Байбуз В.Н. - RATIO DECIDENDI OF SELECT JUDGEMENTS OF THE SUPREME COMMERCIAL COURT OF THE RUSSIAN FEDERATION (OCTOBER

RATIO DECIDENDI OF SELECT JUDGEMENTS OF THE SUPREME COMMERCIAL COURT OF THE RUSSIAN FEDERATION (OCTOBER – DECEMBER 2011)

RATIO DECIDENDI OF SELECT JUDGEMENTS OF THE SUPREME COMMERCIAL COURT OF THE RUSSIAN FEDERATION (OCTOBER – DECEMBER 2011)

[The texts of ratio decidendi are drawn up by Dr. Alexander Vereshchagin. Please note that such publications are for information only and therefore do not constitute an official text of legal positions of the Supreme Commercial Court. In order to identify the authoritative version of a legal position, please turn to the original text of the respective decision.]

Judgement of the Supreme Commercial Court of 4 October 2011 № 6417/11 in the case Parex banka vs The company “Univermag Moskva”

Point of law: does the law contain any special requirements as to the choice of law clause, especially its terminology? Should the clause, in order to be valid, refer to particular statutes?

Ratio decidendi: no special requirements with regard to terminology used in the choice of law clause may exist. References to particular statutes are not required.

Practical consequences: the Judgement says that prior court decisions in analogous cases if inconsistent with this interpretation may be reversed in the manner and within the limits envisaged by Art 311 of the Commercial Procedure Code.

Tags: choice of law

Judgement of the Presidium of the Supreme Commercial Court of 4 October 2011 № 7073/11 in the case Non-commercial partnership “Innovations in Power Industry” (NP INVEL) vs The company “Unikhimtek”

Point of law: whether the rules relating to the payment of membership fees by the members of associations and unions may, by way of analogy, govern the obligations as to the payment of fees by the participant of a non-commercial partnership who left the partnership before the end of financial year?

Alternative solutions: 1) legal analogy in such cases is admissible (the view of lower courts); or 2) the legal analogy is inadmissible, because the function of membership fees in unions and associations, on the one hand, and non-commercial partnerships, on the other hand, is not the same – non-commercial partnerships may engage in entrepreneurial activities and thus the fees paid by their members are not their only source of financing.

Ratio decidendi: the second solution was deemed to be legally correct.

Tags: non-commercial entities

Judgement of the Presidium of the Supreme Commercial Court of 11 October 2011 № 4820/11 in the case Ivan Zabolotskii, an entrepreneur vs The Administration of the municipality “Nemugunskiy nasleg”

Point of law: when does the obligation to pay interest for the use of another person’s monetary funds arise and, accordingly, when should the period of limitations with regard to such an obligation commence?

Alternative solutions: 1) from the moment of delay in performance of the underlying principal obligation; or 2) with the expiry of the period, for which the interest is accrued, so that the period of limitations is calculated separately for each overdue payment.

Ratio decidendi: the first solution is legally correct.

Tags: statute of limitations

Judgement of the Presidium of the Supreme Commercial Court of 18 October 2011 № 6478/11 in the case “Afro-Asia Consulting Inc.” vs Friedel Gerhard Wilms (Germany)

Points of law: 1) whether an arbitration clause contained in a contract may still be valid after the expiry of the term of such contract, provided that the parties to it have made it clear by their behavior that they regard the contract as being in force in spite of the expiry of its term; 2) whether it is open for an arbitration court to determine the applicable law, or the court must in all cases apply the law which is referred to in the arbitration clause.

Ratio decidendi: the Presidium held that 1) the arbitration clause may be extended to cover the subsequent relations between the parties; 2) the arbitration court may independently determine the applicable law.

Tags: arbitration courts, arbitration clause

Judgement of the Presidium of the Supreme Commercial Court of 18 October 2011 № 5355/11 in the case “Gazbank” vs The Inspection of the Federal Tax Service for the Oktiabrskiy district of Samara

Point of law: tax inspection requested from the taxpayer the documents relating to his contractor, with the reference to Art 93.1 of the Tax Code of Russia. What kind of documents may it request under this article?

Alternative interpretations: 1) it is up to the tax inspection itself to determine, which documents are relevant and may be requested from the taxpayer; or 2) tax inspection may request only those documents which relate to the economic activities of the contractor and therefore may contain information on tax offences that the latter could have committed.

