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

RATIO DECIDENDI OF SELECT DECISIONS OF THE SUPREME COMMERCIAL COURT OF THE RUSSIAN FEDERATION (JULY – SEPTEMBER 2012)

RATIO DECIDENDI OF SELECT DECISIONS OF THE SUPREME COMMERCIAL COURT OF THE RUSSIAN FEDERATION (JULY – SEPTEMBER 2012)

[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.]

Decision of the Supreme Commercial Court of 3 July 2012 N ВАС-4065/12

Point of law: whether an explanatory letter of the Federal Antitrust Service, which says that it is unlawful to create the subject of public sale (tender) by putting together works on preparation of project documentation and works on the organisation of construction, conforms to the law.

Alternative attitudes: 1) the explanation does conform to the law, because such works relate to different markets, and also because persons who prepare project documentation and those who perform construction works are members of different self-regulatory organisations; or 2) the explanation does not conform to the law, because the legislation does not contain such provisions.

Ratio decidendi: the Court came to conclusion that the second approach is legally correct.

Practical consequences: the letter containing such explanations is deemed to be invalid. This decision is final, because the opportunity for its reversal by way of supervisory procedure is lost due to the expiry of periods.

Tags: public sale

Judgment of the Presidium of Supreme Commercial Court of 10 July 2012 № 6791/11 in the case The company INTEKO vs The Interregional Tax Inspection for Major Taxpayers № 3

Point of law: whether expenses incurred by the plaintiff for receiving a bank guarantee, which was a precondition for receiving an injunctive relief from the court, may be included into litigation expenses?

Alternative attitudes: 1) since the plaintiff offered the bank guarantee at its own initiative as a counter security in order to exclude the possibility of its injunctive relief motion to be dismissed by the court, the related expenses are not reasonable and may not be reimbursed; or 2) such counter securing is inseparably connected with the dispute considered by the court, while the list of litigation expenses in Art 106 of the Commercial Procedure Code is not exhaustive; accordingly, the expenses in the form of paying a remuneration to bank for a guarantee which was obtained with the view of countersecuring an injunction relief related to a suit, should be reimbursed by the losing party as a part of litigation expenses.

Ratio decidendi: the second approach is legally correct.

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

Tags: litigation expenses

Judgment of the Presidium of Supreme Commercial Court of 10 July 2012 № 17713/11 in the case The company “The Silver of Maghadan” vs The Interdistrict Tax Inspection № 1 for Maghadan Region

Point of law: is it lawful to have in an export contract, under which silver is sold abroad, a clause establishing a “price corridor” in the form of admissible deviations from the price of the silver in the world market?

Alternative attitudes: 1) irrespective of the conditions of the contract, the selling price of gold must conform to mandatory prescriptions of the law, that is, to correspond to world market prices, which in this case are the prices in the London Metal Exchange (the view of the panel of judges which referred the case to the Presidium); or 2) the selling price of silver must depend not only upon exchange quotations, but also upon the prices applied by the participants of export-import transactions, when selling silver abroad in conditions comparable with the ones in the disputed contracts (the view of appellation and cassation courts).

Ratio decidendi: the first view is legally correct. It also flows from the text of the Judgment that, as long as the transaction price was to be determined in the procedure which was directly established by a law, the tax inspection had no duty to investigate the question of comparable conditions, when determining a market price of the commodity in question (i.e. silver).

Practical consequences: the Judgment does not provide for the possibility to reverse inconsistent court decisions in earlier cases by virtue of Art 311 of the Commercial Procedure Code. Therefore, its ratio decidendi has only prospective force.

Tags: transfer pricing

Judgment of the Plenary Session of the Supreme Commercial Court of 12 July 2012 N 42 “On Certain Questions Regarding the Resolution of Disputes Connected to Suretyship”

In this explanatory Judgment the Court has elucidated an array of issues concerning suretyships.

One of the main purposes of this Judgment was to protect the rights of creditors against unscrupulous attempts to undermine this kind of securing arrangements (suretyship). This purpose is served, in particular, by para 37. It is devoted to the interpretation of Art 367(1) of the Civil Code, which runs that the suretyship shall be terminated in the event of a change of that obligation, entailing an increase of liability or other unfavourable consequences for the surety, without the latter’s consent. The Judgment explains that this rule purports not to indemnify a surety from any liability, but to protect him from being forced to pay more than he promised to the creditor. Therefore, a change in the underlying obligation (i.e. an increase in the amount of debt, interest, change of time periods and the like) does not in and of itself terminate the suretyship – the surety should be still liable to the creditor on the initial conditions (i.e. the original amount of debt, original interest, and within the original time periods).

