Case of the Day: Batbrothers LLC v. Paushok
Posted on December 11, 2018
The case of the day is Batbrothers LLC v. Paushok (N.Y. Sup. Ct. 2018). Batbrothers had a $25 million judgment against Sergey Viktorovich Paushok from a Russian court. It sought recognition and enforcement in New York and moved for summary judgment. Paushok defended on grounds of lack of standing, a supposed lack of finality of the Russian judgment, and a supposed lack of conclusiveness. The standing argument is somewhat difficult to discern, and so I don’t address it here.
The court correctly held that the availability of an appeal in the foreign jurisdiction did not undermine the finality of the judgment. Indeed, the statute provides that a final judgment can be recognized “even though an appeal therefrom is pending or it is subject to appeal.” A more interesting argument was that because Batbrothers sought to have Paushok declared insolvent in Russia, and because that move gave rise to an automatic stay under Russian law, the judgment was no longer presently enforceable in Russia. I don’t know enough about Russian insolvency law to know what to make of this argument, but I think the court’s dismissal of the argument was somewhat cursory and unconvincing. I will not repeat it here at length. It does not seem that Paushok has filed an ancillary bankruptcy proceeding in the United States under Chapter 15 of the Bankruptcy Code. Again, I don’t know enough about Russian bankruptcy law to say, but perhaps that would be a good next step?
Last, Paushok argued that the Russian judgment was not conclusive, because he did not receive notice in sufficient time to allow him to defend, and because the judgment is repugnant to New York public policy (the public policy point apparently also relied on the supposed lack of notice). The court rejected the notice argument on the grounds that the Russian court had already considered and rejected it. This was enough, in light of the choice of forum clause in the parties’ contract.