Joint Stock Company 'Aeroflot-Russian Airlines' v Berezovsky and Another
| Jurisdiction | England & Wales |
| Judge | Arden,Kitchin L JJ,Lord Toulson. |
| Judgment Date | 16 January 2014 |
| Court | Court of Appeal (Civil Division) |
| Date | 16 January 2014 |
[2014] EWCA Civ 20
Court of Appeal (Civil Division).
Arden and Kitchin L JJ and Lord Toulson.
Philip Marshall QC and Justin Higgo (instructed by Pinsent Masons LLP) for the appellant.
Anthony Trace QC, Thomas Grant QC and Alexander Winter (instructed by Addleshaw Goddard LLP) for the estate of the first respondent.
Philip Jones QC and Jennifer Haywood (instructed by Boodle Hatfield LLP) for the second respondent.
The following cases were referred to in the judgment:
Brumarescu v Romania (Application No. 28342/95).
Carl Zeiss Stiftung v Rayner & Keeler LtdELR [1967] AC 853.
Henderson v HendersonENR (1843) 3 Hare 100.
India v India Steamship Co Ltd [1997] CLC 1581; [1998] AC 878.
Israel Discount Bank of New York v HadjipaterasWLR [1984] 1 WLR 137.
Johnson v Gore Wood & CoELR [2002] 2 AC 1.
Lindberg v Sweden (Application No. 48198/99) (2004) 38 EHRR CD239.
Maronier v Larmer [2002] CLC 1281; [2003] QB 620.
Merchant International Co Ltd v Natsionalna Aktsionerna Kompaniya Naftogaz [2012] 1 CLC 396; [2012] 1 WLR 3036.
Nouvion v FreemanELR (1889) 15 App Cas 1.
Pravednaya v Russia (Application No. 69529/01).
Soering v United Kingdom (Application No. 14038/88) (1989) 11 EHRR 439.
United States v MontgomeryWLR [2004] 1 WLR 2241.
Varniené v Lithuania (Application No. 42916/04).
Conflict of laws — Enforcement — Recognition and enforcement of judgments — Res judicata — Issue estoppel — Russian law — Russian criminal and civil proceedings — Defendants held jointly and severally liable for fraud on claimant — Successful application to Russian court to increase amount of judgment in line with inflation — Whether enforcing second Russian judgment contrary to English public policy — Whether decision to reopen judgment as to amount of damages payable breached finality principle — English law laid down requirements for final and binding judgment but incidents of foreign judgment to be determined by foreign law — Trial required to determine disputed questions of Russian law — Defendants not entitled to summary judgment.
This was an appeal by the claimant Russian company, Aeroflot, against a decision of Floyd J ([2012] EWHC 3017 (Ch)) granting summary judgment dismissing its claim to enforce two Russian judgments, on the ground that enforcement would breach the finality principle.
The defendants (B and G) had been the subject of criminal and civil proceedings in Russia arising out of their involvement with Aeroflot. In 2006 G had been convicted of defrauding Aeroflot and ordered to pay compensation by a judgment of the Savelovsky district court. The Golovinsky district court quantified the liability in the sum of 215m roubles. By a second judgment of the Savelovsky court in 2007, B was convicted of defrauding Aeroflot and found liable to compensate Aeroflot for the sum of 215m roubles jointly and severally with G and others.
In 2010, Aeroflot recovered some 1,760m roubles through proceedings in Switzerland. That sum considerably exceeded the amount of the compensation awarded to it in Russia. Aeroflot accepted that it had to give credit for that recovery.
In 2011, Aeroflot applied to the Golovinsky court asking for its loss of 215m roubles to be uplifted by the rate of inflation from 1996, when the loss was incurred. By a second judgment, the Golovinsky court granted indexation of Aeroflot's loss, increasing the total amount of compensation payable to 2,118m roubles.
Aeroflot sought to enforce the second Savelovsky judgment and the second Golovinsky judgment in the UK and the defendants applied to strike out the action or for summary judgment. The judge granted summary judgment on the basis that the decision to reopen the judgment as to the amount of damages payable was a plain breach of the finality principle.
