26.09.2015 — Russian Government Grants Workers Almost One Month off in 2016
The Russian Government has issued a Decree on substitute holidays in 2016. The Decree was signed by Dmitry Medvedev, the Prime Minister of Russia, and was published on September 26, 2015 on the official website of the Russian Government.
The Decree was issued to ensure the rational use of working days and holidays by employees in accordance with Article 112 of the Russian Labour Code. This Article generally provides that if a public holiday with a fixed date occurs on weekends, the working day following the fixed date of the public holiday will be considered a day off work.
The Decree establishes the following public holiday breaks:
- a 10-day New Year break (from January 01 until January 10);
- a 3-day break due to the Defender of the Fatherland Day (from February 21 until February 23);
- a 4-day break due to International Women’s Day (from March 05 until March 08);
- a 3-day break due to Spring and Labour Day (from May 1 until May 3);
- a 3-day break due to Victory Day (from May 07 until May 09);
- a 3-day break due to Russia Day (from June 11 until June 13);
- a 1 day off due to Unity Day (November 04).
25.09.2015 — Russian Courts to Hear Cases against Foreign States after Yukos Award
A bill amending the Civil and Arbitrazh procedure codes, as well as the law “On enforcement procedures”, which was introduced by the Government, has recently passed its first reading in the State Duma. The bill limits the jurisdictional immunity of foreign states and their property in Russia. The bill was developed as a result of arrests of Russian state assets in Belgium and France based on the Ruling by the Hague court, under which Russia shall pay USD 50 bln to Yukos shareholders.
The bill defines such terms as ‘foreign state’, ‘jurisdictional immunity’, ‘immunity from legal process’. It sets forth the limits of jurisdictional immunities of foreign states and their property, and provides for cases when foreign states waive them.
According to the proposed bill, foreign states will not enjoy jurisdictional immunity in disputes resulting from civil transactions not connected with the exercise of sovereign powers, as well as in disputes connected with business activities in the territory of Russia or in the territory of another country, if the consequences of such activities are connected to the territory of Russia. Moreover, foreign states will not enjoy immunity in real estate and most of labour disputes, disputes connected with copyrights and compensation for harm caused to the life, health, property, honour and dignity, goodwill of an individual, or property and goodwill of a company.
Nevertheless, foreign states will enjoy enforcement immunity, save for a few cases, such as when the foreign state has expressed its consent to enforcement, or has specifically set aside property for the satisfaction of the underlying claim. Importantly, however, the bill provides for an exception from state immunity if the said property has been used or is intended for use for purposes not connected with the exercise of sovereign powers.
The bill also establishes that a Russian court may limit a foreign state’s jurisdictional immunity based on the principle of reciprocity. For example, the jurisdictional immunity may be limited when Russia’s immunity in the said foreign state is limited to a greater extent. Furthermore, the bill provides that Russian authorities may take relevant counter-measures, if enforcement proceedings against Russian property have been initiated.
The bill was developed as a result of arrests of Russian state assets in Belgium and France based on the Ruling by the Hague court, under which Russia shall pay USD 50 bln to Yukos shareholders.
25.09.2015 — Taking Migration Rules Seriously, 500 Foreigners Banned from Entering Russia for Life
The Federal Migration Service has banned approximately 500 foreigners from entering Russia for life. These people fled from a detention centre while waiting for deportation imposed for the violation of Russian laws. The said actions were taken within the framework of the process of migration legislation improvement. In 2012 a number of provisions of the Russian migration law were enhanced and liability for its violation was made more stringent.
Violation of Russian migration legislation may result in denial of entry into Russia for 3, 5 or 10 years. More than 1.5 mln foreigners have already been banned from entering Russia on these grounds. In 2014, however, the Federal Migration Service started the practice of banning foreigners who fled from detention centres while waiting for deportation from entering Russia for life.
The said actions were taken within the framework of the process of migration legislation improvement. Thus, in 2012 a number of provisions of the Russian migration law were enhanced and liability for its violation was made more stringent. For example, under the law the stay of migrants without a visa in Russia cannot exceed 3 months, and foreigners that have committed an offence in the territory of Russia are prohibited from entering the country. Also, Russian authorities are actively fighting against illegal migration.
