On 7 April the US expanded its sanctions against Russia by adding 24 officials and a businessman, as well as 14 companies to the list of sanctioned persons. The Representatives of the US Department of State call these measures “a signal for Moscow” and link them with the situation in the Ukraine and Syria. In addition, on 9 April US authorities declared their intention to discuss new sanctions against Russia in relation to the recent chemical attack in Syria in the near future. Tightening of the sanctions led to a sharp drop of the Russian national currency.

On Friday the US expanded sanctions against Russia. The updated list includes 24 individuals and 14 companies. Sanctions were imposed on Russian businessmen, including Gazprom CEO Alexei Miller, En+ owner Oleg Deripaska, VTB head Andrei Kostin and Renova head Victor Vekselberg. In addition, officials from the presidential administration and members of the Russian parliament were included into the list of sanctioned individuals.

According to the official information from the US Treasury, all those included into the sanctions lists are connected with the situation in the Ukraine and Syria. The US Department of State explained that new sanctions are a “signal for Moscow” and a response to “Russia’s destabilizing behavior”. Also on Monday, 9 April, the US Department of State attributed the chemical attack in Syria to Russia and promised to introduce new sanctions in this respect.

The financial market reacted to the tightening of sanctions by dropping Ruble more than 10%. This is the most significant drop in the Ruble’s currency exchange rate in the last two years.

The Supreme Court examined whether it is possible to prolong the term of the lease contract for the state land without tender process, in case the terms of the contract provide for the possibility of prolongation of the contract provided that the lessee sends the respective notice to the state authorities. The company decided to exercise this right and sent a notification to the local state property department in accordance with the terms of the contract. Having received a refusal to prolong the contract without tender, the company challenged the local authorities’ refusal to renew the lease contract in court. The Supreme Court ruled that since there was no real estate (including unfinished construction objects) belonging to the lessee on the land plot, the lessee has no right to claim that the local authorities renew the lease contract without tender process.

In this case (case No. A70-9966/2016), the local state property department and the company entered into a lease agreement for a land plot. The contract was concluded for a period of three years, but it expressly stipulated the lessee’s right to prolong the contract or conclude a contract for a new term provided that the lessee sends the respective notification no later than three months before the expiration of the contract. Thus, the company sent the corresponding application to the state authority in accordance with the contract terms. However, the local state property department refused to renew the contract, arguing that there are no grounds for prolonging the lease contract without tender process. Moreover, the local authorities notified the lessee on the need to vacate the land plot after the lease expires. The company challenged the authorities’ refusal to renew the lease contract in court.

The courts of three instances agreed with the lessee and declared that the authorities’ refusal to renew the lease was illegal. The judges argued that originally the contract was concluded without tender process, the lessee complied with the terms of the lease agreement and developed the land, in particular, he obtained a construction permit.

The Supreme Court disagreed with the arguments of the courts of lower instances and overturned their decisions. The  Supreme Court Judicial Chamber for Economic Disputes emphasized that, as a general rule, leases of state or municipal land are concluded only by tender, and there are no grounds to apply an exception from this rule in the case at hand. Namely, the courts found out that there was no unfinished construction belonging to the lessee on the land plot, which would give him the right to renew the lease without tender. In such circumstances, the court ruled that the state body’s refusal to renew the lease without tender was reasonable and complied with law.

In the case at hand the Supreme Court examined whether the seller was entitled to claim a separate payment for the use of his land plot from the purchaser to whom he has sold the premises in the building. The contract for the sale of the premises contained provisions only on the premises and was silent on use of the land plot under the building. In such circumstances, the Supreme Court ruled that the purchaser by default acquired the right of ownership to the part of the land plot under the building and necessary for its use without additional consideration. Thus, the seller bears the associated risks if the condition on additional payment for the use of the land plot is not included in the contract.

In the case adjudicated by the courts (case No. A70-9966/2016), the company purchased non-residential premises in the building from the seller. However, the contract was silent on the purchaser’s right to the land plot under the building. Twelve years after contract was concluded the seller supposed that all this time there has been an unjustified enrichment on the side of the purchaser who was using the land plot under the building belonging to the seller. The seller calculated the amount of the purchaser’s alleged unjustified enrichment based on the rent rates established by the local authorities, and filed a claim to the court.