This explanation consolidates the position of the Presidium of the Court enunciated in its judgment of 18 October 2011 № 6977/11. At the same time, the Plenary Session of the Court points out to the opportunity for the surety to be relieved of his obligations by way of reference to Art 367(1) of the Civil Code, if he proves that the issuance of suretyships is his professional activity, he is not an affiliated person of the debtor, and the change of the underlying obligation was so material that as a result of such change it became clearly unrealisable.

Likewise, the Court says that the fact of debtor’s obligations being subject to constant changes is not a ground for holding a bond-related suretyship to be terminated (para 42).

The interests of creditors are also served by the presumptions that in the event of limiting the liability of the surety by a certain amount a partial payment of the debtor terminates his obligation as to the unsecured part, and that in the event of there being several obligations, one of which is secured by the suretyship and others are not, the debtor’s payment (unless it is indicated otherwise) shall be taken to discharge an unsecured obligation (para 32).

Para 10 aims to minimize the number of cases when the contract of suretyship is deemed not to be concluded on the grounds of absence of essential conditions of the secured obligation in the contract. At the same time, it is pointed out that an anticipatory consent of the surety to be liable for a changed amount of an obligation should contain specific limits to such change. Absent such limits, the surety shall be liable only in accordance with the original terms of the obligation (para 16).

Among other most important explanations are the following:

- suretyship may also secure obligations which may arise in the future out of the transactions having condition precedent or condition subsequent, as well as overdue (mature) and non-contractual obligations (paras 2 and 3);

- surety who performed his obligation should enjoy the right to present a reverse claim against the debtor by way of subrogation, and not by way of recourse (para 13);

- the death of the surety does not terminate the suretyship, and his heirs shall be liable within the value of the property inherited (para 20);

- in case of competition of claims of a creditor who is pledgeholder, one the one hand, and a surety who partially performed his obligation, on the other hand, they shall be deemed to be joint pledgeholders, but the surety may not act to the detriment of the creditor (para 30);

- in the event of unscrupulous change of court jurisdiction (venue) by way of conclusion of a contract of suretyship providing for an alternative jurisdiction, which is not convenient to the debtor, a court may relegate the case in accordance with the original jurisdiction (para 6);

- reorganisation of a company, which is a surety, may not be a ground for demanding of the latter to fulfill its obligations before time (paras 19 and 22);

- creditor may not bring a suit against a surety regarding specific performance of the underlying obligation secured by him, if such obligation is not a pecuniary one, but consists, for instance, in delivery of goods; a claim against surety, as well as his own obligation, are always pecuniary (para 12).

Separate sections of the Judgment are devoted to peculiarities of application of rules on suretyship in the context of bonds and bankruptcy procedures.

Tags: suretyship

Judgment of the Plenary Session of Supreme Commercial Court of 12 July 2012 N 43 “On Making Changes in the Judgment of the Plenary Session of Supreme Commercial Court of the Russian Federation of 17.02.2011 N 12 “On Certain Questions of the Application of the Commercial Procedure Code of the Russian Federation in the version of the Federal Law of 27.07.2010 N 228-FZ “On Making Changes in the Commercial Procedure Code of the Russian Federation”

By this judgment the Plenary Session of the Court clarified its own earlier explanations regarding court notices, and gave additional explanations as to litigation expenses. In particular, it explains:

- what should be considered as the latest judicial act for the purposes of reimbursement of litigation expenses;

- that a claim as to litigation expenses should be considered by an individual judge within a reasonable term, which under the Commercial Procedure Code should not exceed 3 months;

- that the composition of legal expenses, connected with the consideration of the case by a commercial court, shall be included also expenses borne by a party for consideration of the claim on reimbursement of litigation expenses;

- that the claim regarding litigation expenses borne at the stage of execution of judicial acts may be presented to the court, which considered the case in a capacity of the court of first instance, within 6 months from the moment of issuance of a decision of a judicial bailiff-executor concerning the termination or completion of execution procedure.

Practical consequences: the Judgment says that prior court decisions if inconsistent with interpretations given in this Judgment may be reversed in the procedure and within the limits envisaged by Art 311 of the Commercial Procedure Code.

Tags: commercial procedure, litigation expenses

Judgment of the Presidium of Supreme Commercial Court of 17 July 2012 № 17528/11 in the case The company “Les” vs The Federal Customs Service of the Russian Federation

Point of law: whether it is possible to recover a contributory compensation of moral harm (i.e., harm to company’s reputation) from a State body which adopted an unlawful decision against the company?

Alternative attitudes: 1) in such situation the proper remedy consists in deeming the decision of the State body to be unlawful (the view of inferior courts); or 2) deeming the decision of the State body to be unlawful does not per se constitute a just compensation of harm made to company’s reputation.