In accordance with the law, foreigners can be deported from Russia by a court order, and special detention centres are created for temporary accommodation purposes. Among other things, foreigners can be deported for violation of the migration regime. More than 38 thousand people were admitted to such detention centres across the country in 2014. Most of these people have already been deported to their home countries. Tickets are generally purchased by the migrants themselves or their close relatives.
25.09.2015 — Claimants Encouraged to Arrest Defendant’s Assets in Order to Secure Priority in Insolvency Proceedings
A recent ruling of the Povolzhsky district Arbitrazh court (of 17.09.2015 in case No. A55-27454/2014) is a breakthrough case developing insolvency court practice on protection of pledge creditors’ interests. The cassation instance court confirmed that a creditor is entitled to have its mortgage claims included into an insolvency creditor’s registry, provided that it has been successful in pursuing an arrest of the debtor’s property as a provisional measure in another court case. This court ruling will allow creditors to protect their pledge rights effectively, provided that they had previously been successful at seeking an imposition of an arrest of the property as a provisional remedy in another court case.
In the present case regarding the insolvency of a closed-joint stock company “Volgospetsstroy” (hereinafter -“Volgospetsstroy”, “debtor”), the creditor, a public joint stock company “Sberbank of Russia” (hereinafter “Sberbank”) filed a suit asking to have an earlier realty arrest of the debtor’s property included as a pledge claim into the creditors’ registry.
The said realty arrest was imposed as a provisional remedy in another court case, which included Sberbank’s claim against the debtor and an individual on recovery of debts resulting from a commercial loan. Sberbank’s claims in that case were satisfied, the court’s ruling entered into force, however Sberbank decided against enforcing the ruling, as supervision proceedings (first stage of insolvency proceedings) had already been initiated against the debtor. Information on the realty arrest had also been included into the Uniform State Register of Real Property Rights and Transactions.
Within the framework of insolvency proceedings Sberbank sought to include the realty arrest into the creditors’ registry. Nevertheless, the first and second instance courts refused to satisfy Sberbank’s claims.
Reversing the lower courts’ rulings, the cassation instance court noted that they had mistakenly construed para. 5 Article 334 of the Russian Civil Code. This provision establishes that unless otherwise follows from pledge relations, a creditor or another authorised person, in whose interests the prohibition to dispose of the property was imposed, possesses the rights and obligations of a pledge holder regarding this property as of the moment the court ruling satisfying the claims of the said creditor or authorised person enters into force.
The cassation instance court held that the lower courts were wrong to hold that the above mentioned provision was inapplicable in the present case. The cassation instance court held that Sberbank, in whose interests the realty arrest was implemented, became a pledge holder regarding this property as of the moment the court ruling on debt recovery from Volgospetsstroy came into force. Thus, this security interest arises in accordance with the law and shall be included into the creditors’ registry within the framework of the insolvency case.
This court ruling will allow creditors to protect their pledge rights effectively, provided that they had previously been successful at seeking an imposition of an arrest of the relevant property as a provisional remedy in another court case.
24.09.2015 — Can Director Protect his Good Name if Company’s Reputation is Ruined? Supreme Court Orders Retrial of Landmark Case
After courts of three instances ruled that the company’s business reputation does not equate to the business reputation of its director, the Supreme Court ordered a re-trial of the case (No. A56-17708/2014). The first instance court will have to decide whether on the facts of the case publishing information that a certain individual is a director of a male fide supplier compromises the director’s business reputation.
On September 23, 2015 the Supreme Court considered whether publishing information that a certain individual is a director of a male fide supplier compromises the director’s business reputation (case No. A56-17708/2014).
A JSC “Varshavskoye” (the company) was included into a list of mala fide suppliers composed and published by Rentenergo group of companies. The list contained a reference to the name of the company’s director as well. The director filed a claim against the website’s owner (the defendant), asking the court to recognise that this information discredits her honour, dignity and business reputation. She also asked the court to oblige the defendant to publish a relevant refutation.
