PARIS COURT OF APPEAL REJECTED APPLICATION OF THE RUSSIAN FEDERATION ON SUSPENSION OF ENFORCEMENT OF THE AWARD IN OSCHADBANK CASE 24.10.2019

News

Another victory of Oschadbank in international judicial institution! On 22 October 2019, Paris Court of Appeal ruled in favour of Oschadbank by rejecting an attempt of the Russian Federation to suspend the execution of the award of international arbitration dated 26 November 2018 delivered in favour of Oschadbank.

Earlier, Arbitral Tribunal found the Russian Federation liable for the damage, caused as a result of occupation of the Autonomous Republic of Crimea.

Russia's main argument was that enforcing an arbitration award in countries that are less concerned with protection of the state immunity than France could harm it. Russia may suffer material damage, and its rights may to be violated. In its application, the Russian Federation asked the Paris Court of Appeal to suspend the enforcement of the arbitral award in order to protect itself from any attempts to enforce it abroad. Thus, in fact, Russia had acknowledged that it did not intend to implement that award.

Considering the appeal, the Paris Court of Appeal found the arguments presented by the Russian Federation unreasonable and unfounded. The Court emphasized that the requirements for the suspension of the enforcement of the award should be assessed on the basis of the specific facts of the case. Therefore, the reference to abstract or hypothetical grounds put forward by Russia was inadmissible.

The Court of Appeal stated that the risk of harm to the rights of the Russian Federation as a result of an attempt to enforce the award in respect of its assets enjoying immunity from enforcement, as stated by the Russian Federation in its application, was not a sufficient ground for suspending enforcement. The issue of forced execution, including at the expense of assets that could enjoy immunity, is a matter for consideration by local courts in each individual jurisdiction. In addition, the Court noted that the risk of distrainment on sovereign property could not justify the suspension of the arbitral award. The Сourt noted that the enforcement of the award would not jeopardize the country's financial situation and that Oschadbank, which is a reliable commercial bank, did not pose risk to possible refund in case of cancellation of the award. The Court therefore rejected the Russian Federation's application and ordered it to bear part of the costs for the proceeding.

Citing abstract and groundless arguments, Russia uses every effort trying to avoid execution of the arbitral award and inappropriately avails of the French judicial system. This once again proves that Russia refuses to fulfil its international obligations now or in the future.

Let us remind you that after Russia’s refusal to participate in the arbitration proceeding, it tries to stop enforcement of the award and cancel it. Russia has its reasons to avoid participation in the judicial process related to the execution of the award of the Arbitral Tribunal in various jurisdictions. Oschadbank has once again demonstrated its ability to resist the attempt of evasion of execution of the arbitral award and once again managed to defend its interests.

Prepared on the basis of the materials of the Press Service of Oschadbank