On 9 September 2019 the Board of Directors of the Central Bank decided to reduce the key rate from 7,25% to 7% per annum, that is a record low for the last five years. According to the bank annual inflation is continuing to slow and economic growth has been lower than it expected.

Russia’s Central Bank cut its key interest rate to 7% from 7.25% (see the Central Bank’s notice as of 6 September 2019). The decision to lower the key rate was influenced by several factors.

According to the Central Bank, inflation is continuing to slow down. At the same time, the economic growth is still below expectations of the Central Bank, which is due, inter alia, to a decrease in export of Russian goods. Therefore the Central Bank lowered its inflation forecast for the year to 4-4.5%.

Owners of real estate objects are obliged to properly fence off their property to prevent unauthorized access of third parties. Otherwise they may be liable to pay damages to injured third parties that trespassed into such property. In particular, where the owner failed to comply with relevant safety rules, the owner has to pay damages for injuries, compensate non-pecuniary losses (moral harm), and pay special statutory compensation for violation of safety rules in addition to damages.

In the case examined by the Supreme Court, the owner of a cell tower failed to secure the tower from unauthorized access of third parties. As a result, a minor trespassed into the object through a gap underneath the surrounding fencing, and died as a result of falling off this cell tower. The lower courts rejected the victim’s relatives’ claim for non-pecuniary losses and special statutory compensation due to the fact that the minor entered the object illegally, as the presence of fencing and a closed gate was deemed to be a manifest evidence of the owner’s prohibition of trespassing.

However, the Supreme Court did not agree with this position and came to conclusion that it was the owner who was obliged to take proper safeguards against possible trespassing to prevent this injury. The Supreme Court clarified that the owner bears the burden of proving compliance with all safety requirements. Since the cell tower had not been properly fenced off, the Supreme Court found its owner liable for the harm caused. The Supreme Court also emphasized that the Russian town planning legislation provided for special statutory penalty in addition to regular damages in cases where building safety rules are violated. In accordance with Article 60 of the Russian Town-Planning Code, this special statutory penalty does not apply only in cases of force majeure and the victim’s intentional conduct (see Ruling of the Judicial Panel on Civil Matters of the Supreme Court of the Russian Federation dated 20.05.2019 No. 31-КГ19-1).

The Russian authorities simplified the process of obtaining digital information on real estate objects. Information on the characteristics of real estate and its owners or encumbrances may now be requested online, rather than as part of a formal excerpt from the real estate register.

Earlier, official data from the Russian real estate register could only be obtained through a formal excerpt and was provided by Rosreestr (the Russian registration authority) within three days. However, Rosreestr has recently launched a new service that allows obtaining the necessary information online (https://spv.kadastr.ru/). Further, it is now possible to request information on several real estate objects simultaneously, without submitting separate requests for each object. To use this service, you need to have a registered account for the Russian public services portal.

Electronic statements given by Rosreestr are certified by an enhanced electronic signature and have the same legal force as paper-based statements.

The Federal Tax Service may refuse to apply reduced (preferential) land tax rate if the land plot is not used in line with its planned purpose, where this purpose served as the ground for tax rate reduction.  In this case the tax authorities may charge additional taxes in line with the land plot’s actual use.

In Russia, land tax rates are determined based on the permitted use of a land plot. Reduced (preferential) land tax rates apply to land plots designated for a range of privileged purposes. However, if a land plot is actually used for other activities, for example to erect objects of non-preferential categories (commercial objects, etc.), then the owner will lose its right to apply the reduced land tax rate.

Further, in this case the owner can be held liable for the misuse of the land plot. Besides, the tax authorities may charge increased land taxes starting from the beginning of the tax period in which the violation was discovered and until the beginning of the tax period when the violation was remedied.

In one recent case the Russian Supreme Court clarified the conditions for granting claims for specific performance (performance of an obligation in kind, as opposed to damages). Particularly, with regard to supply contracts, specific performance is unavailable when the contracted goods are not readily available on the market or where the enforcement of the seller’s duty would be contrary to public policy. Earlier, the Supreme Court also stated that specific performance should be denied if performance is objectively impossible or if performance is exclusively personal in nature to the extent that an order for specific performance would disparage a person’s honor and dignity. In these cases, the only remedy available to the creditor is to claim damages.

As a general rule, under Russian law, the purchaser may request specific performance for fungible goods even if the seller does not have the contracted goods in stock, as in this case the seller is obliged to procure the goods on the market and hand them over to the purchaser. However, the Supreme Court clarified that this rule is not absolute. Particularly, in cases when it is difficult to purchase the goods on the market or when enforcement of this duty would be contrary to public policy, specific performance is deemed to be an inappropriate remedy, and only damages can be claimed in lieu of performance.

The case examined by the Supreme Court dealt with a contract for the supply of residual precious metals scrap produced during the activities of missile military units. Due to the nature of these goods, the Supreme Court decided that the seller (the Ministry of Defense) did not assume the obligation to purchase analogous goods on the market if they were not available to the seller itself. Moreover, the military nature of the contracted goods precludes an order for specific performance, as enforcement of the duty to procure these goods would be contrary to public policy. Based on this rationale, the Supreme Court decided against issuing an order for specific performance in this case (see Ruling of the Supreme Court of the Russian Federation dated 04.07.2019 No. 305-ЭС18-22976 on the case No. А40-220175/2017).