09.02.2017 — Starting from July 1, 2017, Fines for Violation of Personal Data Laws Will Be Raised
The President of Russia has signed into law a bill that raises the fines payable for violations of personal data regulations. For instance, fines for handling personal data without written consent will be punishable by up to 75.000,-- RUR (approx. 1.300,-- USD) for companies, whereas failure to publish a personal data policy when required by law will be punishable by up to 30.000,-- RUR (approx. 500,-- USD) for companies.
Previously, fines for violations of personal data regulations were not differentiated, and their amount was quite low (for officials up to 1 000 RUR, approx. 17 USD, and for companies up to 10 000 RUR, approx. 178 USD). Such liability, according to the drafters of the bill, did not reflect the consequences of violations in the area, and did not have a sufficient deterrent effect to ensure compliance with the law by personal data operators. As a result, it was decided to raise the fines and to differentiate their amount by the type of violations.
For instance, handling personal data without written consent, when it is required, will be punishable by a fine of up to 20.000,-- RUR (approx. 357 USD) for officials, and up to 75.000,-- RUR (approx. 1.340,-- USD) for companies. If the personal data operator fails to publish a personal data processing policy required by law, it may be subject to fines up to 30.000,-- RUR (approx. 535 USD) for companies. Separate fines are also envisaged for improper storage of personal data, wrongful handling of protected categories of personal data (private information, religious information, etc.), and other types of violations.
08.02.2017 — Supreme Court: Full Repayment of Company's Debt Before Employees by Another Creditor To Gain More Control over Bankruptcy Proceedings Is Not Abuse of Rights
The Supreme Court has considered one more case concerning Article 313 of the Russian Civil Code, which allows third parties to repay the debt owed by the insolvent company to a creditor to gain more control over the bankruptcy proceedings as a whole. Previously, the Supreme Court in a number of cases considered similar conduct abuse of rights. However, in the newest case the decision was different. The Supreme Court held that the primary interest of creditors in bankruptcy is obtaining the debt in full, rather than participating in bankruptcy proceedings itself. Due to this, when a creditor’s debt is fully (rather than partially, as in previous cases) repaid by another creditor acting to protect its own interests, such conduct cannot be deemed an abuse of rights in the case at hand.
Former employees of a company, petitioned the court to initiate bankruptcy proceedings due to the company’s failure to pay severance wages. However, a third party (another creditor of the company), covered these debts via a notary deposit, and submitted its own bankruptcy petition. As a result, courts of first and appellate instances excluded the employees from bankruptcy proceedings since the debts before them is repaid. However, the cassation court disagreed, referring to the positions of the Supreme Court in a number of previous cases, where repayment of debt before an unrelated creditor on the brink of bankruptcy was deemed an abuse of rights.
As a result, the case was referred to the Supreme Court, which noted that the cassation court did not interpret its previous decisions correctly. Unlike other cases, where a seemingly similar behavior was deemed abusive, in the present case the debt was repaid by another creditor in full, not partially. The primary purpose of bankruptcy proceedings is to obtain a full repayment of debt. Moreover, by repaying the debts before the former employees, the creditor did not intend to harm their interests, but was merely protecting its own rights. Thus, one of the former employees was the insolvent company’s general director, and prior to its insolvency a number of transactions against the creditors’ interests had occurred. Therefore, the creditor needed to ensure that an impartial bankruptcy administrator was appointed, which could be impossible if the general director took part in the proceedings.
06.02.2017 — Supreme Court: Bank Guarantee Can Be Demanded from Debtor in Court
The Supreme Court reversed decisions of lower courts, which refused to force the debtor to provide a bank guarantee to the creditor in accordance with the contract and award liquidated damages for delay. The decisions of lower courts were motivated by the fact that the debtor could not force the banks to issue a bank guarantee in its favor, and the fact that the parties did not specify the precise issuing bank in the contract, thus making the guarantee clause unenforceable. The Supreme Court disagreed with these arguments, stating that bank guarantee provision is common in business practice, and should be enforceable.
The parties concluded a supply agreement, under which the supplier undertook to provide either a bank guarantee or surety in favor of the customer. Having supplied the goods in question, the supplier nonetheless failed to provide the security as required. As a result, the customer filed a law suit demanding a bank guarantee and liquidated damages for delay. The first-instance court in Moscow fully satisfied these claims. However, the appellate and cassation courts reversed, stating that the parties failed to agree upon a precise issuing bank, and that the supplier could not force a third party (a bank) to issue the guarantee, making the respective contractual provisions unenforceable.
However, the Supreme Court disagreed with this approach and upheld the decision of the first-instance court. According to the Supreme Court, issuance of bank guarantees is a routine activity in the business sphere. Due to this, the parties did not have to specify a concrete bank in order for the clause to be enforceable. Furthermore, the possibility of banks’ rejecting the supplier’s request for a bank guarantee does not render the obligation itself impossible to perform or unenforceable. The supplier is obliged to attempt to obtain the bank guarantee as required from any bank it sees fit, and the customer is entitled to demand enforcement of this obligation.