In this survey the Presidium gave examples of correct resolution of issues regarding the application of public policy clause. In particular, it pointed out that:
- the concept of “public policy” embraces fundamental legal principles having highest mandatory force, universality, special societal and public significance, and providing the grounds for constructing the economic, political and legal systems of the State. Such principles include, among others, a prohibition against actions which are clearly prohibited by super-mandatory rules of legislation of the Russian Federation, if such actions cause damage to the sovereignty and security of the State, affect the interests of large social groups or violate constitutional rights and freedoms of private persons;
- in the light of extraordinary character of public policy clause the necessity to use it is lacking when there are special (ordinary) grounds for refusal to recognize foreign court decision or arbitral award;
- a compulsory execution of a foreign arbitral award under unfulfilled contract which was concluded by way of ‘commercial bribe’ (a crime envisaged by Russian Criminal Code, Art. 204) is contrary to the public policy of the Russian Federation. Court may find the fact of such contradiction independently, ex officio, irrespective of a declaration of a party to that effect;
- the lack in Russian law of such institutions as contractual guarantees and warranties, liquidated damages or litigation bond (cautio judicatum solvi) is not per se a ground for application of public policy clause when considering the recognition of respective foreign decisions. For instance, liquidated damages contradict the public policy of the Russian Federation only in the event that the amount of such damages is so abnormally high that it many times exceeds the amount which parties might foresee when concluding the contract, or if at the time of agreeing the amount of such damages there were clear signs of abuse of freedom of contract (in the form of taking advantage of bargaining opportunities of the debtor, the violation of public interests and the interests of third persons, etc);
- the failure of foreign company to follow the procedure for approval of a large-scale transaction as prescribed by the company lex societatis may not contradict the public policy of the Russian Federation because the rules on special procedure for the approval of large-scale transactions pursue the goal of protecting the shareholders of the company and, consequently, may not entail the violation of rights of its counterparties.