Ratio decidendi: the Presidium held that the second interpretation is legally correct. Practical consequences: the Judgement says that prior court decisions in analogous cases if inconsistent with this interpretation may be reversed in the manner and within the limits envisaged by Art 311 of the Commercial Procedure Code.

Tags: the powers of tax authorities

Judgement of the Presidium of the Supreme Commercial Court of 18 October 2011 № 6977/11 in the case Sberbank vs The company “Ladoga”

Point of law: whether the contract of surety is still in force if the amount of the underlying principal obligation which it intends to secure has been increased without the consent of the guarantor?

Alternative solutions: 1) the contract of surety shall terminate in such circumstances; or 2) the contract of surety is still valid, although the amount of guarantor’s liability is still confined to the original one which existed prior to the increase in the liability of the debtor.

Ratio decidendi: the second solution is legally correct.

Practical consequences and implications of the decision: the opinion of the Presidium in this case purports to curb a tendency (quite common among the guarantors) to easily terminate the contract of surety by way of an unduly formal interpretation Art 367 of the Civil Code of Russia. Besides, the Judgement provides that prior court decisions in analogous cases if inconsistent with this interpretation may be reversed in the manner and within the limits envisaged by Art 311 of the Commercial Procedure Code.

Tags: guarantees, surety

Judgement of the Presidium of the Supreme Commercial Court of 20 October 2011 № 7517/11 in the case Retail filling chain “Salavat” vs Directorate on outside advertising, information and urban design of the city of Izhevsk

Legal issue: lower courts diverged as to whether an information shield should be considered as an advertisement and, consequently, whether its installation requires a license.

Alternative approaches: some courts believed that an installation bearing information on the range of goods and services as well as their prices with seller’s logo on it do not constitute an “advertisement” in the meaning of the law. Other courts, however, held the opposite view, since such shields are capable of drawing the attention of an unlimited number of potential customers and may emphasise the merits of certain goods and services.

Ratio decidendi: the Presidium held that information shields do not legally constitute an advertisement, if the information thereon ought to be brought to the consumers’ attention by virtue of a federal law. Also, in such circumstances the manner in which such shields are made is of no significance.

Tags: advertising

Judgement of the Presidium of the Supreme Commercial Court of 25 October 2011 № 18613/10 in the case Svetlana Moiseeva, an entrepreneur vs The company “Tander”

Point of law: whether the decision of a commercial arbitration court is lawful if the power of attorney of a party’s representative did not contain an explicit permission to participate in arbitration proceedings.

Alternative views: 1) the right to represent a person in arbitration proceedings should be specifically mentioned in the power of attorney; or 2) no specific provision to that effect is required as long as the power of attorney contains a general provision on procedural representation.

Ratio decidendi: no specific provision as to the right to participate in arbitration proceedings is required. In coming to this conclusion, the Presidium referred to the judgement of the Constitutional Court of Russia of 26 May 2011 № 10-П, which says that arbitration courts are not a part of the State (judicial) power in Russia, but a kind of alternative dispute resolution, which is in fact a discharge of a contractual duty provided for in an arbitration agreement. Therefore, if the power of attorney did provide for the right to enter into such agreement and to control its fulfillment, the power to participate in the proceedings should be implied.

Tags: arbitration courts

Judgement of the Presidium of the Supreme Commercial Court of 25 October 2011 № 9382/11 in the case The company “Garant-Stroi" vs The Building Committee of the Government of Saint-Petersburg

Point of law: whether a unilateral dissolution of public procurement contract by the customer (public authority) is permissible.

Alternative views: 1) such dissolution is impossible because it is prohibited by special laws on public procurement; or 2) it is possible because it is permitted by the general rules of the Civil Code which govern the independent work contracts.

Ratio decidendi: the second view is legally correct – the rules of the Civil Code should have priority.

Tags: public procurement

Judgement of the Presidium of the Supreme Commercial Court of 1 November 2011 № 6672/11 in the case The company “Тоp 7” vs The company “Softkei” et al.

Point of law: under which circumstances may be a web hosting provider found liable for the violation of exclusive right to the content placed on his peer-to-peer file sharing server?

