Журнал ЗАКОН

Case Comment on the Judgment of the Chamber for Commercial Disputes of the SC RF No. 305-ЭС18-13693, 6 December 2018 Public funds could be provided in Russia to manufacturers and service providers in the form of nonrepayable financing (subsidy) for two purposes: to compensate expenses on duties imposed on a company by public regulation and to provide financial support to certain businesses. In relation to the latter case, the Supreme Court of Russia has for the first time considered the issue of whether the public authority in charge of the management of public funds could groundlessly refuse to perform its duties under an agreement to provide the funds (the agreement being regulated by public law rules). The court answered this question in the negative. The recipient of the funds has a pecuniary right to receive money that should be protected by courts.

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Keywords: subsidy, stimulating subsidy, payment obligation, financial year, art. 78 of the Budget Code, pecuniary right

Case Comment on the Judgment of the Chamber for Civil Cases of the RF SC No. 26-КГ18-20, 13 August 2018 The article analyzes an issue that has been considered by the Supreme Court: can a court act generate an insurer’s obligation to pay insurance money? This is important, for example, for determining when the penalty for non-payment should start to accrue. The Ruling of the Supreme Court is based on a positive answer to this question. The author of the article, however, puts forward a number of objections to this approach. According to the author, the position that was taken by the court is not in line with insurance legislation and could have an adverse effect on the rights and interests of the policyholders and insured parties. By default, the obligation to pay insurance money should arise after the occurrence of the insured event. The author also critically assesses the Supreme Court’s arguments on the need to lower the amount of penalty established by law.

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Keywords: insurance, obligatory state insurance of the military, obligatory insurance, covered loss, reduction of penalty

Review of the Judgment of the Supreme Court of Germany of 09/05/2018 VIII ZR 26/17 with a Commentary In this case, a buyer found that the car he had purchased had a significant defect. The buyer was forced to repair the car several times, and thus he requested a reduction of the price. But before the price difference was paid by the seller, the buyer changed his demand. The buyer demanded a refund of the price of the car and said that he was prepared to return the defective car to the seller. The Supreme Court of Germany decided that, having requested a price reduction, the buyer had already made his choice. The seller was entitled to draw the conclusion that the buyer did not plan to withdraw from the contract, and thus he cannot change his choice. The buyer has the right to get the difference in price, but not to withdraw from the contract.

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Keywords: withdrawal from a contract, defect in goods, contract of sale, reduction of price

The final part of the publication covers such elements of ownership right as the burden of property maintenance, the consequences of violating the prohibition to use the property in a harmful manner, the possibility of seizing an asset in the repayment of debts, including the legal status of an asset in case of bankruptcy of the owner (creditor) and user (debtor), as well as the risk of accidental loss of an item. The burden of property maintenance is transferred from the owner to the user, which must be taken into consideration not only in terms of relations between the debtor and the secured creditor, but also in terms of third-party relations. Moreover, harm done by the security asset (when the person required to compensate is the one to whom the thing belongs) must be compensated by the debtor. Foreclosure on the security asset may only be carried out with regard to the owner’s debts. In such case, the rights of its debtor and the use of the property shall be additionally protected against the person acquiring the items in the foreclosure process, as long as the debtor properly fulfills its obligations. On the same grounds, an asset must be included in the bankruptcy assets should the asset owner goes bankrupt. In case of the debtor’s bankruptcy, the owner should be allowed to seize of the property, and if the debtor refuses to return it, an ordinary proceeding, but not a separate dispute within a bankruptcy case, shall be the proper form of the asset recovery procedure. The risk of accidental loss or damage to the security asset shall be transferred to the debtor possessing the property: the debtor must continue to fulfill its obligations to the owner (creditor) despite accidental loss or damage to the item.

