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Convention on the Recognition and Enforcement of Foreign Judgments
The Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (hereinafter – the Convention) is a new document, adopted on July 2, 2019, and as of today signed by only two states. On behalf of Ukraine in early March 2020, the Convention was signed by Ambassador Extraordinary and Plenipotentiary of Ukraine to the Kingdom of the Netherlands Vsevolod Chentsov. According to the Ministry of Justice of Ukraine on its website, the Convention aims to facilitate access to justice for market participants, to create for them certainty, predictability, reduction of costs, time and risks in doing business.
There is currently no official translation of the Convention into Ukrainian on the parliament’s website. The full text of the Convention is available in English on the website of the Hague Conference on Private International Law, an international organization which, in accordance with its Statute, aims at the progressive unification of the rules of private international law. It was within the framework of the Hague Conference on Private International Law that the Convention was developed and adopted. Let’s turn directly to the rules of the document and determine what legal mechanism is proposed for the recognition and enforcement of foreign judgments.
Purpose of the Convention
The developers point out that the Convention is designed to promote multilateral trade and investment, for which it is crucial to establish an international legal regime that provides greater predictability and certainty regarding the global circulation of foreign judgments.
Scope of the Convention
According to the wording of the Convention, it applies to the recognition and enforcement of judgments in civil or commercial matters, and does not apply to decisions in administrative matters, including decisions relating to customs duties, budget revenues, and arbitration. The Convention shall apply if it is necessary to recognize and enforce in one Contracting State a judgment given by a court of the other Contracting State. Thus, both states must be parties to the Convention.
The Convention operates with terms that will be used further, such as “State of Origin” – the State in which the judgment was taken, and “Requested State” – the State in which the judgment is to be recognized and enforced.
Article 2 of the Convention provides a fairly large list of exceptional cases to which the provisions of the Convention do not apply, including cases of:
status and legal capacity of individuals;
other family law matters, including matrimonial property regimes and other rights or obligations arising out of marriage or similar relationships;
wills and succession;
insolvency, composition, decisions of financial institutions and similar issues;
transportation of passengers and cargo;
transboundary marine pollution, marine pollution in areas outside national jurisdiction;
liability for nuclear damage;
validity, invalidity or liquidation of legal entities or associations of natural or legal persons and the validity of decisions of their bodies;
validity of entries in state registers;
activities of the armed forces, including the activities of their personnel in the performance of their duties;
law enforcement activities, including the activities of law enforcement officers in the performance of their duties;
issues of antitrust law (competition);
public debt restructuring through unilateral government measures.
The Convention applies to the enforcement of any decision on the merits of a court, whatever such decision may be called, including a ruling or order if the defendant is a natural person domiciled in a Contracting State. For legal entities, their country of location is determined by establishing:
the state defined in the statutory documents;
the state, according to the legislation of which the legal entity is created;
states where there are the main governing bodies of the legal entity;
the state where the main activity of the legal entity is carried out.
Rules of Recognition and Execution of Decisions
The Convention establishes the following rules for the recognition and enforcement of judgments.
First, the decision is not substantively verified. The decision is checked only to the extent necessary for its implementation.
Second, a judgment is recognized only if it enters into force in the State of Origin and is enforceable only if it is enforceable in the State of Origin.
Third, recognition or enforcement may be postponed or rejected if the decision is subject to review in the State of Origin or if the time limit for recourse to ordinary review has not expired.
A judgment shall be recognized and enforced if one of the requirements of Article 5 of the Convention is complied with. The main ground is that the person against whom recognition or enforcement of the judgment is sought is habitually resident in the State of Origin at the time when that person became a party to the proceedings in the court of origin.
Recognition or enforcement of a decision may be refused in cases established by the Convention, in particular when:
– the defendant was not duly notified of the hearing,
– the defendant was notified in the Requested State in a manner incompatible with the basic principles of the Requested State concerning service of documents;
– the decision was obtained by fraud;
– the recognition or execution of a decision would be incompatible with the public policy of the requested State, including situations where the specific proceedings leading to the court’s decision were incompatible with the fundamental principles of procedural justice of that State and with regard to breaches of the security or sovereignty of that State.
To recognize and enforce the judgment, the person submits the documents referred to in Article 12 of the Convention, in general it is a complete and certified copy of the judgment and any documents necessary to establish that the judgment has entered into force or, if applicable, is enforceable. in the State of Origin. If a decision was made in absentia, the original or a certified copy of the document is submitted stating that the document on which the court proceedings have been initiated has been brought to the notice of the defendant. If necessary, the court may require other documents if the decision of a foreign court does not allow to establish that all the conditions for enforcement of the decision established by the Convention have been met.
If the relevant documents are not presented in the official language of the Requested State, a certified translation into the state language shall be attached to them, unless otherwise provided by the legislation of the Requested State.
The specific procedure for recognition and enforcement of a judgment shall be governed by the law of the Requested State. The court of the requested State must act expeditiously.
Is It Possible to Apply the Convention Effectively?
Today, the issue of recognition and enforcement of decisions of foreign courts in Ukraine is regulated by the Civil Procedure Code of Ukraine. In general, decisions of foreign courts are enforced in Ukraine in the case when:
– their recognition and implementation are provided by an international agreement, the binding nature of which has been approved by the Verkhovna Rada of Ukraine, or
– based on the principle of reciprocity. If the recognition and enforcement of a foreign court decision depends on the principle of reciprocity, it is considered to exist because it has not been proven otherwise.
Today, Ukraine is a member of a number of international treaties governing the recognition and enforcement of foreign judgments. For example, the Convention on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters of January 22, 1993 (in force within the CIS countries), the Agreement on the Settlement of Disputes Related to Business Activities of March 20, 1992 (in force within the CIS countries), the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (concerning arbitration disputes).
To recognize and enforce the decision of a foreign court, an applicant applies for the permission to enforce a foreign court decision, which shall be accompanied by documents provided for by international agreements, the binding nature of which has been approved by the Verkhovna Rada of Ukraine. If international agreements, the binding nature of which has been approved by the Verkhovna Rada of Ukraine, do not specify the list of documents to be attached to the application, or in the absence of such an agreement, the following documents shall be attached to the application:
1) a duly certified copy of the decision of a foreign court, the enforcement of which is filed;
2) an official document that the decision of a foreign court has entered into force (if it is not specified in the decision itself);
3) a document certifying that the party in respect of whom the decision of a foreign court has been rendered and who has not participated in the court proceedings has been duly notified of the date, time and place of the hearing;
4) a document determining in what part or from what time the decision of a foreign court is subject to execution (if it has already been executed before);
5) a document certifying the authority of a representative (if the application is submitted by a representative);
6) translation of the listed documents into Ukrainian or the language provided by international agreements of Ukraine, certified in accordance with the legislation.
In view of the above, the Convention, signed by a wide range of states, would help to understand the need to conclude bilateral international treaties for the recognition and enforcement of judgments and to avoid the need to prove the principle of reciprocity if its existence is disputed.
The Convention is open for signature and accession by all States. It is important to note that the Convention shall enter into force between two Contracting States only if neither of them has notified the Depositary of its wish not to extend the Convention to the other Contracting State (without making a reservation to that effect).
As of today, the Convention has been signed by only two states – Ukraine and Uruguay. Ukraine has not yet ratified the Convention. It is currently difficult to predict whether it will be able to become an effective tool for the recognition and enforcement of foreign judgments, and if so, when this will happen. As such, we will be able to draw appropriate conclusions over time.
Anastasiia Obertynska-Yenich, Leading Lawyer of K.A.C. Group