Ratio decidendi: the provider is not liable for the information being exchanged as long as he does not initiate its transmission, does not choose the receiver of the information in question, does not affect its integrity, and also if he takes preventive measures against using the object of the exclusive right without the consent of the rights holder. When considering analogues cases, the commercial courts must take into account the degree of the provider’s involvement into the transmission, preservation and processing of the information, as well as his ability to control and change its content.

Practical consequences: the Presidium has noted that, given the current progress of the Internet, the ratio decidendi of the present case may extend to the cases of liability of owners of social and file sharing Internet resources. The Judgement also says that prior court decisions in analogous cases if inconsistent with this interpretation may be reversed in the manner and within the limits envisaged by Art 311 of the Commercial Procedure Code.

Tags: Internet

Judgement of the Presidium of the Supreme Commercial Court of 1 November 2011 № 7088/11 in the case The company “Aren” vs The Federal Service for State Registration, Cadastre and Cartography in Penza Region

Point of law: whether the consent of the seller of a real estate item (an edifice) to divide the land plot for the purpose of forming the land plot, necessary for the use of the real estate, is required, or such consent is not needed and the purchaser receives the right to lease such land by virtue of the law?

Alternative solutions: 1) the purchaser of an item of real estate which is situated on a land plot belonging to the seller by virtue a lease contract shall acquire the right to lease the respective land plot, regardless of whether he has a properly formalized lease contract with the owner of the land plot; or 2) it is required to receive a written consent of the seller of the real property to the division of the leased land plot for the purpose of formation of a land plot, necessary for the use of the real estate.

Ratio decidendi: the Presidium found the first solution to be legally correct.

Tags: lease, land, real estate

Judgement of the Presidium of the Supreme Commercial Court of 10 November 2011 № 6773/11 in the case Ministry of Culture of Buryat Republic vs The company “Meliorator”

Point of law: whether the envisaged value of the necessary conservation works to be carried out on an archeological site shall constitute a real damage, or it is merely hypothetical and therefore cannot be regarded as damage and, consequently, is not subject to compensation.

Alternative views: 1) the value of the future conservation works is hypothetical, it may not be regarded as a harm and does not constitute a real damage in legal terms; or 2) the performance of such works is admissible only if there are the appropriate permissions and project documentation, and therefore their value may be reimbursed only upon their effectuation and confirmation by the primary documents of the costs incurred; or 3) the compensation of the value of such works is possible and it by no means depend on the moments of approval of the project documentation and of the commencement of works.

Ratio decidendi: the Presidium found the third view to be legally correct.

Тags: losses

Judgement of the Presidium of the Supreme Commercial Court of 10 November 2011 № 8472/11 in the case The Land Resources Department of the city of Moscow vs The company “ARZ-3”

Point of law: from which moment the duty to make lease payment shall terminate if a sales-purchase contract as to the leased land plot has been concluded between the lessor and lessee?

Alternative interpretations: the duty to make lease payments shall terminate either 1) upon paying full price for the land under the sales-purchase contract; or 2) upon the State registration of the purchaser’s right of ownership; or 3) from the moment of conclusion of the sales-purchase contract.

Ratio decidendi: the Presidium found the second interpretation to be legally correct.

Tags: lease

Judgement of the Plenary Session of the Supreme Commercial Court of 10 November 2011 № 71.

In this Judgement the Plenary Session of the Court has addressed a number of important issues of judicial practice relating to administrative offences. In particular, the Plenary Session held that:

- if an individual entrepreneur has already lost this status after the commission of an offence, his case nevertheless still falls within the scope of competence of commercial courts;

- if an application of a public prosecutor with a view to imposing an administrative sanction upon a person has been dismissed by a court, the litigation costs shall be reimbursed by the Treasury;

- litigation costs borne by the person relieved from an administrative sanction due to the insignificance of his offence shall not be reimbursed;

- what may and what may not count as a lasting offence (for example, the failure to fulfill an obligation by a certain date may not be regarded as such);

- in which cases it is possible to apply to a court at the place of the commission of an administrative offence;

- whether legal holidays may be added to the terms provided for submitting an application to an appellate court;

- if the infringer is not an owner of the things which served as an object or an instrument of his offence, such things may not be forfeited;

- qualification of a certain conduct given by a court of general jurisdiction when considering an administrative offence is not binding upon a commercial court if the latter should subsequently give its own qualification of the same (for instance, when in the first place a natural person is brought to a court of general jurisdiction and subsequently a legal entity is sued in a commercial court in connection with the same offence);

- which offences should be regarded as homogenous and thus aggravate the sanctions in case of the repeated commission of such offences;

- even a partially executed decision on the imposition of administrative sanction may not be executed beyond the limits of the periods of limitations;

- an application challenging a decision of an administrative body to impose sanctions upon a foreign person, not having a registered address or domicile in the territory of the Russian Federation, shall be submitted to the commercial court at the location of the administrative body which took the contested decision.

