CONSTRUING OF APPLICATION OF THE AGREEMENTS GOVERNING PROCEDURES OF ECONOMIC COURTS (ARBITRAGES) OF THE STATES WHICH ARE THE PARTIES TO SUCH AGREEMENTS

Judgment No. 01-1/5-2000 dated March 23, 2001 on construing Articles 2, 3 of the Agreement on the state duty amount and the procedure of collection thereof when examining economic disputes between economic entities of different States, dated December 24, 1993, concerns applicability of Article 3 of the Agreement to any bargains closed in any freely convertible currency, and possibility for the economic entities to pay the state duty in the roubles of the Russian Federation (RUR) when applying to the courts of the States which are the parties to the Agreement, if the claim is raised in a freely convertible currency.

According to Article 3 of the Agreement dated December 24, 1993, the state duty payable at application to judicial and arbitral bodies of the CIS member-States may be paid both in the national currency valid in the court’s location, and in the roubles of the Russian Federation (RUR). Nevertheless, this Article fails to answer whether such procedure is only applicable to claims raised in national currencies of the States which are the parties to the Agreement dated December 24, 1993, or to claims raised in any freely convertible currency.

Taking account of the purposes and terms of the above Agreement, the CIS Economic Court believes that within the context of this Agreement the currency of claim shall be deemed national currencies of the States which are the parties to the Agreement. If the purpose of the Agreement dated December 24, 1993 was to govern the interrelations connected with payment of the state duty in RUR while the cost of claim is denominated in any freely convertible currency, then it had to specify the appropriate conversion procedure.

Proceeding from this assumption, the CIS Economic Court believes that Article 3 of the Agreement on the state duty amount and the procedure of collection thereof when examining economic disputes between economic entities of different States, dated December 24, 1993 shall not be applicable to any bargains closed in any freely convertible currency by the economic entities of the States which are the parties to this Agreement, save as otherwise may be provided for by the legislations of such respective States.

Judgment No. 01-1/3-02 dated June 21, 2002 on construing the Agreement on the state duty amount and the procedure of collection thereof when examining economic disputes between economic entities of different States, dated December 24, 1993 in the wording of the Protocol thereto dated July 1, 2001clarifies the following:

§         At what rates the state duty shall be paid by: the economic entities when applying to economic courts of the States which are the parties to the Agreement but which, as of the date of lodging the claim, have failed to fulfill intra-state procedures required for coming the Protocol into effect; and by the economic entities from the States which are the parties to the Agreement but which, as of the date of lodging the claim, have failed to fulfill intra-state procedures required for coming the Protocol into effect, when applying to economic courts of the States which are the parties to the Agreement and for which the Protocol has come into effect;

§         What is the procedure of the state duty collection at examining economic disputes between the economic entities.

Article 2 in the Agreement dated December 24, 1993, to which all CIS member-States are the parties, fixed the state duty when applying to the court of any other member-State at the rate of 10 percent of the amount of claim, in the currency of such claim. The Protocol dated July 1, 2001 differentiated the rates of the state duty paid by the economic entities when applying to the court any other member-State, depending on the amount of claim.

Being governed by the norms of the Viennese Convention on the International Treaty Law 1969, the CIS Economic Court believes that the Protocol dated June 1, 2001 shall be applied only to mutual relations between the States for which such Agreement has come into effect. Should any economic entities from the States for which the Protocol dated July 1, 2001 has not come into effect, or should any economic entities from the States which have failed to fulfill intra-state procedures under the Protocol dated June 1, 2001 (whether they are or are not the parties to the Agreement) apply to any judicial bodies of the States which are the parties to the Agreement dated December 24, 1993 and for which the Protocol has come into effect, the state duty shall be payable at the rate of 10 percent of the amount of claim, in the currency of claim.

