Recognition of Foreign Judgments: The Limits of the 'Public Policy' Exception in Russian Courts

The Arbitrazh Court of the City of Moscow (ASGM) has issued a significant ruling in the dispute between the Chinese entity Jiaxing Kaworth Hardware and the Russian company Zitar-Snab, affirming the recognition and enforcement of a Chinese court judgment for the recovery of approximately $570,000 (Case No. А40-205251/2025).

Factual Background and Procedural History

Zitar-Snab attempted to obstruct the enforcement process using several procedural and substantive arguments, including:
1. Jurisdictional Challenges: Arguing that the company's registration location should preclude the ASGM's jurisdiction.
2. Due Process Violations: Claiming that service via 'public announcement' denied the company its right to appeal.
3. Substantive Errors: Alleging that the Chinese court misidentified the parties to the transaction when reviewing invoices.
4. Public Policy Breach: Contending that the requirement to remit funds via a Hong Kong bank violated the currency legislation of the PRC and IMF agreements, thereby contravening public policy.

Judicial Analysis and Legal Reasoning

The ASGM systematically rejected these arguments, reinforcing a strict approach to the recognition of foreign judgments.

First, the court cited the 1992 Treaty on Legal Assistance between the Russian Federation and the People's Republic of China, noting that the guarantee of free access to courts cannot be artificially restricted by civil law norms regarding registration addresses.

Second, regarding the notification of the debtor, the court found that the representative had physically received 386 pages of translated documents—including the statement of claim and summons—at the Tverskoy District Court of Moscow in April 2024, well before the judgment was rendered.

Third, the court dismissed the claims regarding misidentified parties as an attempt to review the merits of the case. Under established principles of private international law, a Russian court is not empowered to re-examine the factual findings or the application of procedural law by a foreign court during the recognition phase.

The 'Public Policy' Exception and Currency Control

The most critical aspect of this ruling concerns the definition of 'public policy.' The defendant argued that routing payments through Hong Kong bypassed Chinese currency controls, which should trigger the public policy exception to enforcement.

The ASGM clarified that the public policy exception is designed to protect the fundamental pillars of the Russian legal order, not to enforce the administrative or currency regulations of a foreign sovereign state. The court noted that the 1996 Agreement between the RF and PRC on Cooperation in the Field of Currency Control governs the exchange of information between authorities and does not grant Russian courts the authority to refuse the recognition of judgments based on such administrative norms.

Furthermore, the court ruled that IMF regulations concerning currency contracts are inapplicable here, as the underlying dispute involves a standard contract for the sale of goods, not a currency exchange transaction.

Conclusion