Ratio decidendi: the Presidium held the second version to be legally correct, having pointed out that if a State authority or another agency has committed, in violation of the requirements of the Russian Constitution, an unlawful interference with person’s entrepreneurial activities, which resulted in making harm to the business reputation of such person, the latter should have an opportunity to receive a just monetary compensation of such harm in accordance with the current legislation. The Presidium has also emphasized that current legislation (Art 1100 of the Civil Code) does not consider fault as a necessary precondition of liability for harm caused by the dissemination of information undermining one’s business reputation; when eliciting causal link between the actions of the defendant and the unfavourable consequences on the part of the plaintiff, courts must investigate whether defendant’s action could indeed have an impact upon third persons’ opinion about the plaintiff.

Tags: moral harm

Judgment of the Presidium of Supreme Commercial Court of 24 July 2012 № 2544/12 in the case The company “Perspektivnye Tekhnologhii” vs Tax Inspection № 3 for the City of Moscow

Points of law: 1) whether court has a right to evaluate at its own initiative the reasonability of amounts expended by the winning party for court representation, and subsequently reduce them when recovering them from the losing party? 2) whether the evaluation of the reasonability of expenses is anyhow affected by the fact that they must be recovered from the State budget?

Ratio decidendi: with regard to the first point the Presidium sided with inferior courts, having pointed out that court does have power to recover at its own initiative the expenses within the limits which it believes to be reasonable. Such power is one of the remedies provided by law and levelled against an unjustified overpricing of attorney’s services, and therefore aiming at the realization of a constitutional requirement, according to which the exercise of rights and duties of man and the citizen should not violate the rights and freedoms of other persons.

With regards to the second point the Presidium, on the contrary, gave support to the view of the panel of judges who referred the case to the Presidium. It opined that the recovery of expenses for court representation from the federal budget does not testify to the amount of the expenses being unreasonable or excessive.

A dissenting opinion of Justice Petrova is appended to the judgment. In her view, the fact that the cases, in which the expenses were to be recovered, were relatively simple, should not in and of itself serve as a ground for their reduction, and the Presidium ought to take into account the unscrupulous behavior of the tax inspection, as evinced by its bringing to court the cases which were clearly losing.

Tags: court expenses

Judgment of the Presidium of Supreme Commercial Court of 30 July 2012 in the case The company “Russian Railways” (RZhD) vs The Directorate of the Federal Antitrust Service for Rostov Region

Point of law: whether it is a violation of antitrust legislation that the booking clerks of RZhD, alongside with selling railway tickets, were also rendering services on voluntary insurance, without receiving purchaser’s consent to such services and without explaining to him the conditions of insurance contract and the rules of its conclusion?

Alternative attitudes: 1) in the case at hand the relevant market is the market of insurance services, and therefore only an entity having dominant position in this particular market may be held to be violating the Law “On the Protection of Competition”; RZhD, however, dominates in another market – namely, the market of railway transportation; its booking clerks were not exercising their labour duties as employees, but were acting as insurance agents whose activity is regulated by the Law “On the Protection of Consumers’ Rights”; besides, insurance agents, when acting on behalf of the insurer, have powers to agree on the termination of an insurance contract and return the insurance premium paid by the passenger; or 2) the violation was elicited in the market of services on the sale of railway tickets, where the monopolistic position of RZhD enabled it to impose another service, which was not asked for by the purchaser; in order to define RZhD’s actions as an abuse of dominant position it would suffice to prove the fact of its dominance in the market of those services, for which consumers apply to the company, and not in the market of services, which were imposed upon them; all the same, the consequences of the abuse consist in the impingement upon passengers’ interests both in the market of railway tickets (through the increase of the price of transportation) and the insurance market.

Ratio decidendi: the second version is legally correct. The Presidium emphasized that in accordance with the civil legislation the contract of voluntary personal insurance is a public one, and for its conclusion the consent of the insurant is essential, as well as his familiarization with the conditions of the contract and the rules of its conclusion.

Tags: insurance; antitrust; consumer protection

Judgment of the Presidium of Supreme Commercial Court of 4 September 2012 № 3809/12 in the case The Prefecture of the Southern Administrative District of Moscow vs The company “London Bridge Market”

Point of law 1: what is the proper judicial remedy against the violation of rights of the owner of a land plot, if a lessee has built a permanent structure on it without consent of the owner and subsequently registered his ownership with respect to such structure?

Alternative attitudes: 1) the only proper remedy might be a suit on the demolition of the unauthorised structure (the view of the panel of judges who referred the case to the Presidium); or 2) it is possible to bring a suit on the recognition of ownership to such structure to be non-existent (the view of appellation and cassation courts).

Ratio decidendi: the Presidium held that the fact of the object being registered as a real property does not in itself preclude bringing a suit on the recognition of the right of ownership to be non-existent, as long as the factual circumstances of the case do not unequivocally indicate that the structure in dispute was, by its parameters, an item of real estate.

Point of law 2: whether 3-year statute of limitation is applicable to suits on deeming the right of ownership to be non-existent?