Judgment No. 10/95/С-1/3-96 dated February 7, 1996 on construing the Agreement on the state duty amount and the procedure of collection thereof when examining economic disputes between economic entities of different States, dated December 24, 1993clarifies the following:

§         Whether the requirement of the national banks of the CIS member-States, that certain payments should be made to them for conversion of currency when the state duty is paid or sums of money are collected according to the decisions of arbitral bodies of the Commonwealth member-States, is lawful, since such expenses have not been charged to the legal costs by the mentioned Agreement;

§         At what rate shall money, collected according to the decisions of arbitral bodies of the Commonwealth member-States, be converted: existing as of the date of debt arising, or as of the date of making a decision on collection of such amount, or as of the date of execution of such decision, since the rates of national currencies are not fixed.

The CIS Economic Court has established that the rouble of the Russian Federation shall be a uniform money equivalent at collection of the state duty payable to judicial and arbitral bodies of the CIS member-States. The procedure of payment of such state duty when applying to judicial and arbitral bodies of the CIS member-States, established by the Agreement dated December 24, 1993, fails to consider expenses incurred by a plaintiff from conversion of its national currency to the roubles of the Russian Federation (or other currency of the States which are the parties to the Agreement). The national banks of such States shall undertake to ensure unhampered payment of the state duty and collection of sums of money according to the decisions of arbitral bodies of the CIS member-States, but they are not responsible for conversion of monetary funds.

As far as the procedure of fixing, by judicial and arbitral bodies, of sums collected at settlement of economic disputes, as well as the procedure and terms of currency conversion in the territories of the States which are the parties to the Agreement dated December 24, 1993, are established by the national legislations of such States, the requirement of the banks to be paid for the services related to conversion of national currencies when the state duty is paid or sums of money are collected according to the decisions of arbitral bodies of the CIS member-States, does not conflict with the Agreement dated December 24, 1993.

In order to calculation the sum which is subject to collection, the judicial and arbitral bodies proceed from the amount of losses incurred by the aggrieved party. The CIS Economic Court believes that the amount of real losses incurred by the aggrieved party includes the costs related to currency conversion, taking account of variation of the national currencies exchange rates as of the date of debt arising, as of the date of making a decision on debt collection, and as of the date of execution of such decision.

Any expenses arising in connection with the above circumstances shall be collected according to general rules, in particular, by increasing the sum of claim or raising (satisfaction) of additional points of claim.

Judgment No. 01-1/6-97 dated June 23, 1998, on clarification of the CIS Economic Court’s Judgment No. 10/95/C-1/3-96 dated February 7, 1996 on construing the Agreement on the state duty amount and the procedure of collection thereof when examining economic disputes between economic entities of different States, dated December 24, 1993, specifies more exactly which party shall bear expenses for conversion of sums collected according to the decisions of the courts, and at what rate shall such sum be converted: existing as of the date of debt arising, or as of the date of making a decision, or as of the date of execution of such decision.

The CIS Economic Court has clarifies that conversion of the national currency of the debtor’s State into the currency indicated in the writ of execution shall be effected by the bank (which services such debtor) at the rate fixed as of the moment of actual collection of such sums specified in the court decisions, provided the respective national legislation imposes on such bank a duty to convert currencies at execution of the decisions of judicial and arbitral bodies. Should the national legislation fail to include a norm charging the bank with conversion of the national currency into the currency specified in the writ of execution, and should the bank (which services the debtor) return such writ of execution unexecuted, the claimant shall be entitled to solicit the competent court of the debtor’s country for changing the currency specified in such writ of execution for the national currency or any other currency, in compliance with the rules of the law of procedure which provide for change of the method and procedure of the court judgment execution.

All expenses incurred from currency conversion shall be recovered by the bank at the expense of the debtor. Any losses incurred by the claimant from currency conversion due to variation in exchange rates existing as of the date of payment of the state duty and collection thereof according to the court judgment, or incurred from changing the method and procedure of execution of such court judgment as of the date of debt arising (and payment of the state duty) and as of the date of making a decision on changing the currency of payment respectively, — may be recovered to such claimant in accordance with the national laws through additional claims.

The Findings of the Plenum of the CIS Economic Court dated July 10, 1997 on removal of action No. С-1/5-96 on construing Article 8 of the Agreement on procedure of settlement o disputes related to carrying out business activity, dated March 20, 1992, terminates proceedings in the case by inquiry of the Higher Economic Court of the Republic of Belarus, in connection with recall thereof by the applicant.