When it comes to obtaining money awarded by a Russian court in Israel, there is a specific legal procedure that needs to be followed. You cannot immediately turn to Israeli court bailiffs for enforcement.
Firstly, it is necessary to go through a special judicial process to recognize a foreign court decision in Israel. During this process, the Israeli court reviews the foreign court process and determines the extent to which it complies with the criteria set out in the Israeli Enforcement of Foreign Judgments Law of 1958. If the Israeli court determines that the legal requirements have been fully met, an order is issued recognizing the foreign court decision and allowing its enforcement in Israel.
Enforcement of the decision: Conditions
Certain conditions must be met for a foreign court decision to be recognized in Israel. Firstly, the decision must not have been obtained through fraudulent means. Secondly, the court examines whether the defendant had a genuine opportunity to effectively participate in the foreign proceedings and was properly notified of the commencement of the proceedings. Thirdly, the decision must have been rendered by a foreign court with jurisdiction to hear the dispute according to the principles of private international law. Fourthly, the decision must be final and not subject to further review. Lastly, the application for recognition of the decision must be submitted in Israel before the expiration of the statute of limitations.
It is important to consult with a legal professional familiar with international enforcement procedures to navigate this process effectively.
Enforcement of the decision: Statute of limitations, procedure
According to the law, it is necessary to file a lawsuit for the recognition of a foreign court decision in an Israeli court within 5 years of the issuance of that decision by the foreign court.
When filing the lawsuit, all relevant documents must be provided, which should be legalized, notarized, and translated. Additionally, an expert opinion on relevant issues of foreign law should be obtained. The preparation and collection of all necessary documents and expert opinions can take a considerable amount of time, so it is recommended to start this process well in advance to meet the deadline and file the lawsuit before the expiration of the statute of limitations.
What if there is no convention on the enforcement of judgments between the countries?
The case of “Gazprom Transgaz Uhta” vs. “Double K Oil Products” is an example of a situation where the presence of a treaty on the enforcement of judgments between states is not required for the recognition of a foreign court decision in Israel.
If the plaintiff can prove that the Israeli court and courts of another state effectively recognize each other’s decisions, it can serve as a basis for enforcing the foreign court decision in Israel.
There is no mutual agreement on the enforcement of court decisions between Israel and Russia. In the past, this fact hindered the enforcement of Russian court decisions in Israel. If there is no bilateral agreement between the countries, it was assumed that enforcement would be impossible.
However, in 2012, the Israeli Supreme Court issued a precedent-setting decision in the case of “Gazprom Transgaz Uhta” vs. “Double K Oil Products.” The court ruled that a decision of the Russian court can be enforced in Israel despite the absence of a bilateral agreement between the countries. “Double K” tried to challenge the decision, citing the complete corruption of the Russian judicial system, but the Israeli Supreme Court rejected this argument due to lack of evidence.
The dispute revolved around the issue of enforcing court decisions from Russia and Israel in both countries. Each party presented expert opinions analyzing the experience of Russian legal practice. After carefully studying the case materials, the Israeli Supreme Court concluded that Russian courts recognized decisions of their foreign counterparts and allowed enforcement in several cases.
Justice Daphne Barak-Erez explained that it is not necessary for Israeli court decisions to be recognized and enforced in Russia at all times for a foreign decision to be recognized. It is sufficient to indicate a certain trend or even the potential for such enforcement. Based on the examples of the “Rentpool” and “Boegli-Gravures” cases, the Israeli Supreme Court recognized the decision of the Russian court in the “Gazprom vs. Double K” case.
Recognition of decisions: Effective opportunity to participate in foreign proceedings
In 2010, two years prior to the ruling in the “Double K” case, the Israeli Supreme Court considered Raiffeisenbank’s application for a temporary seizure of the property belonging to an Israeli citizen, I. Katziva. The basis for the request was a criminal case against Katziva that had been ongoing in Russia since 2008, involving embezzlement on a particularly large scale. The Israeli court at that time refused to entertain the civil claim, as Raiffeisenbank had not exhausted all civil legal remedies in Russian courts. However, the evidence presented by the bank was sufficient to seek recourse in the Israeli court and impose a seizure on Katziva’s Israeli property until the conclusion of the process in Russia.
In 2014, the Russian court granted Raiffeisenbank’s civil claim against Katziva for an amount exceeding $15 million. Katziva’s appeals and cassation complaints regarding the awarded compensation were dismissed, and in 2016, the bank filed a lawsuit in the Israeli court for the recognition and enforcement of the decision.
