Recent years have brought increased litigation activity to U.S. courts involving debt collection in multi-million dollar matters originating from Russia. It should not be surprising, as after the privatization that occurred in Russia, following the fall of the Soviet Union, in the 1990s, many wealthy Russian nationals, acquiring their assets in that privatization, have sought to diversify their global holdings, came to the U.S. and bought assets here. Now, as there are so many cases involving bad loans and broken loan agreements in Russia, creditors have been coming to the U.S. to enforce judgments against debtors, who have unsuccessfully tried to hide assets from the reach of their creditors in the United States. The result is the globalization of litigation in such cases and increased litigation activity in U.S. courts involving Russian nationals.
Generally speaking, U.S. courts have been enforcing the judgments of Russian courts, especially in recent years. Although there is no international treaty requiring the United States to recognize the money judgments of foreign courts, and Russian courts specifically, such foreign money judgments can be recognized in the United States under the laws of individual states. Indeed, the majority of the fifty states in the United States have adopted some version of a uniform set of laws on judgment recognition, named the Uniform Foreign Money- Judgments Recognition Act (UFMJRA or the “Act”). Uniform Foreign Money-Judgments Recognition Act of 1962, 13 U.L.A. 149 (1986) (UMFJRA).
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.” Although these principles may apply to block enforcement of judgments from certain countries, where the judicial system is considered particularly corrupt, the U.S. courts have generally enforced judgments from the courts of the Russian Federation. U.S. Federal and state courts have found 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 (see e.g. Base Metal Trading SA v. Russian Aluminum, 253 F.Supp. 2d 681 (S.D.N.Y. 2003), affd sub nom. Base Metal Trading Ltd. v. Russian Aluminum, 98 Fed.Appx. 47 (2d Cir 2004); Parex Bank v. Russian Sav. Bank, 116 F.Supp. 2d 415, 425 (S.D.N.Y. 2000)). “The Court of Appeals has ‘repeatedly emphasized that it is not the business of our courts to assume the responsibility for supervising the integrity of the judicial system of another sovereign nation’”. Base Metal Trading SA v. Russian Aluminum, 253 F.Supp. 2d at 709, quoting Blanco v. Banco Indus. de Venezuela, SA., 997 F.2d 974, 982 (2d Cir 1993).
New York and California courts, in the past three years, issued orders recognizing Russian money judgments in multi-million dollar cases. See VTB Bank (PJSC) v. Mavlyanov, 2018 NY Slip Op 30166(U) (Supreme Court, New York County 2018); Batbrothers LLC v. Paushok, Supreme Court of New York, Index No. 150122/2015 (App. T at 640); AO Alfa-Bank v. Yakovlev, 2018 WL 1250637 (CA 4th DCA March 12, 2018). In a recent case, which we are continuing to litigate, the Miami state court did the same. See https://www.law.com/dailybusinessreview/2020/10/26/akerman-attorneys-cant-stop-this-international-litigation-from-advancing-to-trial/
Once the judgment is enforced in a particular U.S. state, it becomes a judgment of the U.S. state, and according to the law applicable in most states, it is enforceable for a decade or more. In New York and Florida, a judgment is enforceable against a debtor for a period of twenty (20) years. The judgment creditor can then use the tools for judgment collection available to any other creditor of any other U.S. state judgment, including information subpoenas, attachment proceedings and proceedings against third parties (who, for example, may have been the recipients of fraudulent transfers from the debtor).
Having come to the United States from the former Soviet Union as a child, it is remarkable to me to see the developments that have occurred in this field over my seventeen year career as a litigator. I am convinced that the amount of cases involving cross-border claims between litigants in Russia and/or U.S., and the enforcement of judgments from Russia in U.S. courts, will continue to grow. Russian courts are also likely to be faced with the enforcement of judgments from U.S. at some point in the near term also. These matters will also likely be impacted by the political relations between our countries, although to date, the politics has not precluded judgment enforcement in the U.S. courts.