New York Courts Increasingly Enforcing Russian Money Judgments

Natalie Shkolnik

12/16/2019

Client Bulletin

Given the current politically perilous relations between the United States and Russia, some observers may be surprised to learn that American courts—and New York courts, in particular—recognize and grant comity to judgments issued by Russian courts.

The first step in any proceeding to enforce any foreign judgment from any foreign nation is the recognition and domestication of the judgment. Once the foreign judgment is recognized in New York, the judgment creditor may invoke all of the rights and remedies available to any other judgment creditor under state law, while the judgment itself is entitled to full faith and credit in other states and in federal court. That recognition allows judgment creditors to enforce the judgment widely and to collect on assets located in New York and across the United States.

In order to achieve recognition, however, the judgment creditor holding a foreign judgment must persuade a court that the foreign judgment is entitled to recognition under principles of “comity” among nations.  In the words of its highest court, New York “has traditionally been a generous forum in which to enforce judgments for money damages rendered by foreign courts.”[1] Consistent with that generous approach, New York state and federal courts have recognized foreign money judgments from countries as varied as Canada,[2] France,[3] Singapore,[4] Curacao,[5] and India.[6]

Like many states, however, New York has also passed a version of the Uniform Foreign Money Judgments Recognition Act. Among other things, the Act provides that courts may decline to recognize a judgment “obtained by fraud” and must decline to recognize a judgment “rendered under a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law.” Relying on those defenses, judgment debtors have convinced courts to block enforcement of foreign money judgments from countries such as Liberia[7] and (perhaps most famously) Ecuador.[8]

So far, recent cynicism about the Russian political system has not in turn provoked like cynicism about the Russian judicial system. On the contrary, judges of the Manhattan Commercial Division have recently issued orders recognizing Russian money judgments. Along with other New York state and federal cases recognizing the basic fairness of the Russian judicial system, these decisions add to a growing body of law establishing New York City as an increasingly favorable forum for recognizing Russian money judgments despite recent tensions.

For example, ruling on a motion for summary judgment in lieu of complaint in VTB Bank (PJSC) v Mavlyanov, Justice O. Peter Sherwood recognized a $37,000,000 judgment issued by the Meshchansky District Court of Moscow in favor of a Russian bank, despite the Russian defendant’s argument that the proceeding was unfair.[9] Citing federal cases, the court reasoned “that the Russian legal system provides a fair and adequate forum for litigants and that judgments from Russia should be afforded full faith and credit.”[10]

More recently, in BatBrothers LLC v Paushok, Justice Andrew S. Borrok likewise granted summary judgment recognizing a $25,000,000 judgment issued by the Cheremushki District Court of Moscow in favor of Gazprombank—a decision recently affirmed on appeal.[11] Pointing to VTP Bank, the court explained that “Russian courts afford a fair, and impartial tribunal.”[12]

These decisions build on the Commercial Division’s decision in Norex Petroleum Ltd. v. Blavatnik, which allowed a group of Russian defendants to use a favorable judgment defensively in a New York lawsuit.[13] Norex (a Cypriot oil exploration company) sued Leonard Blavatnik, Victor Vekselberg, and affiliated companies in New York for diluting its controlling interest in Yugraneft, a Russian joint venture. Yet the defendants had already prevailed against Norex in a Russian court. Justice Bransten recognized that Russian judgment and dismissed the case.[14]

These decisions also fit within a longer line of cases granting dismissal of lawsuits filed in New York on the grounds that Russia is a more appropriate place to hear the case (a doctrine known as “forum non conveniens”). To convince the court to dismiss such cases, the defendant must show that there is a fair and adequate alternative forum. Many judges have granted these motions in favor of the Russian courts, explaining that denying dismissal because those courts are unfair “would be to accept a mass indictment of the Russian judicial system.”[15]

Thus, these cases and others establish New York as an increasingly favorable forum for granting recognition of Russian money judgments, despite recent political and legal uncertainties.

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About Wilk Auslander

Wilk Auslander is a full-service law firm based in New York City, serving U.S. and international clients. Founded over 30 years ago, Wilk Auslander helps clients solve their most difficult problems, and capitalize on their most promising opportunities.

The firm’s clients include financial firms, foreign governments, accounting and consulting firms, private equity firms, hedge funds, investment banks, real estate developers, sports and entertainment agencies, and technology companies, and high-net-worth individuals. We are an internationally recognized leader in the area of national and cross-border enforcement of large-scale monetary judgments, including judgments exceeding the billion-dollar mark.