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Keywords: security property, financial leasing, maintenance burden, bankruptcy assets, risk of accidental loss

Case Comment on the Judgment of the Chamber for Commercial Disputes of the RF SC No. 307-ЭС17-22975, 16 May 2018 The Plenary Resolution of the Supreme Court of the RF No. 7, dated 24 March 2016 has established a set of principles for claiming damages which were meant to improve unfavourable court practice. The new rules have become widespread in the lower courts, but now the Supreme Court itself is taking the opposite position in certain cases and steering practice in a different direction with its decisions. The article covers one such case. The dispute was spawned by the breach of a sales contract which, in turn, led to the breach of subsequent contracts. The appellate and cassation courts followed the spirit of the Plenary Resolution, but the Supreme Court’s Judicial Chamber on Economic Disputes has ignored the earlier interpretations and raised the standard of proof of damages. The most negative consequence of such cases lies in steering the lower courts towards argument with the plaintiff and protection of passive defendants. This case and other similar decisions serve as the basis for examining different possible methods for evaluating proof of damages caused by the termination of subsequent contracts, including lost profits and losses in the amount of the penalties paid to third parties.

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Keywords: damages, lost profit, penalty

In a famous case decided by the US Supreme Court in 1906, the issue of the enforceability of a lobbying contract was discussed. Justice Oliver W. Holmes laid down two propositions. First, the purpose of the contract — namely, ensuring the adoption of legislation advantageous for the client — runs counter to public policy, and, therefore, the contract as a whole is void. Besides that, the contract contains provisions in effect equivalent to paying the lobbyist a contingent fee if the legislation is adopted. In the opinion of Justice Holmes (and this is secondly), contingent fee provisions are a fortiori unenforceable because they additionally increase the corrupt incentives characteristic of any contract for paid lobbying services. During the last century, many things have changed in the US. Today lobbying is regarded as a respectable and well-regulated profession. Accordingly, the first proposition of Justice Holmes is no longer relevant. But the second one, concerning the ban on contingent fees, is still in force.

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Keywords: lobbying, contingent fee, US, public policy

The article covers the specifics of the fulfillment of claims of parties connected with the debtor, within a debtor’s bankruptcy case, and consists of two parts: description and analysis. The first part published in this issue is dedicated to the analysis of existing judicial practice, the experience of the resolution of legal problems in foreign jurisdictions (USA, UK, Germany), and the recommendations of the UNCITRAL relating to the said issues. The author arrives at the conclusion that there are two possible models based on objective and subjective imputation. The first one is illustrated by German experience and provides for a special attitude towards the requirements of connected parties based on the mere fact of such connection. The second one is illustrated by the Anglo-Saxon approach, in which certain grounds are required (abuse of rights, abuse of the limited liability principle, etc.) in order to change the treatment of a claim.

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Keywords: insolvency (bankruptcy), connected parties, burden of proof, claim subordination, abuse of right

The authors analyze the practical application of Art. 179 of the Civil Code of the Russian Federation and conclude that transactions are rarely disputed on the grounds established in the article. Courts very rarely satisfy claims to annul transactions on the first (threat) and third (oppression) grounds; the second ground (deceit) is frequently used in case of active and passive deceit, which is not the case for deceit by a third party. For this category of disputes, it is important to have a criminal sentence passed by the court, since it has prejudicial significance in the civil dispute. However, in case of such interaction between civil and criminal laws, courts do not consistently determine when the limitation period starts to run, and in this connection it would be useful for the Supreme Court to develop a definitive position on this matter.

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Keywords: deceit, threat, oppression, transaction invalidity

This article considers the practice of circuit commercial courts of Russia regarding challenging of arbitral awards and refusing to issue a writ of execution for compulsory execution of the arbitral award due to the improper notification of the party against which an arbitral award was pronounced about the formation of the arbitral tribunal or the time and place of the arbitral hearing. Based on the analysis, the author formulates criteria evaluating whether notification was proper (sending to the address indicated by the party or contained in the Unified State Register of Legal Entities; timely receipt by the addressee; delivery to an authorized person or a person whose authority is clear from the situation), identifies cases when the risk of non-receipt of a legally significant notice is transferred from the addressee to the sender, and suggests ways to avoid negative situations connected with such non-receipt.

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Keywords: arbitration tribunal, challenging of an arbitral award, compulsory execution of an arbitral award, legally significant notice