Practical consequences: the Judgement says that prior court decisions in analogous cases if inconsistent with these interpretations may be reversed in the manner and within the limits envisaged by Art 311 of the Commercial Procedure Code.

Tags: administrative offences

Judgement of the Presidium of the Supreme Court of 15 November 2011 N 8654/11 in the case Coal company “Severnyi Kuzbass” vs The Federal Inspection № 1 for Major Taxpayers of Kemerovo Region

Point of law: what is the role of international treaties with regard to interest payments from Russian companies to foreign residents – whether they regulate the composition of expenses deductible at the taxation of the profit of Russian companies, or such composition must be determined in accordance with the rules of the Russian Tax Code?

Alternative views: 1) since the issues of taxation of interest payments relating to controlled debt are regulated by international treaties, the rules of the Russian Tax Code shall not apply; or 2) the rules of the Russian Tax Code shall apply, because the international treaties do not determine exactly which expenses should count as interest payments and thus their rules do not conflict with thin capitalisation rules provided for by Art 269 of the Russian Tax Code.

Ratio decidendi: the Presidium deemed the second view to be legally correct.

Practical consequences: in the Judgement there is no provision as to the possibility to reverse prior court decisions in analogous cases by way of procedure envisaged by Art 311 of the Commercial Procedure Code. However, this decision shall undoubtedly have considerable effect upon the future taxation practices with regard to interest payments of Russian “associated enterprises”.

Tags: thin capitalization

Judgement of the Presidium of the Supreme Commercial Court of 15 November 2011 № 5641/11 in the case The company “Zhabinkovskii Sugar Plant” vs The Federal Treasury et al.

Point of law: who must prove the illegality of non-feasance of a State agency – this agency or the applicant who contests such non-feasance in a court?

Alternative solutions: 1) the burden of proof should be placed upon the applicant; 2) the burden of proof should be placed upon the State agency, the illegality of its failure to act being presumed.

Ratio decidendi: The Presidium found the second solution to be legally correct.

Tags: administrative disputes

Judgement of the Plenary Session of the Supreme Commercial Court of 17 November 2011 № 73 “On certain issues of application of the rules of the Civil Code of the Russian Federation regarding lease contracts”

The Plenary Session has clarified a number of unclear issues in the area of lease contracts, particularly as regards the procedures of public tender for the right to lease State and municipal property. It pointed out, inter alia, that:

- a lessee having preferential right to conclude a contract for the next term may demand the transfer to himself of the rights and duties under a lease contract that has been concluded with another person as a result of public tender. At the same time, the latter person may claim damages, if the announcement about public tender had contained no indication to the existence of the preferential right;

- a lessee of State and municipal land who acquired the right of ownership to it is not relieved from the duty to make lease payments up to the moment of registration of the sales-purchase contract. If he leases and subsequently purchases another real estate item rather than a land plot, his duty to make lease payments exists until the full payment of the purchase price.

Tags: lease

Judgement of the Presidium of the Supreme Commercial Court of 17 November 2011 № 4238/11 in the case The company “Lecaz Holdings Limited” (Cyprus) vs The company “RN-Vlakra”

Point of law: whether the shareholder of a closed joint-stock company is considered to be properly notified about the holding of the general meeting of shareholders, given that he was represented by a management company, but the trust management contract with this company had already been terminated by the time of the meeting being held?

Alternative views: 1) the company has properly discharged its obligation to notify its shareholder because para 2 of Art 57 of the Law on Joint-Stock Companies provides for the duty of the management company either to give him a proxy for voting or to vote in the general meeting in accordance with his instructions; or 2) the duty tо notify the shareholder is not properly discharged because the aforementioned provisions of the Law relate only to new acquirers of shares, whereas in the present case the shareholder has been in possession of shares all along.