Held, allowing Aeroflot's appeal:
1. The finality principle was part of English public policy. The main issue on the appeal was whether English law applied to all questions arising from the application of the finality principle, in particular the question whether the foreign court's judgment was final and binding for the purposes of the finality principle. By implication the judge decided that English law governed the question whether the second Savelovsky judgment was final and binding. That conclusion was contrary to principle and authority. The English courts would not hold that a later foreign judgment infringed the finality principle when it interfered with a prior judgment if under the foreign law the prior judgment was not final and binding. When the issue in English recognition and enforcement proceedings was whether a foreign judgment was final and binding, English law laid down the requirements for a final and binding judgment but the incidents in fact of the foreign judgment had to be determined by foreign law. The court needed to make findings of fact as to whether as a matter of Russian law the second Savelovsky judgment was final and binding under Russian law. Until that happened the court could not refuse recognition on the ground that the second Golovinsky judgment breached the finality principle. A trial was therefore necessary to decide the disputed issues of Russian law. (Nouvion v FreemanELR(1889) 15 App Cas 1andCarl Zeiss Stiftung v Rayner & Keeler LtdELR[1967] AC 853applied; Merchant International Co Ltd v Natsionalna Aktsionerna Kompaniya Naftogaz[2012] 1 CLC 396; [2012] 1 WLR 3036considered.)
2. The finality principle engaged art. 6 of the European Convention on Human Rights and Aeroflot argued that the foreign court's violation of art. 6 had to be “flagrant” to justify withholding recognition on that ground, and that there was a strong presumption of Convention compliance because Russia was a contracting party to the Convention. It was not necessary to decide in this case whether there was some threshold test of seriousness, that a violation of the finality principle had to reach before it precluded enforcement, though provisionally the court would be inclined to hold that there was. While the court was not in a position to say whether the finality principle was breached until there had been findings on the questions of Russian law, if the second Savelovsky judgment was final and binding under Russian law, then any breach of the finality principle was certainly flagrant. When a court was asked to enforce a foreign judgment, it need not actively inquire whether the foreign court was entitled to make the order it made. It was entitled to assume that the court acted in a proper way unless the contrary was proved. However, any presumption of compliance with art. 6 would be displaced if, following the findings of Russian law, it was clear that the second Golovinsky judgment breached the finality principle.
Arden LJ: Issue: Recognition of Russian judgments
1. The claim in these proceedings is for the recognition and enforcement of a judgment dated 29 November 2007 of the Savelovsky District Court in Moscow, as varied by a judgment dated 31 May 2011 of the Golovinsky District Court in Moscow for 2,118m roubles, or the unsatisfied balance of that amount, claimed at 507m roubles, plus interest. I refer to these judgments as “the second Savelovsky judgment” and “the second Golovinsky judgment”.
2. The law of England and Wales will recognise and enforce the judgment of a foreign court provided three conditions are fulfilled:
(1) the judgment was final and conclusive;
(2) there are no defences to recognition; and
(3) the court which gave the judgment had “international jurisdiction” over the defendant (meaning for this purpose that he was present, or (arguably) resident in the court's jurisdiction when served with the proceedings).
3. Floyd J, as he then was, summarily dismissed the claim in this case on the ground that there was a complete defence to the recognition and enforcement of the judgments described in paragraph 1, namely public policy, by reason of the “finality principle”. This principle is recognised by the common law and also by Strasbourg jurisprudence, that is, the case law of the European Court of Human Rights (“the Strasbourg court”). The finality principle will be examined in more detail below. It is sufficient to say at this stage that it prevents parties from re-opening a dispute save by an appeal or if fraud is shown. Neither of those exceptions applies here.
4. The issue on this appeal is whether the judge was right summarily to dismiss the claim on this basis. The test for summary dismissal of a claim is high: the court must be satisfied that the claim has no real prospect of success.
5. For reasons amplified below, having considered the parties' submissions, I consider that that test was not satisfied. The court needed to make findings of fact as to whether as a matter of Russian law the second Savelovsky judgment was final and binding under Russian law. Until that happened the court could not refuse recognition on the ground that the second Golovinsky judgment breached the finality principle. This is sufficient to decide this appeal but counsel argued further issues with which I also deal below. In my judgment, therefore, this appeal should be allowed. If my Lords agree, that means that there will have to be a trial at which the issues are fully considered. Accordingly I shall not go into the issues more than necessary at this stage.
6. The second Savelovsky judgment and the second Golovinsky judgment arose out of criminal proceedings in which the first respondent (“Mr Berezovsky”) (now deceased) and the second respondent (“Mr Glushkov”) were convicted of defrauding the appellant (“Aeroflot”) in the 1990s.
7. Mr Glushkov was convicted by the first Savelovsky judgment on 3 July 2006 and ordered to compensate Aeroflot. The judgment stated that 214m denominated roubles were stolen...
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