Журнал ЗАКОН

Case Comment to the Judgment of the Chamber for Commercial Disputes of the SC RF No. 307-ЭС22-6562, 7 July 2022 The author comments on and evaluates the recent ruling of the Supreme Court of the Russian Federation on the case concerning the possible revocation of spousal consent to make the main contract after the preliminary one had been signed. The author concludes that the Supreme Court came to a fair decision protecting the rights of a bona fide purchaser who transacted with a married individual. The author also tries to evaluate the factors, which may have caused the Supreme Court to take this approach (e.g., view on the nature of a preliminary contract, primacy of family interests over counterparty’s interests), and reflects on the influence of the conclusions made by the Supreme Court on civil transactions in general.

---

Keywords: bargain, consent to a bargain, preliminary contract, invalid transaction

The article presents a translation of the decision of the Supreme Court of the Federal Republic of Germany on a dispute similar in circumstances to the famous Magadan-Test case considered by the Supreme Court of the Russian Federation, as well as a brief commentary on the key issues raised in the decision (operation of a contract with protective effect for third parties and net economic losses in the context of tort protection).

---

Keywords: contract, contract with third party protective effect, tort, damages, net economic loss

This publication is part of the author’s monitoring of the application of art. 239.1 of the Civil Code of the Russian Federation, which regulates the compulsory alienation of capital construction structures in connection with the termination of a lease of a state (municipal) land plot on which they are located. The provisions of that article determine the participants and the procedure for alienation of the said objects. The presence of this norms in the civil legislation gives an opportunity to public authorities to organize an effective and rational land use, to create conditions for comfortable living of citizens on a territory. The author has analyzed more than 50 court acts on claims by authorities about withdrawal of buildings and their sale on a public auction. In the course of the research various approaches of courts to understanding and application of art. 239.1 of the Civil Code of the Russian Federation were found. The reasons of inconsistent judicial practice were revealed. They lie not only in courts’ wrong interpretation of current land and civil legislation, but also in defects of legal regulation of the considered relations. Based on the results of the monitoring, a scientific assessment of the main controversial points is given and ways to improve the current legislation are proposed.

---

Keywords: land plot, lease, compelled selling of real estate, construction in progress, article 239.1 of the Civil Code of the Russian Federation

The author explores the institution of secondary proceedings as part of a modified universalism, focusing on its absence in the domestic legal system. The author argues that the main obstacle hindering the development of secondary proceedings in Russia is the failure of the Parliament to implement a legislation on cross-border insolvency. As a result, courts could not resolve the emerging problems. Among the ways to deal with the problem of unresolved secondary proceedings in particular and cross-border insolvency in general the author names bilateral and multilateral agreements, as well as the implementation of the provisions of the UNCITRAL Model Law on Cross-Border Insolvency in Russian legislation, highlighting the latter method as the most attractive for realization.

---

Keywords: bankruptcy, cross-border insolvency, UNCITRAL

The article explores the construction of title security through the prism of the legal position of the parties. A political-legal and dogmatic analysis of various approaches to the problem is made, in particular the concept of the creditor’s security ownership of a collateral is criticised. In describing the legal status of the debtor the emphasis is placed on the most important problems from a practical point of view, such as the unlimited dispositive power of the creditor, his bankruptcy and the fate of the debtor. The solution to these problems depends on a conceptual approach to the nature of the security right, which can theoretically be conceived both as an obligation and as a right in rem. De lege ferenda the emergence of a right in rem like the German right of expectation (Anwartschaftsrecht) is possible by applying the right to purchase another’s immovable thing to the title security, as set out in the Civil Law Development Concept. The current regulation of leasehold title security is explained through the concept of the right in rem. In other cases, by virtue of the numerus clausus principle, the protection of a debtor’s interests de lege lata must be achieved on the basis of the obligatory model which, however, in conjunction with the principle of good faith, may achieve results similar to the property law model. The author therefore concludes that the principle of good faith is capable of creating new rights in rem without violating the numerus clausus, subject to its teleological interpretation. The problem of unauthorised alienation of collateral by the creditor is seen as a particular manifestation of double sale. The controversy between the doctrine of interference with other people’s contractual relations and the effective breach of contract theory, which arises here, is offered to be resolved de lege ferenda by allowing the parties to choose between the binding and the rights in rem models of title security.

---

Keywords: title security, pledge, security transfer of title, title retention, expectation right

The article examines the issue of the ability of non-profit organisations of the Russian Federation to be debtors in insolvency relations (capacity to become a bankrupt). According to the current Russian regulation, the following non-profit organisations (their estates) do not have competitive capacity: religious organisations, institutions, political parties, state companies, state corporations, public-law companies, foundations acting on the basis of special laws. The simultaneous lack of this capacity and full subsidiary responsibility of the founders of such organisations is for the most part characteristic of public law legal entities under state ownership. This situation gives the beneficiaries of these organisations a clear and unreasonable advantage, violates the rights of creditors in the actual insolvency of such organisations, discourages the management of these legal entities for effective management. The author proposes to grant competitive capacity to all legal entities (their property masses), with the exception of those in which founders are obliged to cover all debts of an organisation. Implementation of this provision would ensure compliance with the principle of formal equality (art. 1 (1) of the Civil Code) by enabling the creditors of the entities in question to use the mechanisms of the insolvency institution that aim at the fullest and most proportionate satisfaction of the claims of all creditors, not the first to file a writ of execution. Moreover, such solution would also allow clearing the market from actually insolvent entities.

---

Keywords: bankruptcy, non-profit organisations, solvency, bankruptcy estate

Is there undercompensation of damages in Russian arbitrazh courts? Leveraging the data on court rulings we establish a relationship between claim sum and award ratio (i. e. the ratio of award sum to claim sum). Having studied the universe of awards for non-contractual disputes granted by courts of first instance in 2014–2019 in the country, we report three stylized facts suggesting undercompensation. First, the larger the amount claimed the lower the award sum granted to plaintiffs is. We call it ‘the law of declining compensation’. Second, the law of declining compensation is more pronounced in disputes where judges enjoy wider discretion in determining the award sum and vice versa. Third, in disputes with wider discretion we observe differing relationship between claim sum and award ratio in Moscow and St. Petersburg courts and other courts. While in capital city courts the award ratio is increasing in claim sum starting from a certain amount, in regional courts the award ratio is strictly decreasing in claim sum. We explain the uncovered undercompensation of plaintiffs’ damages by two cognitive biases: omission bias (propensity to maintain status quo even though inaction brings same or larger harm) and anchoring bias (tendency to rely on the first piece of evidence when deciding on quantum).

---

Keywords: anchoring bias, omission bias, property rule, liability rule, behavioral law & economics, empirical legal studies, cognitive bias, arbitrazh courts