The court of first instance granted the claim in full. The court of appeal reversed the decision of the court of first instance, ruling that the purchaser of real estate has the right to the land plot under it, regardless of whether the respective provisions were included in the contract. The court of cassation upheld the decision of the court of first instance and ruled that the purchaser shall pay the amount of unjustified enrichment to the seller.

The Supreme Court Chamber for Economic Disputes dismissed the claim. The judges noted that although the land plot and the premises sold by the claimant were independent objects of civil rights, at the time of sale they belonged to one person and thus the right to the land plot was transferred to the purchaser together with the premises. In this case by default, the price for the premises in the building specified in the contract included the price for the right to the corresponding share in the ownership title to the land plot.

Taking into account this position of the Supreme Court, it is necessary to pay special attention to the formulation of the terms of the contract for the sale of buildings and premises in terms of specifying the regime of use of the land plot under the sold buildings.

In the case adjudicated by the Supreme Court the owner of the building concluded a preliminary contract for the sale of real estate. However, having received the deposit, he transferred the house to his relative as a gift, and did not return the money that he received from the purchaser under the preliminary contract for the sale of real estate. The purchaser wanted the court to invalidate the gift contract, but the Supreme Court dismissed the claim. The judges argued that the contract in question was concluded after the expiration of the term provided in the preliminary contract for concluding the main contract. Thus, the seller acted in good faith, while the purchaser did not take the necessary measures to conclude the main contract within the term provided in the preliminary contract.

In this case (case No. A40-209178 / 2015), the parties concluded a preliminary contract for the sale of real estate, and the seller received a deposit from the purchaser. The parties agreed to sign the main contract no later than within two months, but in fact the main contract was never concluded. After two months expired, the seller transferred the property to his daughter as a gift.

The purchaser filed a claim to the court demanding that the seller concludes the main contract, but the court dismissed the claim. The court of the first instance argued that the respondent is no longer the owner of the property, thus the respective claim cannot be granted. However, the appellate court declared the preliminary contract invalid and ordered that the amount of the unreturned deposit shall be reimbursed to the seller as unjustified enrichment. Nevertheless, the money has not been repaid to the purchaser, and he initiated bankruptcy proceedings against the seller. In the course of the bankruptcy proceedings the issue on the validity of the gift contract arose.

Courts of three instances refused to declare the gift contract invalid, and the Supreme Court Chamber for the Economic Disputes agreed with the lower courts. The courts pointed out that the gift contract was concluded after the term provided in the preliminary contract for conclusion of the main contract expired. In addition, the judges noted that at the time of the transaction the seller did not have any creditors that he should have known about, that is, the seller acted in good faith when he transferred the property to his daughter as a gift. Moreover, the contract of sale was not concluded due to the fault of the purchaser, who did not take all the necessary actions to conclude the main contract, thus the seller has the right to retain the deposit. Therefore, the court found no evidence of abuse of law in the actions of the seller and refused to invalidate the gift contract.

The President of the Russian Federation presented to the State Duma a bill on mandatory audio recording of court hearings on civil and criminal cases in the courts of first and appellate instances of general jurisdiction. Moreover, the bill stipulates other ways to enhance the transparency of justice: for example, the bill provides for the use an automatic system to distribute cases between judges what will reduce the possibility of abuses.

The President of the Russian Federation presented a bill to the State Duma with amendments to the procedural codes (bill No. 426094-7), aimed at increasing the openness and transparency of justice. The main development of the bill is the mandatory audio recording of court hearings on civil cases in the courts of the first and appellate instances. At the moment, audio recording is widely used in arbitrazh (state commercial) courts. The bill will expand this practice to the courts of general jurisdiction that adjudicate civil and criminal cases. The bill also expressly stipulates that the litigants shall have the right to submit objections on the inaccuracy and incompleteness of audio records.

In addition, the legal developments will also affect the procedure of composition of the bench. Namely, the bench will be composed by an automatic system randomly. According to experts, this method will reduce the opportunities to exert influence on the outcome of the case and composition of the bench, as well as will promote for the independence of judges.

If the amendments are adopted, they will enter into force on 1 January 2019.