JSC RN-Trans v. ITEK-TRANS LLC

At a glance

Parties

JSC RN-Trans (Russia), applicant and award creditor, v. ITEK-TRANS LLC (Ukraine), debtor

Case no.

No. 761/39565/17 (first instance proceeding No. 2-к/761/14/2018; cassation proceeding No. 61-5333св19)

Court

Shevchenkivskyi District Court of Kyiv (19 October 2018); Kyiv Court of Appeal (12 February 2019); Supreme Court of Ukraine, Civil Cassation Court (8 May 2019)

Underlying award(s)

Award of the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation (Moscow), 20 April 2017, case No. 57/2016

Treaty

New York Convention 1958 (Articles III, IV, V); the court also cited the 1992 Kyiv Agreement and the 1993 Minsk Convention

Court

District Court: Judge V.O. Voloshyn. Supreme Court: D.D. Luspenyk (presiding), O.V. Bilokon, B.I. Hulko, Ye.V. Synelnykov (rapporteur), S.F. Khopta

Sector

Rail freight forwarding (fuel oil transport)

Outcome

The award was recognised and leave to enforce it in Ukraine was granted. The Court of Appeal and the Supreme Court upheld that ruling and dismissed the debtor's challenges.

Amount

Enforced: USD 1,584,612.47 debt and RUB 2,463,091.11 for the arbitration fee. Court fee of UAH 800 awarded against the debtor.

The dispute

On 31 December 2014 JSC RN-Trans and ITEK-TRANS LLC concluded freight forwarding agreement No. 4350014/1261Д. Clause 4.8 of the agreement referred disputes to the ICAC at the Chamber of Commerce and Industry of the Russian Federation. RN-Trans claimed that part of what it had paid for the first quarter of 2015 should be recalculated and returned. The reason was that a telegram of Ukraine's State Administration of Railway Transport had applied a reducing coefficient of 0.26 to the tariff for carrying fuel oil (mazut) on certain routes. In its award of 20 April 2017 the ICAC upheld the claim and ordered ITEK-TRANS to pay USD 1,584,612.47 (overpayment for services) and RUB 2,463,091.11 for the arbitration fee. ITEK-TRANS did not pay, so RN-Trans applied in Kyiv for leave to enforce the award. ITEK-TRANS raised three objections: no enforcement document (executive document) had been filed as Article 8 of the 1992 CIS Kyiv Agreement requires; the dispute fell outside the arbitration clause; and enforcement would breach Ukrainian public policy. On public policy it relied on the separate opinion of arbitrator L.F. Vinokurova.

Key holdings

1. The District Court rejected the objection that no enforcement document had been filed. Under Russian procedural law such a document can be issued only where the debtor is in Russia, and this debtor is located in Ukraine. The debtor's representative could not name any Russian rule under which an enforcement document is issued on an ICAC award. District Court ruling, pp. 4–5
2. The District Court held that the debtor bears the burden of proving the grounds for refusal. None of the grounds in Article V of the New York Convention, Article 36 of the Law on International Commercial Arbitration or Article 478 of the Civil Procedure Code was shown. Public policy can be invoked only where enforcement is incompatible with the foundations of the State's legal order. The court granted recognition and enforcement in the currencies stated in the award. District Court ruling, pp. 5–6
3. The Supreme Court held that the New York Convention is the special instrument for foreign arbitral awards and prevails over the 1993 Minsk Convention and the 1992 Kyiv Agreement, which govern judgments of courts. The Convention's list of documents (Article IV) is exhaustive. An award need not have the force of an enforcement document in the State where it was made before it can be enforced abroad. On this point the court followed its own ruling of 24 October 2018 in case No. 264/1297/17. Supreme Court ruling, p. 3
4. The Supreme Court held that the public policy exception protects fundamental principles of justice, morality, sovereignty and security. Refusing enforcement without good reason would amount to blocking the award. It could also be a disproportionate interference with the creditor's property right under Article 1 of Protocol No. 1 to the European Convention on Human Rights. Supreme Court ruling, p. 4
5. The Supreme Court held that the dispute concerned settlements between businesses under the forwarding agreement, which contains an arbitration clause in clause 4.8. ITEK-TRANS had not proved that the dispute fell outside the clause or that enforcement would affect Ukraine's social, economic or social foundations. The cassation appeal was dismissed and the lower courts' rulings were upheld. Supreme Court ruling, pp. 4–5

Procedural history

1. 20 April 2017The ICAC at the Chamber of Commerce and Industry of the Russian Federation issues its award in case No. 57/2016 in favour of RN-Trans. An ICAC certificate of 20 June 2017 confirms that the award is final and immediately enforceable.
2. November 2017RN-Trans applies to the Shevchenkivskyi District Court of Kyiv for leave to enforce the award.
3. 29 January 2018The District Court sends the case to the Kyiv Court of Appeal under Article 23 of the Civil Procedure Code.
4. 27 March 2018The Court of Appeal returns the case to the District Court for a decision on the merits.
5. 19 October 2018The District Court recognises the award, grants leave to enforce it and orders an enforcement writ to be issued. The full text is dated 26 October 2018.
6. 12 February 2019The Kyiv Court of Appeal upholds the District Court's ruling.
7. 25 March 2019The Supreme Court opens cassation proceedings on the appeal of ITEK-TRANS.
8. 8 May 2019The Supreme Court dismisses the cassation appeal and upholds the rulings below. Its ruling is final.

Tribunal, counsel and experts

Decided by

• V.O. Voloshyn Judge, Shevchenkivskyi District Court of Kyiv
• D.D. Luspenyk Judge, Supreme Court of Ukraine (presiding judge)
• O.V. Bilokon Judge, Supreme Court of Ukraine
• B.I. Hulko Judge, Supreme Court of Ukraine
• Ye. V. Synelnykov Judge, Supreme Court of Ukraine (judge-rapporteur)
• S.F. Khopta Judge, Supreme Court of Ukraine

For the claimant

V.I. Malchikov

For the respondent

Olena Viacheslavivna Tsykhmeistruk

Run a conflict check on these names →

Keywords

• New York Convention
• recognition and enforcement
• Article V(2)(b)
• public policy
• ICAC Moscow
• Russian Chamber of Commerce and Industry
• Kyiv Agreement 1992
• Minsk Convention 1993
• executive document
• enforcement writ
• scope of arbitration clause
• freight forwarding
• railway tariffs
• fuel oil
• Ukraine
• Article 1 Protocol 1 ECHR
• burden of proof

Summary generated with AI from the published documents — refer to the award for the authoritative text.