Award of the foreign arbitration court was recognized and inforced

Claimant operated in Hungury invoked the arbitration clause included in relevant article of the Agreement concluded by Respondent as borrower and the Hungarian financial institution. The parties requested to record in arbitral award the Debt Repayment Agreement. Permanent Arbitration Court attached to the Hungarian Chamber of Commerce and Industry issued award on agreed terms according to which Respondent had to pay the debt towards Claimant in installments via bank transfer in accordance with the debt repayment schedule. 

Parties agreed that if the Debt repayment schedule set out in the agreement is not followed by Respondent the whole amount of the debt became due automatically on the date, when borrower fails to perform its payment obligation towards Claimant. Since the defendant participated in the case being considered by the arbitration court through his authorized representative, the need to present to Supreme Court of Azerbaijan documents confirming proper notification of the defendant was eliminated. 

According to Article 458 of the Civil Procedure Code of the Republic of Azerbaijan, Award of foreign courts are recognized and enforced in the Republic of Azerbaijan in cases provided for in the laws of the Republic of Azerbaijan or international treaties to which the Republic of Azerbaijan is a party, or on the basis of mutual agreement. The Supreme Court of the Republic of Azerbaijan granted our motion and the decision of the Permanent Court of Arbitration under the Hungarian Chamber of Commerce and Industry was recognized and enforced in the territory of the Republic of Azerbaijan.

Azerbaijan is a party to the following international treaties related to recognition and enforcement of foreign arbitral awards:

• the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) (with no reservation);
• the European Convention on International Commercial Arbitration 1961 (with no reservation); and
• the Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965 (with no reservation).

The Arbitration Law and Civil Procedure Code replicate provisions in the New York Convention.

An arbitral award (irrespective of the country where it was made) is recognised as binding and, on written application, will be enforced in accordance with the Law on International Arbitration. The Supreme Court reviews applications on the enforcement and recognition of arbitral awards. For recognition and enforcement of foreign arbitral awards, the party seeking enforcement must supply the duly authenticated original award or a duly certified copy of it. If an arbitration agreement is not in Azerbaijani, a certified translation must be provided.

The Supreme Court can refuse to enforce a foreign arbitral award only in the following cases:

When the party against whom the award was made provides the following evidence to the court considering the application for recognition or enforcement:

• that one of the parties to the arbitration agreement was a person without legal capacity at the time of conclusion of the agreement in accordance with the legislation applicable to him or her, or that the arbitration agreement was invalid under the legislation applied by the parties to the agreement or, if the agreement does not provide for such an indication, under the legislation of the state where the arbitral award was made;
• that the party against whom the award was made was not duly notified of the appointment of the arbitrator or of the arbitral proceedings, or was not given the opportunity to present his objections and evidence for other reasons;
• the award is made on a dispute not provided for in the arbitration agreement of the parties or not related to its terms, or the award covers issues that go beyond the scope of the arbitration agreement or the claim (if the awards on issues covered by the arbitration agreement or the claim can be separated from the awards on issues not covered by this agreement or claim, the parts containing the awards on issues covered by the arbitration agreement or the claim may be recognized and enforced);
• the composition of the arbitral tribunal or the arbitration proceedings do not comply with the agreement of the parties or, in the absence of such agreement, with the law of the place where the arbitration is held;
• the award does not enter into binding legal force for the parties or is annulled or suspended by the court of the state in which the award was made or in accordance with the law of the state in which it was made;

The Supreme Court may also refuse to recognize or enforce a foreign arbitral award in the following cases:

• the dispute cannot be resolved by arbitration in accordance with the legislation of the Republic of Azerbaijan; 
• the recognition and enforcement of the arbitration award is contrary to the Constitution of the Republic of Azerbaijan or public order, that is, fundamental legal bases (principles) that are imperative in nature, universal and of special public importance and form the basis of the political, economic and legal structure of the Republic of Azerbaijan.

As Azerbaijan is a party to the New York Convention, achieving recognition of a foreign arbitral award is not difficult provided that no grounds for refusal stipulated in the Law on International Arbitration and the Civil Procedural Code exist.

When considering an application for recognition or enforcement of an arbitration award, the court shall not have the authority to review the arbitration court's decision on its merits.

An application for recognition and enforcement of a foreign arbitration court's decision shall be considered within 3 (three) months from the date of its receipt by the court.

Decisions of foreign courts may be enforced for a period of 3 years from the date the resolution enters into legal force.