Do We Need Cross-Border Bankruptcy in Russia?

The theoretical issue of cross-border bankruptcy has now become a practical problem for arbitration courts in Russia, which were required to deal with the issue without the benefit of a pre-existing regulatory framework. In this article, an examination will be undertaken, drawing upon a case study, of the issue of protecting rights in instances where a debt is not settled by a debtor – a foreign legal entity with property in Russia – after a court has issued a ruling. In this particular instance, the most opportune course of action was to petition the court to initiate bankruptcy proceedings, a matter which, at the time, was scarcely addressed in the context of Russian law enforcement and the courts were, at that time, only beginning to explore the intricacies of cross-border bankruptcy. This was prior to the involvement of the legislator. The case in question was adjudicated prior to the establishment of the “practice-forming” legal positions of the Supreme Court of the Russian Federation, as articulated in the decision of the Judicial Board for Economic Disputes of the Supreme Court of the Russian Federation of 08.02.2024, No. 305-ES23-15177, in case No. A40-248405/2022. The article also provided commentary on this Definition of the Supreme Court of the Russian Federation, which can be termed “the code of cross-border bankruptcy in Russia”. It was asserted that this Definition had created the norms of substantive law and procedural law, and that the judicial act in fact outlined the due process for cross-border bankruptcy. The article further explores the implications of the Definition, highlighting its practical application by judicial bodies as a statutory instrument. The article further demonstrates the manner in which the aforementioned definition had an instrumental influence on the appellate court’s ruling in the case which formed the basis of the investigation.