About the Author

Natalie Shkolnik is a Russian-speaking lawyer serving U.S. and international clients, with a focus on Russia, Ukraine, and Latin America. She has substantial experience in bridging legal and cultural differences, helping American and international clients navigate the complexities of foreign jurisdictions to achieve their goals. Her clients include public and private corporations, hedge funds, private equity firms, large institutional banks, and high-profile individuals throughout the world.

Natalie is experienced in complex commercial litigation, business disputes, arbitration, and judgment enforcement, and works closely with her partners in corporate transactions, trusts and estates, and real estate matters. Natalie has particular expertise in litigating judgment enforcement matters in state and federal courts in New York, numerous other United States jurisdictions, and throughout the world. Her enforcement practice includes representations of judgment creditors against defiant and evasive judgment debtors, as well as representation of debtors (including sovereigns and instrumentalities of sovereigns). Collectively, she has acted as counsel in numerous large-scale, sophisticated judgment enforcement matters in which her clients were enforcing or defending judgments, the total amount of which has been in excess of $3 billion.

If you have any questions or would like to discuss your options for recognizing a foreign or domestic money judgment in New York or elsewhere, please contact Natalie at (212) 981-2294 or nshkolnik@wilkauslander.com.



[1] CIBC Mellon Tr. Co. v. Mora Hotel Corp. N.V., 100 N.Y.2d 215, 221 (2003).

[2] Lenchyshyn v. Pelko Elec., Inc., 281 A.D.2d 42 (4th Dept. 2001).

[3] SerVaas Inc. v. Republic of Iraq, 540 F. App’x 38 (2d Cir. 2013).

[4] Kim v. Co-op. Centrale Raiffeisen-Boerenleebank B.A., 364 F. Supp. 2d 346 (S.D.N.Y. 2005).

[5] Island Territory of Curacao v. Solitron Devices, Inc., 489 F.2d 1313 (2d Cir. 1973).

[6] New Cent. Jute Mills Co. v. City Trade & Indus., Ltd., 318 N.Y.S.2d 980 (Sup. Ct. N.Y. Cty. 1971).

[7] Bridgeway Corp. v. Citibank, 45 F. Supp. 2d 276 (S.D.N.Y. 1999), aff’d, 201 F.3d 134 (2d Cir. 2000).

[8] Chevron Corp. v. Donziger, 974 F. Supp. 2d 362 (S.D.N.Y. 2014), aff’d, 833 F.3d 74 (2d Cir. 2016). In Chevron, the oil giant famously overturned a fraudulent judgment obtained on behalf of a group of Ecuadorian plaintiffs by their counsel, Steven Donziger. Finding that Donziger had obtained the judgment by ghostwriting the opinion of a supposedly neutral expert and attempting to bribe an Ecuadorian judge, the federal court refused recognition of the judgment and ultimately held Donziger in contempt.

[9] No. 650245/2017, 2018 WL 623530 (Sup. Ct. N.Y. Cty. Jan. 30, 2018).

[10] Id. at *4.

[11] No. 150122/2015, 2018 WL 6309075 (Sup. Ct. N.Y. Cty. Dec. 03, 2018), aff’d, 172 A.D.3d 529 (1st Dept. 2019).

[12] Id. at *3.

[13] No. 650591/11, 2015 WL 5057693 (Sup. Ct. N.Y. Cty. Aug. 25, 2015), judgment entered sub nom. Norex Petroleum Ltd. v. Blavatnik, et al. (Sup. Ct. N.Y. Cty. 2015), and aff’d, appeal dismissed, 151 A.D.3d 647 (1st Dept.  2017).

[14] Although, in granting recognition of the Russian judgment, Justice Bransten offered a more tepid endorsement than her colleagues: “the Russian court system cannot be said to be so corrupt as to deprive litigants of their due process rights.” Id. at *27.

[15] Base Metal Trading SA v. Russian Aluminum, 253 F. Supp. 2d 681, 709 (S.D.N.Y. 2003), aff’d sub nom. Base Metal Trading Ltd. v. Russian Aluminum, 98 F. App’x 47 (2d Cir. 2004); see also Freidzon v. Lukoil, No. 14-cv-5445, 2015 WL 13021409, at *6 (S.D.N.Y. Mar. 12, 2015); Pavlov v. Bank of New York Co., 135 F. Supp. 2d 426, 435 (S.D.N.Y. 2001), vacated on other grounds, 25 F. App’x 70 (2d Cir. 2002); Parex Bank v. Russian Sav. Bank, 116 F. Supp. 2d 415, 424–25 (S.D.N.Y. 2000).