The defendant, on the other hand, claimed that it is inadmissible to equate the legal entity’s reputation with the reputation of its sole executive body. Courts of all three instances agreed with the defendant and refused to satisfy the director’s claim, holding that the published list does not contain information about the director herself, thus her business reputation cannot be thereby compromised.
During the Supreme Court proceedings the director insisted that a legal entity’s business reputation is related to the business reputation of its sole executive body. She further alleged that an efficient and bona fide (or, to the contrary, an inefficient and mala fide) activity of a legal entity results from personal qualities of its director and from his or her ability to run a business. The company’s director also referred to an expert’s opinion confirming that the information at issue can be deemed negative, and can be perceived as discrediting the honour, dignity and business reputation of a legal entity and its director.
Importantly, the defendant failed to submit evidence that the company is a mala fide supplier. Among other things, it did not submit a court ruling confirming that the claimant did not perform its contractual obligations. The Supreme Court ordered a re-trial of the case.
23.09.2015 — One Ruble per Year for Lease of Ancient Mansion, Russian Government Passes Long Awaited Resolution
The Russian Government issued a Regulation regulating the lease of cultural heritage objects and establishing that annual lease payments thereof shall amount to RUB 1 provided that the tenant carries out renovation works within the first 7 years. After the tenant performs its renovation obligations, it will be entitled to dispose of the object as it wishes, e.g. it may sublease the building. According to the Russian Ministry of Culture, the new Regulation is aimed at increasing the number of businessmen interested in leasing monuments and other landmarks.
The Regulation covers cultural heritage objects in federal ownership that are in poor condition. It is planned that the said objects will be leased as a result of an auction. The opening price of the annual lease shall be set at RUB 1. The Regulation does not provide for a lease payments’ increase within the validity period of the contract.
Nevertheless, the Regulation establishes that the tenant is obliged to renovate and restore at its own expense at least 35% of the landmarked building within 7 years as of the moment the lease commences. Thus, the tenant has 2 years to develop the relevant project documentation and 5 years to carry out the works.
The maximum term lease of lease shall be 49 years. 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 from the lease.
According to the Russian Ministry of Culture, the new Regulation is aimed at increasing the number of businessmen interested in leasing monuments and other landmarks.
22.09.2015 — Sale Contract Deleted from Checklist for Customs Clearance
On September 18, 2015 the Russian Federal Customs Service published its Order of 26.08.2015 No. 1737 “On reduction of the list of documents submitted for customs declaration”, which will enter into force on October 19, 2015. In accordance with the Order, Customs officials are prohibited from demanding a sale and purchase agreement from persons submitting an electronic customs declaration.
On September 18, 2015 the Federal Customs Service published its Order of 26.08.2015 No. 1737 “On reduction of the list of documents submitted for customs declaration”.
In accordance with the Order, Customs officials are prohibited from demanding a sale and purchase agreement from persons submitting an electronic customs declaration, provided that the customs value of the goods is indicated in the customs value declaration. However it will still be necessary to indicate the number and date of the sale and purchase agreement in the goods declaration and in the customs value declaration.
The order enters into force on October 19, i.e. within 30 calendar days as of its publication.
21.09.2015 — Imports into Russia from Non-CIS Countries Drop by 39%
In January-August 2015 imports from non-CIS countries into Russia amounted to nearly USD 103.9 bln, representing a decline of 39% compared to the same period in 2014. The value of imported goods was USD 13.5 bln in August, which is 34.6% less than in 2014. Experts claim that the collapse in imports can be explained by negative economic growth and the devaluation of the Russian ruble.
According to preliminary customs data, in January-August 2015 imports from non-CIS countries into Russia amounted to nearly USD 103.9 bln, representing a decline of 39% compared to the same period in 2014. The value of imported goods was USD 13.5 bln in August, which is 34.6% less than in 2014. The largest drops were observed in machinery imports - 36.7%, textiles and footwear - 35.9%, chemical products - 29.4% and food products - 29.1%.
Konstantin Styrin, an expert from the New Economic School, believes that the imports collapse can be explained by negative economic growth and the devaluation of the Russian ruble. In his opinion, however, the decline in imports will slow down in the next few months.