A Russian company and its Latin American partner: where to litigate and how to get paid

What is happening

A Russian manufacturer shipped a consignment to a Brazilian buyer, and payment never arrived. The contract only says that disputes are resolved in accordance with the law, without naming a court or arbitral institution.

A Mexican distributor has started arbitration abroad against a Russian supplier, as the contract provides. The supplier is under foreign sanctions and cannot defend itself properly: it is unable to pay the fees or retain counsel abroad.

A Russian company has won an ICAC case against a Chilean partner. The award has not been complied with voluntarily, and the debtor's assets are in Chile.

What the law says

• Parties to a foreign trade contract may refer disputes to international commercial arbitration, including the ICAC; the requirements for the arbitration agreement and the procedure are set by Russian Federation Law No. 5338-1 of 7 July 1993 on International Commercial Arbitration.
• An award made in Russia is enforced in the debtor's country under the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, provided that country is a party to it. The local procedure is handled by a local lawyer under local law.
• Article 248.1 of the Commercial Procedure Code (APC) gives Russian commercial courts exclusive jurisdiction over disputes involving persons subject to restrictive measures. How the rule applies where the contract refers disputes to a foreign court or arbitration is assessed on the facts of each case.
• The jurisdiction of Russian commercial courts over disputes with foreign persons is governed by Chapter 32 of the APC, and recognition in Russia of foreign judgments and arbitral awards, including those against a Russian company, follows Chapter 31 of the APC.
• US dollar payments pass through US correspondent banks and are subject to their rules; separate US sanctions programmes apply to Cuba, Venezuela and Nicaragua. This must be considered when choosing the currency both in the contract and in any settlement agreement.

What we do

• Before signing, we draft the dispute resolution clause: ICAC, another arbitral institution or a state court, seat, language, number of arbitrators, governing law, all with an eye to the country where the award will have to be enforced.
• Together with a local lawyer, we establish how foreign arbitral awards and Russian court judgments are enforced in the partner's country and what will be needed.
• Once a dispute arises, we assess the position and the partner's assets, choose the country of enforcement, send a letter of claim and negotiate.
• We conduct the case at the ICAC or before a Russian commercial court, gather evidence and arrange translations into Russian.
• If the company is under sanctions and proceedings have been brought against it abroad, we assess whether the dispute can be heard by a Russian commercial court under Article 248.1 APC and prepare the application.
• We coordinate enforcement in the debtor's country: we brief the local lawyer and prepare Russian documents with an apostille and a Spanish translation; documents in Portuguese are translated with the help of a translator; we check the result.
• If the partner seeks recognition in Russia of a foreign judgment or award against the Russian company, we defend the company in those proceedings.
• We draft settlement agreements: currency, bank, payment schedule, consequences if a transfer is blocked. Where a state partner and an investment are involved, we bring in this practice's separate investment protection service.

What we will need from you

• The contract with the partner, annexes and correspondence, including messenger chats.
• Documents on shipments, services and payments.
• Any known information on the partner's assets, accounts and other counterparties.
• Papers from the foreign proceedings, if the partner has already gone to court or arbitration.
• Information on the sanctions status of the Russian company and its banks.