Enforcement in Russia: Bullying at the Bear’s Den

© Egorov Puginsky Afanasiev & Partners Law Offices
Ilya Nikiforov
Managing Partner
Egorov Puginsky Afanasiev & Partners
Best Russian Law Firm 2010 / International Legal Alliance Summit & Awards
Enforcement in Russia
Bullying at the Bear’s Den

www.epam.ru Ilya Nikiforov “Enforcement in Russia: Bullying at the Bear’s Den ” 2
Best Russian Law Firm 2010
International Legal Alliance Summit & Awards
Enforcement in Russia
Step 1 – Access your position
Step 2 – Consider what result you want
Step 3 – Know your opponent
Step 4 – Tricky enforcement
Step 5 – Plan your campaign

Hot topics 2010
1) Attachments in support of ongoing arbitration proceedings
Decision of the Supreme Arbitrazh Court of the Russian Federation, 20 April 2010, № 17095/09
(Edimax Limited vs. Chigirinsky)
2) Attachments in support of ongoing foreign court proceedings
Decision of the Federal Arbitrazh Court of the North-West district, 29 July 2010, № A56-95127/2009
(Finisterre Recovery Fund 1 Limited, Finisterre Special Situations Fund, Whitewater EMCF LLC,
Whitewater EMCO LLC, Spinnaker Global Emerging Markets Fund Ltd, Spinnaker Global Opportunity
Fund Ltd, Spinnaker Global Strategic Fund Ltd vs. Teorema Holding Plc)
3) Enforcement in Russia against non-resident entities
Ruling of the Supreme Arbitrazh Court of the Russian Federation, 28 June 2010, № VAS-6430/10
(SRL «MISINARIX»vs. SRL «Fercen Grup», JSC «SEB Bank»)
4) Enforcement of judgments from non-treaty countries (reciprocity has to
be proven)
Ruling of the Supreme Arbitrazh Court of the Russian Federation, 7 December 2009, № VAS-13688/09
(Rentpool B.V. vs. Podyomnye Technology LLC)

Identifying applicable rules
International rules of law prevail over national legislation (article 15(4) of
the Constitution of the Russian Federation)
1. Bilateral treaties: Azerbaijan, Albania, Algeria, Argentina, Byelorussia, Bulgaria,
Hungary, Vietnam, Greece, Egypt, Iraq, Spain, Iran, Italy, Yemen, Cyprus, China, the
Democratic People’s Republic of Korea, Cuba, Kyrgyzstan, Latvia, Lithuania, Moldova,
Mongolia, Poland, Romania, Tunis, Finland (family and inheritance matters), Czech
Republic, Slovakia, Estonia, Serbia, Macedonia.
2. Most important multilateral treaties:
- Convention on Judicial assistance in Civil, Family and Criminal Matters of 22 January
1993 (“Minsk Convention”)
- CIS Agreement on the Procedure of Economic Disputes Resolution of 20 March 1992
(“Kiev Convention”), which is focused on business/commercial matters
- Convention on the taking of evidence abroad in civil or commercial matters (Hague, 18
March 1970)
- Convention of the service abroad of judicial and extrajudicial documents in civil or
commercial matters (Hague, 15 November 1965)

Casual Wisdom
• Get an arrest/attachment order as early as possible
• Attachment in support of foreign court/judicial
proceedings
• Bank – warrant directly served
• From Russia with warrant – Minsk & Kiev convention
Convention on Judicial assistance in Civil, Family and Criminal Matters of 22
January 1993 (“Minsk Convention”)
and CIS Agreement on the Procedure of
Economic Disputes Resolution of 20 March 1992
(“Kiev Convention”), which is focused on
business/commercial matters.
• Courts are cheap. No fee shifting.
Low stamp duty. Recalcitrant
debtors prefer to fight to the end.

Chisenau
SEB Bank
guarantor
Fercen
Grup
debtor
MISINARIX Case
(№А40-156339/09-50-1134)
MoscowKiev
Chisinau
MISINARIX
creditor

Access to Justice
Rank for Enforcing contracts
1. Luxembourg
2. Iceland
3. Hong Kong
4. Norway
5. Korea, Rep.
6. France
7. Germany
8. USA
9. Finland
10. New Zealand
11. Austria
12. Belarus
13. Singapore
14. Hungary
15. Latvia
16. Australia
17. Lithuania
18. China
19. Russia
20. Japan
Brazil Russian
Federation
India China
Rank for
enforcing
contracts
100 19 182 18
Procedures
(number)
45 37 46 34
Time (days) 616 281 1.420 406
Cost (% of
claim)
16.6 13.4 39.6 11.1
Source: World Bank http://www.doingbusiness.org/economyrankings/

Enforcement in Russia:

What Does a “Win” Mean?
Consider what result you want:
• Money
• Revenge
• A precedent to deter others
• Continuation of a commercial relationship
• Due care/compliance exercise
• Money

