Fourteen cultural heritage sites have been leased to Moscow businessmen under the programme “1 RUB for 1 sq.m per year” established by the Russian Government a month ago. Under the programme, the annual lease payments shall amount to 1 RUB per 1 square metre provided that the tenant carries out renovation works within 5 years.

On October 22, the Moscow Department of economic policy and development announced that another 3 landmarked buildings in the centre of Moscow had been leased out for 49 years. as a result of an open auction carried out under the programme “1 RUB for 1 sq.m per year”. Thus, a 700 square metre building on Sytinsky per. was leased out to Limited liability company “GALS” for RUB 13.1 mln, an 800 square metre site on Gusyatnikov per. was leased out to Limited liability company “FAMILY HOUSE” for RUB 16 mln., and a 150 square metre house on Goncharnaya street was leased out to Limited liability company “REATON” for RUB 4.7 mln.

In order to be eligible for the preferential lease rate of 1 RUB per square metre, successful bidders shall renovate the building in accordance with the preservation obligations within 5 years. 14 buildings have already been leased out under the program, and 4 of them have been fully renovated.

At the end of September, the Russian Government issued a Regulation regulating the lease of cultural heritage sites, and establishing that annual lease payments thereof shall amount to RUB 1 per square metre, provided that the tenant carries out renovation works within 5 years. According to the Ministry of Culture, the new Regulation is aimed at increasing the number of businessmen interested in leasing monuments and other landmarks. After the tenant performs its renovation obligations, it will be entitled to dispose of it as it wishes, e.g. it may sublease the building. Therefore, interested persons may be able to compensate incurred costs and make a profit form the lease. 

A bill allowing countermeasures following the arrest of Russian property abroad has passed its second and third readings in the Russian State Duma. Russian courts will be entitled to limit the jurisdictional immunity of a foreign state based on the reciprocity principle. The bill was developed as a result of the Yukos award by the PCA in Hague in Summer of 2014, which obliged Russia to pay USD 50 bln of damages. Russia refused to enforce the award voluntarily, however Russian state assets were arrested in Belgium and France based on the ruling by the Hague court.

The bill considered by the State Duma proposes a new approach to absolute immunity regarding the property of foreign states. Under the bill, Russian courts will be entitled to limit the jurisdictional immunity of a foreign state based on the reciprocity principle, provided that they conclude that Russia’s immunity in the relevant state is limited to a greater extent than the immunity of that foreign state in Russia.

When the bill was considered by the State Duma Property committee, Deputy Justice Minister, Dmitry Aristov, noted that this bill is especially relevant considering the “growing number of often unlawful actions taken against the Russian Federation and its property abroad”.

According to Vladimir Afonsky, Deputy Chairman of the State Duma Property committee, should the bill be passed into law, it will protect Russia’s property interests to a greater extent. He noted that the bill specifies the meaning of the term ‘foreign state’s property’, thereby ensuring full liability of foreign states.

The Head of the State Duma Property committee, Sergey Gavrilov, stated that the new bill would eliminate the lack of balance when protecting property interests of Russian enterprises and state-owned companies abroad, and the interests of foreign states in Russia.

The bill was developed as a result of the Yukos award by the PCA in Hague, which obliged Russia to pay USD 50 bln of damages. Russia refused to enforce the award voluntarily, however Russian state assets were arrested in Belgium and France based on the ruling by the Hague court.

More businessmen decided to go to court in 2015 in order to appeal imposed administrative sanctions, according to the statistics of the Russian arbitrazh courts’ activity for the first six months of 2015, published by the Supreme Court Justice Department. Nevertheless, fewer business representatives were successful in cases against state authorities, in comparison to 2014. According to Alexander Varvarin, Vice President of the Russian Union of Industrialists and Entrepreneurs in the sphere of corporate relations and legal support, it is harder for a company to be successful in court, when the claim is brought against a state authority.

More than 63.6 thousand cases regarding the imposition of administrative liability on business representatives were heard by arbitrazh courts during the first six months of 2015. More businessmen decided to go to court in 2015 in order to appeal imposed administrative sanctions: the relevant figure has increased by 5% since 2014. At the same time, only 37% of these claims were successful, as opposed to 44% in 2014.

According to the published statistical data, businessmen were least successful when appealing the decisions of the Federal Service for Alcohol Market Regulation and the state authorities empowered to carry out environmental control. Thus, during the first six months of 2015, arbitrazh courts satisfied half of the number of claims satisfied last year. A similar reduction of successful claims was recorded in appeals of customs authorities’ decisions. Thus, only one third of appeals lodged by business representatives was satisfied in this sphere, as opposed to 43% in 2014.

