The Supreme Commercial Court released its full reasons for the decision in Nortel v UNI. The Court ruled that an English judgment may not be enforced in Russia, because the respondents had not participated in the English proceedings nor had they been served in accordance with the Hague Convention.
The decision may result in delays in commencement of proceedings in foreign forums against Russian parties. For instance, English courts have previously routinely allowed service by post (not in accordance with the Hague Convention), because they have found that Russian law does not prohibit service by such means.
The delay may however prove not to be as long as some feared (English courts cited evidence to the effect that it may take 2.5 years to serve under the Hague Convention). In this post we will look both at the court’s decision in Nortel and the practice of service of process under the Hague Convention in Russia.
Supreme Commercial Court in Nortel
We have summarised the facts of the case in our previous posts. In essence, the parties entered into an equipment sale contract and the respondent defaulted on its payment obligations. Since the parties agreed to the jurisdiction of the English courts, Nortel sued in England and obtained a default judgment against UNI. There was no dispute that the claim pack had been delivered to UNI by courier and post, but not in accordance with the Hague Convention.
The Supreme Commercial began with the mandatory nature of the Hague Convention requirements. It noted that Russia’s reservation to Article 10 of the Convention expressly precludes service on Russian parties by means other than those provided by the Hague Convention. This provision of an international treaty overrides any contrary provisions of Russian law, including those permitting service by post or other means in domestic proceedings. Service on a Russian party other than through ‘official channels’ violates Russian law.
The Supreme Commercial Court disagreed with the lower courts’ finding that UNI had waived the applicable service formalities by agreeing to submit disputes under the contract to the English courts. The court relied once again on the mandatory nature of the Hague Convention requirements and explained that parties may not agree to dispense with them.
Finally, the court made an important caveat. It observed that a party may safely ignore documents served on it not in accordance with the Hague Convention. Yet if it chooses to participate in the subsequent foreign proceedings the party may no longer rely on the deficient service.
Service under the Hague Convention in Russia
When documents are served under the Hague Convention in Russia the Ministry of Justice forwards them to the court that has jurisdiction over the party that needs to be served. The court schedules a hearing and serves the documents on the party in this hearing.
Random sampling of such proceedings reveals that in most cases it takes months, certainly not years to serve documents. However, practical problems do arise.
The most common one appears to be incorrect indication of the respondent’s business name. For instance, “OOO Kompaniya Otvetchik” (LLC Respondent Company in Russian) is referred to as “Respondent Company Co”. As a result when a Russian court attempts to summon the respondent to a hearing the summons never reaches the respondent (especially where the respondent seeks to avoid notice). The Russian Post informs the court that the postman failed to locate such company at the indicated address, since the company’s proper name in Russian is different. In these circumstances Russian courts have little choice, but to conclude that they are not able to serve the documents.
To avoid such problems parties seeking to serve documents on a Russian party should ensure that the information contained in the request and accompanying documents is as accurate as possible. In particular proper name of the Russian company as well as its current address should be included. In this respect information contained in the contractual documents or business correspondence is not necessarily current or completely accurate. However, a complete register of all Russian companies is now available online and verifying the relevant information should not be particularly cumbersome.
The full text of the Supreme Commercial Court decision is available here (in Russian).
Author: Sergey Usoskin
First published on CIS Arbitration Forum