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Proceedings on cases, where foreign persons are involved, including foreign creditors under effective Russian legislation provisions, stipulated in Chapter 32 of Arbitration Procedural Code. Arbitration courts of the Russian Federation can investigate cases, involving foreign organizations, international organizations, foreign citizens, persons engaged in entrepreneurial activity, in cases, provided for in Article 1, Article 247of the RF APC. In particular, if the defendant is located or residing in the territory of the Russian Federation or his property, management bodies, branch office of representation office are located in the territory of the Russian Federation.

In accordance with procedural legislation of the Russian Federation, decisions of courts of foreign countries, adopted on cases, arising from the implementation of entrepreneurial and other business activities are investigated and enforced by the Russian arbitration courts, if the recognition and enforcement of such judgments are foreseen by an international treaty with the RF and the RF federal law. The recognition and enforcement of foreign court judgment are reviewed by the arbitration court under application of the parties to the dispute, investigated by a foreign court.

Issues, emerging in the process of cross-border insolvency could be effectively resolved in case of relevant international treaties (conventions) availability. However, despite the elaborated conventions drafts, Russia has never joined any of them26. In cases of cross-border bankruptcy, legislators propose to implement the regulations of national legislation, based on the Federal Law 127-FZ of 26 Oct., 2002 On insolvency (bankruptcy) (hereinafter Law on Bankruptcy) and APC 2002. In cases, stipulated by the law, arbitration courts apply also other legislation provisions.

Herewith, in view of this issue, the legislators should define correlation with the laws of another country (or even legal provisions of several countries), since the cross-border bankruptcy is a subject of international private law (the subjects of which are foreign creditors and the insolvent bankrupt).

M.M. Boguslavsky noted27, that when a of foreign legal entity has property (representation office) in the territory of the Russian Federation, in respect to which there is a court decision of a foreign state on insolvency (bankruptcy), and the property is included in the bankruptcy assets of the debtor, in case of an international treaty availability, enforcement in regard to such property should be applied in compliance with such treaty. In the absence of any international agreement, the issue is resolved on the basis of reciprocity principle.

For example, bankruptcy proceedings are carried out in a foreign country against a legal entity, whose property includes the assets, located in the territory of Russia, and in accordance with the national laws, the legal entity is recognized as bankrupt. All its property, including the assets, located in the territory of the Russian Federation, is included in the bankruptcy assets by the court of that country.

For example, German legislation proceeds from the standpoint, that the insolvency proceedings, initiated in this case in Russia, should be recognized in Germany. Arbitration court seizure of assets covers the assets, located in Germany. The authorized Bankruptcy Commissioner has the right to exercise his powers outside the country boundaries as well. As the Russian Federal Law On insolvency (bankruptcy) is based on the principle of reciprocity, the consequences of proceedings in Germany are applicable to the property in Russia.

Therefore, the claim for that property can be addressed under application of a foreign creditor even in the absence of international agreement on legal assistance. Herewith, the claims of Russian creditors, who have not filed their claims on bankruptcy in a foreign country, can be satisfied in Russia.

Reciprocity can be observed in the legal acts in different ways. Traditionally a direct and indirect principles are applied. The direct reciprocity is applied in Art. 1 of the Law on Bankruptcy, according to which, in the absence of an international treaty, the decisions of international courts on insolvency (bankruptcy) are recognized on the territory of the Russian Federation on the basis of reciprocity, unless otherwise provided by federal law.

Art. 425 of Kazakhstan Procedural Code provisions on the recognition and enforcement of foreign judgments in regard to recognition and enforcement of foreign courts judgments should be executed in accordance with the international treaties on the basis of reciprocity. Indirect reciprocity, that is, without direct reference to that principle is often applied in the majority of international agreements, which can comprise provisions on the duty of the member-States to adhere to certain regulations on a reciprocal basis.

The issues of recognition and enforcement of foreign court judgment and foreign arbitration decision shall be executed by the arbitration court upon applications of the parties to the dispute, investigated by a foreign court. It should be noted that the absence of an international treaty can not be regarded as grounds to reject recognition and enforcement of foreign court decisions of the interested persons by the Arbitration Court of the Russian Federation. In this regard, in resolving the case, the court should proceed from the principle of reciprocity (international comity), and verify, whether there have been cases of recognition the decisions of the Russian or other courts judgments, or such cases are unacceptable under the laws of this country28.

It should be emphasized, that the absence of an international treaty does not preclude the development of cooperation between the authorities, including courts of the Russian Federation and foreign judicial and other official bodies. The courts of sovereign nations, if their national legislations do not provide otherwise, can apply the international principle of reciprocity.

A review of the international instruments on cross-border insolvency, see: V.F. Popondopulo, E.V. Slepchenko. Procedings on bankruptcy in arbitration court. St. Petersburg., 2004. P.79-84.

Ref.: M.M.Boguslavsky. International private law ., 2005.

Ref..: FAS of Moscow Region -40/7813-02 of December 2, 2002.

With regard to the execution of the decisions of Russian courts in the countries, which have no international agreements on legal assistance with the Russian Federation, the following example is remarkable. In 1998, the Uruguayan court has issued a decision on the recognition of the Russian court judgment, basing on the fact that although there is no agreement on legal assistance among Russia and Uruguay, the Uruguayan authorities are not aware of any refusal to assist the Uruguayan people by Russia, and the court of Uruguay decided, on a reciprocal basis to recognize and enforce the decision of the Russian court29.

