Enforcement of Foreign Arbitral Awards: Application of the Public Policy Rule in Russia

Abstract

THE QUESTION of the application of the public policy rule is very important in issues of enforcement of foreign arbitral awards. Often, when all other grounds for refusal are not sufficient, the debtor relies on public policy as the last resort. Since public policy cannot be given a uniform understanding and each case must have an individual approach, a debtor might well be able to use this excuse to delay the enforcement proceedings and execution of the arbitral award. Understanding of public policy differs from state to state. In Germany, public policy is ‘good customs and the purposes of German law’. In the USA, it is ‘the most basic understanding by courts of morals and justice’,1 although this understanding may be widened by the ‘manifest disregard of law’ if, for example, an arbitral award grossly ignored certain imperative norms of a state, which as a result contradicts the public policy of that state.2 In Canada, public policy refers to the incompatibility of an arbitral award with the basic principles of public morals.3 The provisions of a majority of international agreements in which the Russian Federation (RF) participates allow a public policy rule, for example Article V(2)(b) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958.4 Such a rule is also provided by Russian legislation, e.g. article 244 of the Arbitration Procedure Code, article 412(5) of the Civil Procedure Code, articles 34 and 36 of the Federal Law on International Commercial Arbitration. However, despite the fact that Russia has been a participant in international conventions for more than 40 years,5 Russian legislation has failed to remove the uncertainty arising in attempts to define the concept of ‘public policy’. Provisions on this issue are burdened by the difficulty of proving …