Ratio decidendi: the Presidium held that the second view is legally correct. Additionally, it pointed out that 1) the joint-stock company, were it acting reasonably and in good faith, ought to ascertain that the fundamental right of the shareholder to take part in the general meeting with the right to vote on all the issues of the meeting’s agenda had not been violated and, if need be, it ought to suspend the meeting in order to update the list of persons having the right to participate therein, and 2) the protection of the existing shareholders who as a result of the general meeting’s decision to issue additional shares lose to a significant extent their share in the charter capital of the company should have priority over the protection of those who acquire shares as a result of such issuance.

Practical consequences: the Judgement does not provide for the possibility to reverse the judicial decisions that are already in force on the grounds of interpretations given by the Judgement. Therefore, such interpretations may only guide future disputes (those arising after the date of its publication).

Tags: shareholders’ rights

Judgement of the Presidium of the Supreme Commercial Court of 22 November 2011 № 17912/09 in the case The company“Priokskoe” vs The company “Akvamarin” et al.

Point of law: whether the loss of corporate control by a member of limited liability company which has led to the temporary inability to change the LLC’s director-general, may serve as a ground for the tolling of the period of limitations for the purposes of challenging a transaction concluded by this director-general?

Alternative views: 1) the transaction in question has been made at the will of the owner (LLC) whose lawful representative was the director-general, and this is why the period of limitations should start at the moment of making the transaction and should not be interrupted for the period of the loss of corporate control; or 2) the period of limitations may be interrupted for the time when the corporate control was temporarily lost.

Ratio decidendi: the Presidium has found the second solution to be legally correct, having pointed out that the possibility of contesting the transaction has appeared only upon regaining the corporate control by the member of LLC, so that the refusal to apply the statute of limitations may serve as a sanction for the abuse of right.

Tags: period of limitations, abuse of right

Judgement of the Presidium of the Supreme Commercial Court of 22 November 2011 № 9113/11 in the case The Federal treasury enterprise “Samara factory „Kommunar?” vs “The interregional distribution grid company of Volga”

Point of law: whether the coercion to conclude a contract on the transmission of electricity between allied grid companies is lawful, provided that in the proposed draft of the contract the plaintiff appears only as a contractor (the one who renders services) whereas the defendant (the company which is being compelled to the conclusion of the contract) appears only as a customer (the consumer of services)?

Alternative views: 1) the coercion to conclude contract is lawful even in the absence of consideration in the form of reciprocal rendering of services by the defendant because the tariff and the procedure for settlements between allied grid companies have been fixed by a state regulator; or 2) the coercion to conclude contract in question is unlawful because in the draft contract the defendant appears only as a consumer of the services, that is, not an obligor.

Ratio decidendi: the Presidium held that the second view is legally correct. Besides, it pointed out, firstly, that judicial coercion to conclude such contract would mean coercing the defendant to use those services of the plaintiff which had no economic substance and, secondly, that courts must assess the real economic substance of the draft contract and the real purposes that the plaintiff pursued by making an application to coerce the defendant to conclude the contract. Furthermore, the judicial decision on the coercion to conclude a contract must contain the conditions on which the parties are obliged to conclude it; otherwise such a decision cannot be executed.

Tags: electric power industry, duty to conclude a contract

Judgement of the Presidium of the Supreme Commercial Court of 1 December 2011 № 9987/11 in the case Administration of the city of Chelyabinsk et al. vs The Federal Agency for the Management of State Property et al.

Point of law: whether the land plots constituting a federal property may be compulsorily withdrawn for the needs of a municipality?

Alternative attitudes: 1) land plots may be compulsorily withdrawn in the manner provided for by the civil legislation (the view of inferior courts); or 2) such land plots may not be compulsorily withdrawn because the withdrawal thereof by another public body would entail the termination of their use for the respective public needs; and the civil legislation does not apply to such cases.

Ratio decidendi: the second approach is legally correct.

Tags: eminent domain

Judgement of the Presidium of the Supreme Commercial Court of 6 December 2011 № 11523/11 in the case The United Aircraft Construction Corporation vs The Federal Service for Financial Markets

Point of law: whether the Russian Federation can be regarded as an affiliated person for the purposes of company law?