Greatest success was recorded when appealing tax authorities’ decisions. Approximately 54% of the cases were decided against the tax authorities. Nevertheless, the relevant figure has reduced since 2014, when 59% of the cases decided in favour of businessmen.

Notably, in the first six months of 2015, business representatives made fewer attempts to appeal the decisions of enforcement officers. At the same time, more claims were successful in this sphere: courts satisfied every fifth claim, as opposed to 11% of successful claims in 2014.

According to Alexander Varvarin, Vice President of the Russian Union of Industrialists and Entrepreneurs in the sphere of corporate relations and legal support, it is harder for a company to be successful in court, when the claim is brought against a state authority.

The Supreme Court has recently considered the limitations on the local administration’s powers to seize a land plot, in order to develop a build-up area. According to the sole entrepreneur that filed a claim against the local administration, it is unlawful to seize land plots with non-residential property and thereafter use them for enjoyment of an administrative building. The Supreme Court considered whether these actions could be lawfully carried out for municipal needs, and ordered a re-trial of the case.

The Ufa city administration issued a decision, which provided for the seizure of land plots in private ownership with non-residential property. A land plot owned by Olga Gimaldinova, a sole proprietor (hereinafter - ‘claimant’), with a newly reconstructed administrative office building on it, was one of the many land plots affected by the above decision. The claimant appealed the decision, however lower courts of all three instances ruled in favour of the administration. The lower courts concluded that the administration was entitled to seize the land plots for municipal needs under Article 49 of the Russian Land Code and under Article 46.1 of the Town-Planning Code. The claimant addressed the Supreme Court, which ordered a re-trial of the case, after considering its peculiarities.

In the Supreme Court proceedings, the claimant noted that the land plot was seized not for municipal needs, but for the purpose of satisfying the needs of a real estate developer, OOO “Neftyanaya finansovo-stroitelnaya kompaniya”, that entered into a contract on development of the area with the administration. The claimant further alleged that the ownership of the seized land plots will be transferred to private persons, and the administrative office building will remain on the land plot. According to the claimant, these actions do not comply with the purposes of the build-up area development set forth in the Town-Planning Code.

It was also determined by the Supreme Court that as a result of the project to be carried by the administration, only 10% of apartments will remain in municipal ownership. The remaining area will be sold to other persons. The claimants alleged that these actions cannot be deemed municipal needs.

The Supreme Court also considered whether it is lawful to seize land plots with non-residential property. The Town-Planning Code provides only for the buy-out of premises in failing buildings and land plots underneath them (para. 5 part 3 Article 46.2). It has been recognised that these objects can be seized for municipal needs. As for other objects, they can be purchased on the free market only (part 6 Article 46.2 of the Town-Planning Code). Importantly, under Article 49 of the Russian Land Code, seizure of land plots is permitted only in cases expressly set forth in federal laws. Moreover, when interpreting the provisions of the Town-Panning Code, the Constitutional court noted that the Code does not allow to seize land plots for the development of interests of private persons (Resolution dated 07.10.2014 No. 2026-O).

Notably, however, there are numerous issues yet to be determined by the lower courts. Among other things, it is unclear whether the administration posted a buy-out notification in accordance with the established procedure. Moreover, it is still unclear whether the land plot at issue could be included into the area development plan. As these and many other issues are yet to be determined, the Supreme Court had to order a re-trial of the case.

The Russian Government has approved a bill offering employers to pay for trips of their employees and their families within Russia during vacation leave, in order to receive tax benefits. Should the bill be passed into law, employers will have an opportunity to encourage their employees to travel during the off-season, thereby distributing employees’ leave throughout the year. Moreover, the bill is aimed at supporting travel agencies during the off-season.

Although the Russian Government approved the idea of the bill as a whole, it recommended a few amendments. Thus, it suggested that costs incurred through payment for trips within Russia, together with costs incurred from voluntary private and medical insurance, should be limited, so as not to exceed 6% of the total payroll expenses.

The new bill was introduced in August 2015, by two members of the Federation Council, Igor Chernyshov and Valery Ryazansky. Under the bill, employers that made a contract with a travel agency, under which tourism services within Russia are rendered to employees, shall be entitle to reduce the payable corporate income tax accordingly. The authors of the bill proposed to limit the relevant expenses at RUB 50.000 for each employee or his/her family member for the relevant tax period.

According to the authors of the bill, should the bill be passed into law, employers will have an opportunity to encourage their employees to travel during the off-season, thereby distributing employees’ leave throughout the year. Moreover, the bill is aimed at supporting travel agencies during the off-season.