Nov. 27, 2019
Russian Supreme Court recognized and ordered enforcement of two CIETAC arbitral awards
In 2017 – 2018, the China International Economic and Trade Arbitration Commission (CIETAC) rendered two arbitral awards in favor of Zoomlion (a Chinese manufacturer of construction machinery and sanitation equipment "Plaintiff"), against a Russian legal entity ("Defendant"). The defendant refused to voluntarily honor these foreign arbitral awards. In 2018, the Chinese plaintiffs filed applications for recognition and enforcement of CIETAC awards with the Arbitrazh court of Moscow (Arbitrazh courts are Russian state courts in charge of resolution of commercial disputes), i.e. at the defendant’s corporate seat.
In 2019, the competent Russian arbitrazh courts (of the city of Moscow and of the Moscow District) refused to recognize and to enforce these CIETAC arbitral awards on the sole ground: they came to the conclusion that CIETAC failed to notify the Russian defendants properly, as it sent all correspondence on that dispute to the mailing address specified in the sales contracts, and not to the address of the defendant specified in the Russian trade register (EGRUL). In 2014, prior to the commencement of the arbitration proceedings at CIETAC, the defendant relocated its corporate seat, although within the city of Moscow. By doing so, Russian courts of the first and of the cassation instances applied a wrong standard of notifying the defendant about arbitration proceedings: they used the rules applicable for the notification of defendants about court proceedings before Russian arbitrazh courts. Besides, Russian courts of the lower instances applied the Legal Aid Treaty between Russia and China which does not apply to recognition and enforcement of foreign arbitral awards (but applies to recognition and enforcement of foreign judgments).
The plaintiffs found that these judicial acts of the lower Russian arbitrazh courts contradict the applicable law and the existing judicial practice. As a result, the plaintiffs filed so-called “second” cassation appeals with the Judicial Panel for Economic Disputes of the Supreme Court of the Russian Federation.
On 27 November 2019, the Supreme Court of the Russian Federation set aside the judgments of lower courts in both cases without remanding the cases to the court of the first instance and order to recognize and to enforce both CIETAC's awards.
The plaintiff's position in the Supreme Court of the Russian Federation:
The plaintiffs' representatives have demonstrated to the Supreme Court of Russia that the defendant was duly notified in accordance with the CIETAC arbitration rules. As a result, Zoomlion is now able to recover more than $7 mln from the Russian defendant.
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