered in Turkmenistan or a previously recognized decision of a foreign court, or proceedings pending in Turkmenistan;

5) recognition of the decision of a foreign court leads to consequences that clearly contradict the principles of the Constitution of Turkmenistan.

 Tajikistan

 Recognition and enforcement of foreign court awards in Tajikistan are carried out under the Tajik Economic Procedure Code and Tajik Civil Procedure Code. The full text of the Tajik Economic Procedure Code is available in Russian and full text of the Tajik Civil Procedure Code is available in Russian.

 According to Article 223 of the Tajik Economic Procedure Code, economic court refuses to recognize and enforce a foreign court award in whole or in part if:

 1) the award has not become legally binding under the law of the state in which it was made;

2) the party against whom the decision was made was not timely and properly notified of the time and place of the hearing or, for other reasons, was unable to present its explanations to the court;

3) the consideration of the case in accordance with an international act recognized by Tajikistan and the law falls within the exclusive jurisdiction of a court of Tajikistan;

4) there is a legally binding decision of a court of Tajikistan, adopted in a dispute between the same parties, on the same subject and on the same grounds;

 5) a case is pending before a court of Tajikistan in a dispute between the same parties, on the same subject matter and on the same grounds, the proceedings in which were initiated before the proceedings in the foreign court were initiated, or the court of Tajikistan was the first to accept for consideration a claim between the same parties, on the same subject matter and on the same grounds;

6) the statute of limitations for enforcing a foreign court decision has expired and this period has not been reinstated by the economic court;

7) enforcement of the foreign court decision would be contrary to the public policy of Tajikistan.

 According to Article 401 of the Tajik Civil Procedure Code, refusal to enforce a foreign court decision is permitted under the following cases:

1) the decision has not entered into legal force and is not enforceable under the law of the state in which it was rendered;

2) the party against whom the decision was rendered was deprived of the opportunity to participate in the proceedings because it was not timely and properly notified of the time and place of the hearing;

3) the case falls within the exclusive jurisdiction of the courts of Tajikistan;

4) there is a legally binding decision of Tajikistan rendered in a dispute between the same parties, on the same subject matter and on the same grounds, or there is a case pending in the courts of Tajikistan initiated in a dispute between the same parties, on the same subject matter and on the same grounds, prior to the initiation of the case in the court of a foreign state;

5) the enforcement of the decision may harm the sovereignty of Tajikistan or threaten the security of Tajikistan, or is contrary to the public order of Tajikistan;

6) the time for enforcing the decision has expired and this time has not been reinstated by the court of Tajikistan at the request of the claimant.

III. The implications of the Lugovoy awards for Central Asian states

 The above provisions pose a series of questions.

 Would it be possible to refuse to recognise and enforce a Lugovoy award in Central Asia on the ground that the requirement to the contractual jurisdiction is not met (part 4 of Article 248.1), for example, in Uzbek courts if the other party in a dispute with a Russian-sanctioned party provides evidence that the Russian courts were not competent authority to decide on the case?  

Would it possible to refuse to recognise and enforce a Lugovoy award on the ground that its recognition and enforcement would contradict the public order of Central Asian states as they are parties to the 1958 New York Convention or 1965 ICSID Convention (except for Turkmenistan) when the original forum selected by the parties was international arbitration?

When international treaties of Central Asian states result in conflicting obligations, which of the international treaties will prevail? Should the 1958 New York Convention or 1965 ICSID Convention be given be more weight over regional the 1993 Minsk and 2002 Chisinau Conventions?

Would courts of Central Asian states consider the question whether the sanctions over Russian parties limited their access to justice when Russian courts have lowered the bar to prove such and given courts of members states cannot reconsider cases at substance?

These questions remain open to be answered by the judiciary of Central Asian states, most probably, for the reason that Russian courts have not sought recognition and enforcement of Lugovoy awards or anti-suit injunctions in Central Asian countries yet.