15.01.2016 — Employers Can Read Employee’s Private Messages

The European Court of Human Rights (ECtHR) held that employers can read employees' private messages sent during working hours.

The employer, an engineer in Romania, had asked the ECtHR to rule that his employer had breached his right to confidential correspondence when it accessed his messages and subsequently sacked him in 2007. His employer had discovered that he was using Yahoo Messenger for personal contacts, as well as professional ones.

The court refused to satisfy the employee’s claim. According to the ECtHR, sending private messages via chat software and webmail accounts by employees is a breach of the company's rules, and therefore employers are entitled to check on their activities. Because the employer believed it was accessing a work account, it was acting within its rights.

Countries that have ratified the European Convention on Human Rights, which include Russia, have agreed to abide by the ECtHR rulings that involve them. Rulings of the ECtHR to which a contracting state is not a party, are not obligatory for it, however general practice has been to take them into account. Therefore this ruling is technically not obligatory for Russia.

It is yet to be seen whether the said ruling will have an impact on Russia’s court practice, as the waters have been muddied by a recently enacted Federal law empowering the Russian Constitutional Court to refuse the enforcement of an international tribunal’s decision against Russia, if it concludes that the decision does not comply with the Russian Constitution. This Federal law might change the attitude of Russian judges to ECtHR jurisprudence as a whole.

14.01.2016 — Authorities to Knock on Your Door - SMEs to Be Surveyed

The Federal State Statistics Service (Rosstat) will carry out a complete federal statistical survey of small and medium-sized enterprises (SMEs) based on the results of 2015. The survey will be carried out from January 01, 2016 until March 31, 2016. Rosstat will collect information on the income, losses, number of employees and capital assets of SMEs. Failure to provide the relevant information may entail an imposition of fines.

The said information can be provided to Rosstat by email, telephone or in hard copy. The state authority guarantees that the provided information shall be be treated as confidential and shall be protected accordingly. Rosstat made it clear that the information will not be subsequently transferred to tax or other monitoring authorities.

Failure to provide the said information may entail an imposition of fines under Article 13.19 of the Administrative Code: up to RUB 70.000 on the legal entity itself, and up to RUB 20.000 on the company’s officials. Repeat violations may result in an imposition of higher fines: up to RUB 150.000 on the legal entity, and up to RUB 50.000 on the company’s officials.

Further information can be found at http://www.gks.ru/free_doc/new_site/business/prom/splosh.html.

13.01.2016 — Trap for Unwary Drafters: Advance Payment Provision in LOI Turns It into Main Contract

In its Resolution dated 08.12.2015 No.5-KG15-165, the Supreme Court has changed the approach towards contractual provisions on advance payment in letters of intent (LOI). It follows from the Resolution that the Supreme Court has confirmed the view that has been so far expressed by arbitrazh courts. Inclusion of an advance payment provision into a LOI turns it into the main contract between the parties.

Under Russian law, parties enter into a LOI (i.e. preliminary agreement) so as to agree on the conclusion of a main agreement within a certain time in the future.

According to the Supreme Court’s Resolution, should the parties sign a LOI, which includes a provision on advance payment for real estate sold thereunder, the said agreement can no longer be deemed a preliminary one, and shall be qualified as a sale and purchase agreement of a future thing (real estate in the case at hand).

12.01.2016 — Russia’s GDP Plunges Yet Again - Bloomberg Lists Russia Among the Worst 2015 Economies

According to the 2015 ranking of Bloomberg, Russia may be one of the five countries that face the highest risk of recession in 2016. Bloomberg’s experts predict that in 2016 Russia’s GDP will be reduced by 0.5%

Bloomberg’s experts note that the decrease of Russia’s Gross domestic product (GDP) can be explained by the sanctions imposed by the US and the EU, as well as low oil prices. Only Greece, Brazil and Venezuela show worse figures. Thus, by the end of 2016, Venezuela’s economy may shrink by 3.3%, Brazil’s economy may fall by 2.5%, and the economy of Greece - by 1.8%.

According to the World Bank, Russia’s GDP in 2016 is expected to fall by 0.7%. In 2017, however, the World Bank predicts an economic recovery, claiming that Russia’s GDP may increase by 1.3%.

In comparison to the evaluations made by the World Bank in June 2015, its expectations have worsened by 1.4% in 2016, and 1.2% in 2017. World Bank’s experts comment that economic activity in Russia will be hindered by low oil prices and international sanctions. They also mention low investment activity due to low trust levels, and high interest rates among the factors impeding economic growth.

11.01.2016 — Russia Tries to Improve Its Doing Business Ranking With Regard To Construction Permits by Introducing New Procedure to Challenge Ungrounded Denials and Delays in Construction

According to the Federal law No.250-FZ that entered into force on January 10, 2016, the Federal Antimonopoly Service (FAS) is entitled to investigate complaints regarding the acts or omissions of state authorities and municipalities responsible for construction activities, and natural monopolies authorised to connect buildings to utilities, e.g. regarding delays or refusals in issuing construction permits, or technical specifications for design or construction purposes.

Russia tries to improve its Doing Business ranking with regard to construction permits. The Federal Law No.250-FZ introduces a new administrative procedure to challenge ungrounded denials and delays in the sphere of construction. Previously acts and omissions in the sphere of construction could only be challenged in court, which could be a very lengthy procedure.

A complaint can be lodged by a legal entity within 3 months from the moment the relevant act or omission was carried out. The complaint shall be investigated by FAS within 7 days. Should FAS conclude that a violation took place, it will issue an order obliging the relevant authority or company to eliminate it.

The Federal law also provides for the possibility to impose administrative fines for the said violations. The maximum fine imposed on a state official is RUB 5.000, which is increased to up to RUB 50.000 alongside with a disqualification of up to 2 years in case of a repeat violation. The maximum fine imposed on companies connecting buildings to utilities shall amount to RUB 500.000, which is increased to up to RUB 1 million in case of a repeat violation. Officials of such companies may face a fine of up to RUB 40.000, which is increased to up to RUB 50.000 and a disqualification of up to 3 years for a repeat violation.