Журнал ЗАКОН

Case Comment on the Judgment of the Chamber for Commercial Disputes of the RF SC No. 305-ЭС18-15086, 24 December 2018 In the decision under comment, the author suggests distinguishing two situations in order to clarify the grounds for lowering the priority (subordination) of claims arising on the basis of a security transaction (in particular, guaranty) in bankruptcy: 1) a guarantor related to (affiliated with) the borrower (within the framework of coverage relations) pays the principal debt and makes a claim to the borrower in the bankruptcy case by way of subrogation; 2) the creditor under the principal liability (loan or credit) is related to (affiliated with) the guarantor and makes a claim to the guarantor in the bankruptcy case. In the first case, the claims of the related (affiliated) person within the framework of coverage relations should be reduced in priority in bankruptcy on the same grounds as the loans of participants (controlling persons). In the second example, the security transaction may be contested under the rules of paragraph 2 of Article 61.2 of the Law on Bankruptcy as a transaction to the detriment of creditors.

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Keywords: security, bankruptcy, related (affiliated) persons, subordination of claims

Case Comment on the Judgment of the Chamber for Commercial Disputes of the RF SC No. 305-ЭС18-12573, 4 December 2018 The judgment under comment considers the issue of whether contracts to rent out the same real property object (or a part of it) to different persons are voidable. For many years, the courts have been persistently declaring void the contract for leasing the same property that had already been rented by another person. In this judgment, the Supreme Court emphasizes that that this position is erroneous as it contradicts the rules of the Civil Code of Russia and the authoritative position of the Supreme Court itself, as well as views expressed by scholars.

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Keywords: double lease, lease, void transaction

(To the Russian Translation of the Article by M. Gelter and J. Roth)

The authors of the article provide a comparative legal analysis of the two approaches developed by the judicial practice and legislation of foreign countries to the provision of capital substitution financing by participants in the pre-bankruptcy period: re-qualification of granted loans or their subordination. The conditions, order, and consequences of the re-qualification and subordination of loans of participants, as well as exceptions from the indicated regimes, are investigated. The article also analyzes economic arguments for and against the subordination of loans of participants in bankruptcy.

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Keywords: bankruptcy, subordination of claims, participants of a corporation

The second part of the work is devoted to (1) the exercise of the power to dispose of a security asset and (2) guarantees of rights to it when it is forcibly transferred to public ownership (seizure for public use, confiscation). The title of the owner at the same time serves as a symbol and center of gravity of the set of rights of the owner (creditor) resulting from the contract with the debtor. The disposition of the title is often seen as a similar disposition to the contractual position of the creditor. The owner is free to exercise the right to dispose of the security asset, but the debtor retains a set of rights and obligations related to the property, including with respect to the acquirer. The right of disposition includes not only alienation, but also pledge, which, upon the fair full performance by the debtor of its liabilities and receipt of the asset thereby as property, discontinues, whereas the general rule on the preservation of pledge in the case of transfer of the rights to the charged property does not apply. Upon termination of the contract with the debtor, the said specifics of the collateral rights disappear. The debtor also has rights of disposition, which it may exercise by transferring, with the consent of the owner of the contractual position, to a third party or by subleasing the asset. Both transactions are made between the debtor and the third party without the participation of the owner (creditor) and, therefore, the consequences of the possible invalidity of such transactions should also consist in the transfer of assets between the property areas only of the parties to the transactions. Different compensation models are possible if the security asset is seized for public use. Separate compensation to the owner (creditor) and the user (debtor) is preferable. Confiscation of a security asset in view of the user’s (debtor’s) wrongdoing in the case of the good faith of the owner (creditor) should be considered inadmissible. In the case of seizure of the collateral because of the delinquency of the owner, the rights of creditors should be retained. The final part of the article will be published in the following issue of the journal.

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Keywords: security property, leasing, disposal, transfer of contract, seizure of property for public use, confiscation

Federal Law No. 341-FZ of August 3, 2018, introduced large-scale changes to the Land Code of the Russian Federation and several other legal acts of the Russian Federation, as a result of which new regulations on public easements in Russia appeared. Now public easements can be established not only in the interests of the general public (Article 23 of the Land Code), but also in favor of specific entities that place and operate certain infrastructure lines on land plots belonging to others (Chapter V.7 of the Land Code). In the author’s opinion, the updated rules on public easements do not stand up to criticism, first of all because of the peremptory manner in which such easements are established. The commentary is devoted to the formulation of questions arising in connection with the adoption of Federal Law No. 341-FZ of August 3, 2018, as well as to answering these questions.

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Keywords: restriction of the right of ownership to immovable property, easement, public easement, infrastructure lines

Russian law consistently pursues the principle of abstraction of representation. With reference to challenging transactions, a restriction of this principle is the bad faith of a contractor. This category leaves much room for court discretion; precisely for this reason, detailed research is very important. At present, a material change in the direction of case law concerning the standard for verifying a contractor’s good faith is taking place. The interpretation of the Russian Supreme Court which excludes the supposed duty to check a contractor’s internal documents laid an important foundation for this. The objective in this case is to ease the functioning of civil commerce. However, it should be concluded that disputes over the application of Paragraph 1 of Article 174 of the Russian Civil Code continue. The article analyses some problematic situations that arise in practice: the provision of information by a legal entity to a contractor and measures taken by the contractor itself to receive information from a legal entity, the public disclosure of information, representation of the validity of a contract, the interpretation of uncertainties and contradictions in internal documents, taking into account ordinary business activities, long-time cooperation and the interrelation of transactions, whether the contractor has the status of a professional market participant etc. The author provides recommendations for resolving these cases in line with the general approach expressed by the Supreme Court of Russia.

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Keywords: good faith, stability of civil commerce, challenging transactions, verification of counterparties

The present publication consists of a decision by the Civil Cassation Department of the Ruling Senate — i.e. the Russian supreme court of the time — delivered in January 1907. The decision is dedicated to the contestation of debtor’s transactions without insolvency proceedings under the laws of the Kingdom of Poland (then an integral part of the Russian Empire), which were based on French and Roman sources. It is fairly characteristic of the Senate jurisprudence of the time. The commentary touches upon the personalities of the judges involved, the mechanisms of judicial lawcreation employed by the Senate, and the development of the contestation of debtor’s transactions without insolvency in Russian, Polish and French law.

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Keywords: contestation of debtor’s transactions, insolvency, set-off, Ruling Senate, Civil Cassation Department, the laws of the Kingdom of Poland, judicial precedent