Ratio decidendi: The Presidium pointed out that the view of inferior courts on inapplicability of this statute of limitation was wrong.

Tags: commercial procedure, statute of limitations

Judgment of the Presidium of Supreme Commercial Court of 11 September 2012 № 5939/12 in the case The company “Hame s.r.o” (Czech Republic) vs The company “Ruzkom” et al.

Point of law: whether a factory violates an exclusive right to another’s trademark, when it packages its own goods with the packing, on which a designation, confusingly similar to this trade mark, has been put not by the factory itself, but by a third person (the supplier of the packing)?

Alternative attitudes: 1) there is no violation on the part of the factory, because it does not use another’s trade mark independently; or 2) there is a violation, because the law (Art 1484, Civil Code) implies that putting such designation of the packing of goods constitutes an offence.

Ratio decidendi: the Presidium held the second view to be legally correct, having pointed out that such actions may be assessed as creation of infringing goods, bringing them into civil circulation and the violation of the right to trade mark.

Tags: trade marks

Judgment of the Presidium of Supreme Commercial Court of 18 September 2012 № 5338/12 in the case The company “Spektr” vs The Bath and Laundry Enterprise “Chaika” et al.

Point of law: whether it is possible to recover interest for the use of another’s means (Art 395, Civil Code), if the party which lost the case, has failed to reimburse timely the litigation expenses to the winner?

Alternative attitudes: 1) it is not possible, because the mechanism of reimbursement of litigation expenses is regulated only by procedural legislation, the reimbursement of such costs to a winning party is essentially a public duty, not a civil liability, and, accordingly, it may not be considered as a pecuniary obligation; or 2) it is possible, because it does not matter whether a pecuniary obligation has arisen within civil law or procedural framework.

Ratio decidendi: the second attitude is legally correct.

Tags: losses

Judgment of the Presidium of Supreme Commercial Court of 18 September 2012 № 3933/12 in the case The company “Rostelecom” (as represented by its Krasnoyarsk branch) vs Tatiana Pertsovkina, an entrepreneur

Point of law: whether the proven fact of unauthorised third party access to Internet by means of customer’s login and password, which were obtained unlawfully, may justify the customer’s refusal to pay for Internet services?

Alternative attitudes: 1) it may not, as long as under the contract with Internet provider the customer must himself take all necessary measures to prevent an unauthorized access and bear responsibility in case of login and password being stolen; or 2) it may, because relevant regulations place the obligation to prevent such unauthorised access on both customer and provider; besides, payment for services is not a liability for breaching an obligation, but is itself an obligation, corresponding to the obligation of the other party to render services.

Ratio decidendi: the second approach is legally correct.

Tags: Internet

Judgment of the Presidium of Supreme Commercial Court of 25 September 2012 № 5944/12 in the case The Deputy Military Prosecutor of the Western Military Circuit et al. vs The Moscow Regional Directorate of the Federal Agency for the Management of State Property et al.

Point of law: whether restitution of a land plot as a consequence of invalidity of a purchase-sale contract is admissible, if after the conclusion of the contract the right of common share ownership to the land plot has been gained by owners of an apartment house built on this site?

Alternative attitudes: 1) it is admissible, because the rights of the owners of apartment house are not violated by such bilateral restitution; or 2) it is not admissible, since the creation of the right of common share ownership leads to the termination of the former owner’s rights to the land plot.

Ratio decidendi: the second approach is legally correct.

Tags: invalidity of transactions

Judgment of the Presidium of Supreme Commercial Court of 25 September 2012 6616/12 in the case The company “FinansEkspert” vs The company “Energotehmash”

Point of law: if a preliminary contract of lease of a piece of real estate had been concluded prior to the conclusion of a mortgage contract as to the same real estate, whether the real estate in question remains encumbered by lease in case of bankruptcy of the pledgor (lessor), and whether it is possible to judicially compel the pledgeholder to conclude contract of lease?

Alternative attitudes: 1) coercion to conclude contract is not possible, since the right of lease may not originate from a preliminary contract, which is not subject to State registration; the debtor’s obligations secured by the mortgage were already mature; the coercion would not correspond to the aims and consequences of bankruptcy procedure; or 2) coercion is possible, because preliminary contract of lease had been concluded prior to mortgage, and the rights of pledgeholder shall not be violated by leasing out the property in question, because the pledgeholder was included into the register of creditors of the bankrupt debtor, whereas the property subject to lease remains in the latter’s ownership.

Ratio decidendi: the first approach is legally correct.

Tags: mortgage

Адвокат Байбуз Вадим Николаевич

RATIO DECIDENDI OF SELECT DECISIONS OF THE SUPREME COMMERCIAL COURT OF THE RUSSIAN FEDERATION (JULY – SEPTEMBER 2012)