Ratio decidendi: the Russian Federation is neither legal nor natural person and therefore cannot be regarded as an affiliated person. In the view of the Presidium, the categorization of the Russian Federation as an affiliated person would have lead to an uncertainty as to the listing of such persons by all legal entities which otherwise ought to be regarded as affiliated persons of the Russian Federation.

Tags: affiliated persons

Judgement of the Presidium of the Supreme Commercial Court of 13 December 2011 № 10473/11 in the case Neftekamsk branch of Sberbank vs The company “Artur-T”

Point of law: whether drafting of a single document signed by the parties is the only confirmation of the fact that the written form of credit contract has been observed?

Alternative views: 1) the requirement of a written form means drafting a single document, and the subsequent approval of a transaction whose form was defective is not permissible; or 2) the formalization of contractual relations relating to a bank credit is not confined to making one document (credit contract) by the parties, but may also be performed by means of the exchange of documents via postal, electronic, and other communications, enabling it to be reliably established that the document comes from a party under the contract; or 3) if an improper formalization of credit contract is caused by unfair acts of the borrower who has received and accepted the performance of the creditor, but has failed to perform his own obligations with regard to the repayment of the amount of credit and the interest accrued, his action aimed at invalidation of the credit transaction on the grounds of the flawed form must be qualified under para 1 of Art 10 of the Civil Code as an abuse of right, so that the defence of his right must not be granted.

Ratio decidendi: the third view is legally correct. At the same time, the Presidium emphasized that a flaw in the underlying principal obligation (credit contract) shall not necessarily entail the invalidity of a derivative obligation (e.g. a suretyship).

Tags: form of contract, abuse of right, surety

Judgement of the Presidium of the Supreme Commercial Court of 13 December 2011 № 9807/11 in the case Public Organisation of Disabled Persons “The “Arbitr” Legal Centre in the Caucasus Mineral Waters” vs The Enterprise “Stavropolkraivodokanal”

Point of law: whether arbitration courts do have powers to compulsorily impose upon parties to arbitration proceedings fines for non-payment of arbitration fees provided for by the rules of the arbitration court?

Alternative views: 1) when signing a contract having an arbitration clause the parties thereby agree to the application of the rules of the arbitration proceedings including potential fines and similar sanctions. Therefore, the failure to perform their procedural duties, i.e. non-payment of fees, must be regarded as a violation of the obligations they have assumed under the civil law transaction with the arbitration court, whereas additional expenses shall constitute a penalty under such civil law contract; or 2) with regard to the dispute resolution in arbitration courts the same procedural guarantees should apply as to the dispute resolution in state courts, where no fines are provided for in case of the failure to perform the procedural duty to pay the state fee in advance. In such a case the courts may refrain from taking the case for consideration and suspend the application. Courts of international arbitration and arbitration courts, being a form of alternative dispute resolution, do not have powers to apply fines and similar measures.

Ratio decidendi: the Presidium has endorsed the second view and also pointed out that arbitration courts may refuse to consider a case in the event of the applicant’s failure to pay arbitration fees. The imposition of fines would contradict the principle of voluntary recourse to the arbitration court which does not presuppose any compulsory financial measures against the parties.

Tags: arbitration courts

Judgement of the Presidium of the Supreme Commercial Court of 13 December 2011 № 10590/11 in the case Liudmila Belochkina vs Oksana Chernykh et al.

Point of law: under which circumstances must be a sales-purchase contract with regard to a share in a limited liability company (LLC) held invalid, given that the purchaser was a third person (not a member of the LLC) whereas the charter of the company explicitly prohibited selling a share (or a part thereof) to any third person?

Ratio decidendi: the Presidium came to the conclusion that 1) such transaction is a contestable one in the meaning of Art 174 of the Civil Code and, consequently, it can be invalidated by a court decision; 2) when concluding a sales-purchase contract with regard to a share in LLC, the purchaser ought to familiarise himself with the charter of the LLC, including the prohibition against the sale of shares to any third person, and hence to foresee the negative consequences of the transaction in question; 3) all the same, the invalidation of the transaction is unnecessary when the transaction is aimed at the acquisition of the entire business, that is, the simultaneous purchase of all shares from all members of the company by way of a multilateral contract in which the price would be determined as the price of the whole business and takes into account the value of net assets of the company.