Learning by Planning &
Planning from Learning
1. Investigate, investigate, investigate
2. Know your opponent’s…offshore assets,
offshore bank account, credit cards
3. Even DASH is important – Names are
difficult but ignoring “-” you’ll get negative
4. Check address: street name, corporate
register
5. Legal/factual address: seat/mailing address
6. Form over substance…
• Cases in Russia won and lost on what is said in the
documents
• Documents have to be properly authenticated,
translated and certified at every stage
…yet
Serve by all means in all situs

Chisenau
MISINARIX
creditor
SEB Bank
guarantor
Fercen
Grup
debtor
SBERBANK
MISINARIX Case
(№А40-156339/09-50-1134)
MoscowKiev

Tricky enforcement. Bailliffs.
Directly to the debtors’ bank but usually
Bailiffs – officers of the Federal Bailiffs Service with broad powers, inter alia, to
summon persons, to make enquiries, to search for property and persons, to
impose restrictions on property and persons, to exact the property.
• During 2009 the bailiffs service of RF has handled over 38 million
execution cases, which is 8 million more than in 2008 (31 million
cases). Closed over 22 million cases. 78% of them have been
successfully closed (source: http://www.fssprus.ru/press_sdgerh_231109_print.html)
• During 2009 over 87 000 asset/debtor search cases were
handled. Closed 68 800 of them including 56 000 cases of
debtors’ property retrieval (source:
http://www.fssprus.ru/press_sdgerh_231109_print.html).
• Federal Bailiffs Service web site contains a page “Information of
the arrested and offered for auction property”
• Internet sites including social network sites “vkontakte.ru”,
“odniklassniki.ru” (analog of “facebook.com”) are used by the
bailiffs for getting information about debtors and their property.

Tricky enforcement
No veil piercing is allowed on the enforcement stage
Where corporations have experienced problems with
enforcement, the problems were more commonly due to the
insolvency and/or i.e. lack of traceable assets of the debtor
Enforcement authorities trying their best:
•Debtor’s list
•Closed border
•Garnishment of cell phone
accounts / balances
•Other creative stunts

Live-bait fishing

Chisenau
MISINARIX
creditor
SEB Bank
guarantor
Fercen
Grup
debtor
SBERBANK
MISINARIX Case
(№А40-156339/09-50-1134)
MoscowKiev
Ukrsocbank

Preferred
enforcement scenario
1. Identify the entity, its owners and affiliates assets through public records
2. File for arrest of known assets of the debtor as a conservatory measure,
early on but at least in support of a motion to allow the enforcement of
foreign arbitral awards/judgment
3. Leak the story to mass media
4. Write letters to the debtor and its business partners advising them on the
situation
5. Ask the State Commercial Court to
proceed with the enforcement case on an
expedited basis
6. If the debtor and its affiliates are involved
in public procurement put the
government customers on notice
regarding the situation
7. Assist the enforcement authority – court
bailiff – in properly identifying and seizing
business assets of the debtor

Ilya Nikiforov
Managing Partner
St. Petersburg office
Egorov Puginsky
Afanasiev & Partners
T 7 (812) 322 96 81
F 7 (812) 322 96 82
e: Ilya_Nikiforov@epam.ru
Ilya Nikiforov is a Managing Partner at St. Petersburg office of Egorov Puginsky Afanasiev &
Partners.
Ilya Nikiforov is known for a strong expertise in both litigation and arbitration and is listed as an
arbitrator by prominent Russian & European arbitration institutions. Ilya has special experience
in international business transactions, commercial arbitration, construction and development
projects, and intellectual property law .
Mr. Nikiforov represents client interests at domestic forums at all levels, before Moscow
arbitration institution and other prominent commercial arbitration institutions, such as the ICC,
LCIA and SCC. He is often engaged as a Russian law counsel/expert in connection with
commercial litigation and international arbitration proceedings worldwide. Expert opinions of Mr.
Nikiforov were accepted by US, English, German, Dutch and French courts.
Ilya Nikiforov has been recognized by Chambers and Partners as an expert in his practice area
and was highly recommended by The European Legal 500 as a head of the Dispute Resolution
practice that “fully deserves its enviable reputation”. He “wins plaudits from competitors for the
“superb job” he does in litigation and arbitration” (Chambers Europe 2008). The International
Who’s Who of Commercial Arbitration 2010 lists Ilya Nikiforov as one of the top Russian lawyers
specializing in international commercial arbitration.
Since 1997 Ilya Nikiforov serves as an adjunct faculty member at the Law School of St.
Petersburg State University. He frequently speaks on issues of law and legal practice to Russian
and international audience at professional legal conventions. Mr. Nikiforov has published a
substantial number of works on Russian business laws. He has co-authored one of the leading
Commentaries to the Civil Code of the Russian Federation (Parts 1, 2 and 4) that was published
in 2004, 2005 and 2007.
Ilya Nikiforov

© Egorov Puginsky Afanasiev & Partners Law Offices
Ilya Nikiforov
Managing Partner
Egorov Puginsky Afanasiev & Partners
E-mail: spb_office@epam.ru
Тел.: +7 (812) 322 96 81
www.epam.ru
Thank you!

Enforcement in Russia: Bullying at the Bear’s Den

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Enforcement in Russia: Bullying at the Bear’s Den