Though Article 1 of the Russian bankruptcy law established the principle of reciprocity, the latter is difficult to be applied in practice. The point is that the Russian procedural legislation does not provide detailed rules on the enforcement of foreign judgments on the basis of reciprocity, there are no criteria for evaluation, the principle of reciprocity is applicable. Moreover, it is unlikely, that foreign countries, whose legislation is also based on the principle of reciprocity, will be effectively enforcing the Russian courts decisions, since in the Russian law, this principle is not available, with the exception of the provisions on bankruptcy.

In view of the above, the courts of foreign countries, considering many different cases (not only insolvency ones) with the foreign element, may find the principle of reciprocity inapplicable by the Russian courts in practice.

In our view, it is necessary to make such amendments to the Russian procedural law that would enable effective application of the principle of reciprocity in practice, that is, to determine, if the reciprocity principle is applicable.

The establishment of procedural rules of reciprocity in the law would cover the existing gap in procedural legislation and help to improve the arbitration procedure for recognition and enforcement of foreign judgments in cases on business and bankruptcy issues.

A reliable instrument (judicial and other documents) could serve as a possible criterion to identify the availability of reciprocity principle. For example, an executed decision of a foreign court or relevant public authority on similar cases could be regarded as such act. Thus, if the applicant presents evidence on actually issued and executed judgment to the arbitration court (or another valid act, effective in the country of origin of the act), the court can be basing on the assumption that the fact of reciprocity is established.

I think, in future the law can be supplemented with the provision, according to which the presence or absence of reciprocity would be determined by the arbitration court on the basis of information, submitted to the court by interested parties. Foreign judicial acts, official letters and other documents can be used in courts as an evidence of such information. The arbitration court can find it necessary to request information from relevant government authorities of the Russian Federation and foreign States to establish the presence or absence of reciprocity principle.

The criterion of reciprocity can be specified in legal regulations for application by branches (like in industrial laws on bankruptcy), or can be specified in the Arbitration Procedure Code. We believe that both options are acceptable, but trends in the development of international civil procedural law allow to suggest that the criteria for determining the presence or absence of reciprocity in enforcement of foreign judgments should be established in the arbitration and civil Procedural Codes as a general framework for all categories of cases.

As one of the grounds of a case on cross-border insolvency is the recognition by local court the decisions of foreign courts (the relevant jurisdiction authorities), basing on the principle of reciprocity, it is important to promote this approach among court judges in order to prevent rejection of such cases.

Defense in the 2008 federal budget V. Zatsepin In accordance with the latest changes introduced in November in the current three-year federal budget, the 2008 RF expenditures under the section National Defense will decline 0.8% in real terms on the previous year. The federal budget continues to lose transparency not only with regard to defense expenditures, but in every other respect as well, which seriously contradicts the basic principles of the RF Budget Code.

Ref.: V.F. Kanashevsky. International private law. ., 2006. P.593.

On 8 November, immediately after delivering his first message to the Federal Assembly on 5 November, President Dmitrii Medvedev signed the latest alterations30 in the 2008-10 federal budget. It should be noted that it is already for the fourth time that the original law is being altered31 after having been adopted in the summer of 2007 - half a year ahead of the usual schedule of the budgetary process.

In recent years, the federal budget has never been altered so frequently. The first thing that catches the eye in the law signed by the President on the 8th of November is the amazing frequency of the words secret and top secret. The text is literally mottled with them32, which looks rather depressing. This is explained by the fact that the number of classified annexes to the said law, already quite numerous from the start, has been increased fourfold. At the same time, the informative value even of the unclassified data is low: for example, in order to learn the final amount of allocations under one or other section, subsection and targeted item of federal budget expenditure, one should perform three operations of addition33 involving the data from the four different versions of the budget.

Otherwise, it would be simply impossible to analyze the dynamics of changes in specific allocations over the year. Undoubtedly, each of these changes was accompanied by necessary and reasonable motivations, which were effective at a given moment of time in a given segment of state administration. Naturally, it should be taken into consideration that neither lobbying nor any other informal factors have ever been reflected in the explanatory notes supplied by the officials.

The abovementioned changes in allocations are designed to compensate for planning errors and for the considerable losses in the dynamics of economic growth; at the same time they represent the end result of the ongoing interdepartmental struggle for financial resources. However, even when taking into account all these considerations, it is hard to imagine any rational reasons that could have been used to substantiate the cuts (by 14.835 bn rubles) made in March to the sums previously allocated under the federal budgets Subsection 0405 Agriculture and fishery, followed by in increase in those same allocations, in July, by 31.497 bn rubles. In view of the well-known problems in the domestic production of foodstuffs the former move appears to be of a rather dubious nature just like, for example, another change in the amount of allocations under Subsection 0409 Road System, which in March was increased by 160 million rubles, in July by another 6. 81 billion, and in November was cut by 23.1 billion rubles. It would be difficult to look into the causes of such a situation - be they shortages of construction capacities, failures to conclude contracts through somebodys fault, or overoptimistic planning a year ago without carrying out a special investigation ex post (perhaps, an audit or investigation on the part of the Procuracy). However, one thing is clear the number of roads actually constructed in 2008 in Russia is much lower than it could have been.

Generally speaking, the changes under certain subsections in the federal budget expenditures classification have been mutually compensating. Thus, the allocations under Subsection 0901 Inpatient medical care in March went up by 8. 954 billion rubles, and then in July fell by 8.644 billion rubles.

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