District Court: Recognition of the Russian court’s decision
In July 2020, the Israeli Central District Court granted the claim and recognized the decision of the Russian counterparts. Even the established and obvious violations of Katziva’s fundamental rights, which were confirmed by the attention given to his case by business ombudsman Boris Titov, did not change the position of the Israeli court. For example, the entrepreneur had been held in custody for five years.
The court carefully considered Katziva’s arguments, including the decision of the European Court of Human Rights, which established grave violations of the defendant’s basic rights and freedoms, as well as the subsequent ruling of the Presidium of the Russian Supreme Court on the resumption of criminal proceedings dated April 11, 2018.
However, the Israeli court deemed that these circumstances did not provide legal grounds for exempting Katziva from the enforcement of the Russian decision in Israel. Rejecting the defense’s arguments, Judge Schwarz explained that despite the obvious violation of Katziva’s fundamental rights in the criminal proceedings, the case materials indicated that he had a real opportunity to effectively participate in the process.
Recognition of foreign decisions: Margulis vs. VTB
The case of VTB against Evgeny Margulis was heard in 2012 by the Haifa District Court in Israel. VTB filed a lawsuit against Evgeny Margulis, who had provided a guarantee for a loan issued to the company “Zernostandart,” owned by Margulis. As a result, the company went bankrupt, and the bank turned to the Russian court to recover the funds from the guarantor. However, Margulis had left for Israel and was residing there at the time of the proceedings.
Enforcement of the foreign decision: Proper notice of the proceedings
The bank sent the statements of claim and summonses to the address specified in the guarantee agreement, where Margulis no longer resided; only his family members lived there. As a result, the defendant was not personally notified of the proceedings and therefore could not effectively participate in the litigation. Thus, the issue of proper notice was evident, which served as a significant argument for the defendant’s defense.
During the proceedings, the Haifa District Court reminded of the provisions of the law on recognition and enforcement: the plaintiff seeking to enforce a foreign court decision must prove that the defendant was aware of and duly notified of the procedural actions taken against him, which led to the decision being rendered. The court clarified that if the defendant did not actively participate in the proceedings, the plaintiff had to prove that the defendant genuinely knew or could not have been unaware of the proceedings in another country, even if formally notified and if such form of notification complied with the laws of that particular country.
Recognition of Margulis’ case decision: Supreme Court acknowledges the decision
The District Court ultimately dismissed VTB’s lawsuit due to improper notification. However, in 2017, the Supreme Court of Israel overturned the District Court’s decision, explaining that the guarantee agreement specified the defendant’s official address, and there was a provision stating that if the guarantor (Margulis) changed their address, they were obligated to inform the bank. Since Margulis did not notify the bank of the address change, the Supreme Court considered that the bank had properly informed the defendant about the proceedings.
When resolving disputes in a foreign court, the question of whether the court has the appropriate jurisdiction to hear the initial claim is crucial. In Israel, the courts rely on principles of private international law, which are applied in accordance with local legislation. However, the interpretation and application of these principles in Israel do not always coincide with other legal systems.
The application of foreign decisions: What does the contract state?
In practice, Israeli courts often seek to ascertain the actual initial grounds for the case to be considered by a foreign court. In this regard, for example, a provision in the contract between the parties regarding the exclusive jurisdiction of a foreign court is the best evidence.
If there is no such agreement between the parties, the plaintiff may have to prove, in Israel, the connection between the subject matter of the dispute and the defendant, or the connection between the subject matter of the dispute and the jurisdiction of the foreign court where the proceedings were conducted.
For example, if the defendant is a shareholder of a Russian company and was residing outside of Russia at the time the creditor filed the lawsuit, the Israeli court may not grant the request for enforcement if the defendant convincingly proves the insolvency of the plaintiff.
Recognition of decisions: Nuances and skillful process planning
The recognition of Russian court decisions in Israel depends on the circumstances and materials of the case, as well as the knowledge of the subject matter and the legal skills possessed by the representatives of the parties.
Another important factor for success is the degree of effective interaction between Israeli lawyers and their Russian colleagues during the procedural (criminal and civil) actions in Russia, as well as the level of experts involved by the parties. Each case requires individual consideration and examination, despite the fact that, in general, Israeli courts are prepared to recognize decisions of their Russian counterparts.
Arthur Blaer and Yuri Milstein, attorneys at law