Журнал ЗАКОН

Case Comment on the Judgments of the Chamber for Commercial Disputes of the SC RF No. 305-ЭС18-11743, 3 December 2018, and No. 304-ЭС18-20504, 20 March 2019 In the analyzed cases, the problem was discussed — whether the principal should pay something to the bank (guarantor) for the service of providing a guaranty. The guarantor was declared bankrupt before the guaranty expired. The principal has ceased to pay under an agreement to provide a guaranty. The Supreme Court decided that it was illegal. The Supreme Court insists that the principal must pay under the contract even if the bank (guarantor) had become bankrupt. If the bank (guarantor) has been declared bankrupt, the courts should find out the new price of the guaranty, and the principal is to pay this reduced price. The author criticizes this interpretation and argues that after the declaration of insolvency of the guarantor, the guaranty loses its security qualities. Therefore, the guarantor does not fulfill the contractual obligation to provide protection. Principal has to pay for the guaranty only if the guarantor provides protection. Therefore, the author considers that the principal has the right to refuse further payment if the guarantor is declared bankrupt.

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Keywords: independent guarantee, bankruptcy, state and municipal contract, contract to provide guaranty

Case Comment on the Judgment of the Chamber for Commercial Disputes of the SC RF No. 305-ЭС18-15724, 29 November 2018 The article analyses the problem of foreclosing on the sole residence of an insolvent debtor as part of bankruptcy proceedings through the prism of the «Fruschak case». The main issue is how to strike the balance between interests of creditors and debtors. The author criticizes the position of the Supreme Court of the Russian Federation regarding the incompleteness of motives and indicates a number of practical problems: the control function of the court in a bankruptcy case; judicial estoppel in a bankruptcy case; the purpose of initiating the bankruptcy of citizens; and the limits of immunity in a bankruptcy case. According to the author, de lege lata it is possible to use the mechanism of replacement housing in the case of the sale of a sole residence.

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Keywords: insolvency (bankruptcy), arbitrazh procedure, living quarters, property immunity, abuse of right

In the article, the author attempts to understand and doctrinally describe the theory of netting (balance), with reference to which the Supreme Court of the Russian Federation, in a number of rulings made in 2018, denied the challenge of set-off transactions under an independent contractor agreement, despite the fact that the transactions were made right before the bankruptcy of one of the parties to the agreement. The best explanation of this theory, according to the author, is the concept of automatic set-off, which does not require any statements of the parties. Such set-off may occur at a moment specified in the agreement or arising from the legal nature of the obligation, in particular, at the time of termination of the contract.

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Keywords: set-off, insolvency (bankruptcy), balancing of counter claims, balance theory, disputing of preference transactions

This article is an attempted popular exposition of a mathematical theory known as the «evidence theory» or the «theory of belief functions». The exposition is intended mostly for lawyers having some interest in mathematics. The theory mathematically describes the process of fact-finding by a judge or jurors on the basis of the evidence presented to them. The theory may be viewed as a next stage of development compared with the better-known «Bayesian» approach to the problem.

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Keywords: еvidence theory, belief functions, probability, evaluation of evidence, standard of proof

The fourth part of the article deals with the analysis of judicial statistics in cases against the shareholders and management of a company. Based on this analysis, the author comes to the conclusion that the hypothesis on the effectiveness of conglomerates is correct, since they participate in only a small number of cases and mainly suffer from a vertical agency problem. At the same time, the author has to acknowledge that on average, the vertical agency problem was higher than was expected. The fifth part of the article presents proposals that can increase the efficiency of the corporation and protection of shareholders’ rights. The first subsection proposes reforming the fiduciary liability of controlling persons in conglomerates and entitling the beneficiary to file claims on behalf of the corporation. The second subsection proposes some measures that will increase the protection of minority shareholders in corporations with concentrated share capital; in particular, the author proposes introducing the possibility of entitling minority shareholders to file a direct claim against the majority shareholder for the recovery of losses and to request the repurchase of shares.

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Keywords: corporate law, economic analysis of law, agency problem, shareholder protection, repurchase of shares

There exists case law concerning specific situations of violation of duty of loyalty by companies’ directors (top managers). These situations are those where directors usurp companies’ business opportunities. However, Russian courts have no uniform approach to the resolution of such cases. On the contrary, the legislation (or case law) of foreign countries has a Corporate Opportunity Doctrine (or the COD) which serves to help judges faced with analogous cases. The COD is intended for the cost-effective allocation of business opportunities between companies and their directors. The COD is a constitutive part of the duty of loyalty. Under this duty, a company’s director has an obligation to disclose information about the acquisition of business opportunities. Then an authority of the company (shareholders or disinterested directors) must approve or deny such acquisition. If the authority approves a transaction, then the director cannot be held liable for any harm to the company resulting from this transaction. In the present article, the author analyses the COD and provides its definition, tests and the procedure for its application. The author also provides a comparative analysis of the COD in the USA, the UK, Germany and France. The types of CODs in the abovementioned countries differ substantively. The difference, in particular, lies in the courts’ purpose: to choose the proper owner of the business opportunity or to establish the fact of the violation of fiduciary duties. A distinctive feature of the COD is that business opportunities do not per se belong to a company. Therefore, a conflict of interests between a director and the company is not obvious. The present article is one of three parts of the research. The author set the objective of analyzing and explaining the mechanism of the COD, conducting a comparative analysis of the COD’s models and describing some specific cases of application of the COD.

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Keywords: corporate opportunity doctrine (COD), fiduciary duties, duty of loyalty, conflict of interests, liability

The review of the judicial practice of debt forgiveness is based on the issues faced by the courts. The main issue is the correlation of debt forgiveness with donation. The practical significance of the issue is due to the prohibition of donation between businessmen. The author proves that gratuitous forgiveness of debt should not always be considered a donation, as donation implies an intention to donate. This distinction follows from the practice of the superior courts. However, the inferior courts still do not see this sometimes, and cancel the gratuitous forgiveness of debt, even if a businessman indirectly benefited from it. The review provides examples of cases with three types of debt forgiveness: (1) non-gratuitous, (2) gratuitous without intention to donate, and (3) gratuitous with intent to donate. Other issues in the application of debt forgiveness also relate to the correlation of this concept with other institutions. The author supports the position of the courts that the waiver of a claim does not entail the forgiveness of the debt against which the claim was raised. The courts seek to interpret debt forgiveness as a subtype of waiver of the right provided for by Clauses 6 and 7 of Article 450.1 of the Civil Code of the Russian Federation. However, as shown in the article, this approach is fraught with practical problems. For example, it turns out that citizens will not be able to avail themselves of debt forgiveness, as the waiver of the right (and debt forgiveness as a type of such waiver) is possible only in business relations. An alternative to debt forgiveness in business relations could be an agreement not to enforce a debt (pactum de non petendo). The review shows that the courts treat such agreements negatively, seeing them as a violation of the prohibition of the waiver of the right of claim. The author considers this approach of the courts to be too strict and inadequate to the needs of business activity.

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Keywords: debt forgiveness, donation agreement, waiver of claim, waiver of right, pactum de non petendo