Tags: mergers and acquisitions, invalidity of contracts

Judgement of the Presidium of the Supreme Commercial Court of 13 December 2011 № 9350/11 in the case The company “Trast-S” vs The Federal Bailiff Service

Point of law: whether an enforcement fee wrongly levied by a court bailiff (bailiff-enforcer) from the debtor and subsequently refunded following a suit of one of the creditors should be entirely spent to meet lawful claims of this particular creditor or the latter is entitled to only pro rata portion of the sum in question in accordance with the share of his claims within the consolidated execution procedure?

Alternative views: 1) the sum of the enforcement fee to be refunded should be entirely spent to cover the losses of the plaintiff caused by wrong actions of the court bailiff; or 2) the plaintiff is entitled to recover his losses pro rata only, in accordance with the sum payable to him as indicated in the execution writ.

Ratio decidendi: the Presidium held that the second version is legally correct.

Tags: enforcement procedure, losses

Judgement of the Presidium of Supreme Commercial Court of 20 December 2011 № 12262/11 in the case of the company “Grosh&K”

Point of law: the federal law, which entered into force on 1st November 2010, has limited the term for filing an application for the recovery of judicial costs with a court to 6 months from the moment of completion of consideration of the case. Does this rule have a retroactive force and may it apply to cases whose consideration was finished before that date?

Alternative approaches: 1) the term in question should apply to all applications filed after 01.11.2010, regardless of when the court decision in question had been rendered, although it is possible to make a motion to toll the term elapsed, with the reference to the uncertainty of legal rules as a ground for the lapse; or 2) the term in question should commence on 02.11.2010; or 3) application for the recovery of judicial costs ought to be filed within the 3 month term, upon which the law entered into force; or 4) since the recovery of judicial costs is essentially a substantive law institution, not a procedural one, in the given circumstances the general 3 year period of limitation should apply.

Ratio decidendi: in its Judgement the Presidium made a synthesis of the above alternatives 1, 2, and 4. The judges pointed out that applications for the recovery of judicial costs should have been filed within the 6 month term, commencing on 2nd November 2010; all the same, it is possible to bring a motion to toll the term elapsed, and the final judicial decisions in the cases which gave rise to the applications for the recovery of judicial costs must remain within the general 3 year period of limitations.

Tags: procedural terms, judicial costs

Judgement of the Presidium of the Supreme Commercial Court of 20 December 2011 № 9924/11 in the case The company “Instroy” vs The company “SU-155”

Point of law: whether a suit seeking to coerce the purchaser to pay the contract sum under a contract of purchase-sale of land plot falls within the scope of competence of the commercial court at the location of the land plot?

Alternative views: 1) the suit should be considered by the court at the location of the real estate in dispute, because the success of such a suit would entail the registration of the transfer of real estate title; 2) the suit should be considered in accordance with general jurisdictional rules (that is, by the place of registration of the defendant company) because the suit substantively arises from the law of obligations and not property law.

Ratio decidendi: the Presidium held that the second view is legally correct.

Tags: jurisdiction, coercion to execute contract

Judgement of the Plenary Session of the Supreme Commercial Court of 22 December 2011 № 81 “On certain questions of the application of Article 333 of the Civil Code of the Russian Federation”

In this Judgement the Plenary Session of the Supreme Commercial Court has resolved a number of controversial issues relating to the reduction of contractual penalty by way of court decisions. In particular, the Court has:

- listed those arguments of the defendant which may not serve as a ground for the reduction of a penalty;

- pointed out that the penalty may not be reduced at the own initiative of the court;

- recommended to the courts, when determining the commensurability of the amount of penalty to the consequences of the failure to perform the obligation, to take into account the double interest rate of the Bank of Russia, and determined those exceptional circumstances in which the reduction of a penalty below this level is allowed;

- held that cassational commercial courts may not consider cases on the reduction of penalty, because it is not a question of law;

- explained that the rules of Art 333 of the Civil Code apply also to such measure of liability for the failure to perform an obligation as deposit and the transfer of things determined by generic characteristics.

Tags: penalty

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RATIO DECIDENDI OF SELECT JUDGEMENTS OF THE SUPREME COMMERCIAL COURT OF THE RUSSIAN FEDERATION (OCTOBER – DECEMBER 2011)