11.11.2016 — Time Necessary to Obtain Construction Permit to Be Reduced to 7 Working Days

The State Duma has passed in first hearing legislative amendments aimed at decreasing the time limits for issuance of construction permits and commissioning permits. According to the amendments, such permits should be issued within 7 working days. Currently, this term is 10 calendar days.

On the one hand, the legislative trend is aimed at reducing the terms for issuing construction-related approvals. On the other hand, since calendar days are replaced by working days developers should avoid filing permit applications on the verge of national holidays and weekends. 

10.11.2016 — Supreme Court: Rental Payments for Premises Covers Land Plot Use As Well, unless Expressly Agreed Otherwise

Supreme Court of Russia upheld the lessee’s position that rental payments under premises lease agreement covered both the use of premises themselves and the use of the land plot on which they are located. If the lessor wishes to receive separate payment for land plot use, this condition has to be expressly foreseen in the lease agreement. Otherwise separate payments for land plot use will not be chargeable (Ruling of the Supreme Court dated October 21, 2016 No. 309-ES16-8125).

In the case at hand, the municipal owner of premises filed a lawsuit against the lessee, claiming recovery of rent for land plot use. The lease agreement of premises did not refer to separate payments for land plot use. The municipality, however, argued that since the formula of rent calculation for premises did not refer to any fee for using the land plot on which the premises were located, the lessee unjustly enriched to the owner’s detriment by using the land plot for free.

However, the Supreme Court disagreed with this reasoning. It was established that the parties did not intend to foresee a separate payment for using the land plot when concluding the premises lease agreement. The legislative requirements on payments for using the land plot in such cases were also absent. The Supreme Court therefore concluded that usage of the land plot is not subject to separate consideration, being covered by the rental payments for the leased premises. Had the parties wanted to establish a different mechanism of payment, this intention had to be express in the premises lease agreement.

Nonetheless, lessees should be aware that at times the law may specifically require paying for the land plot use separately from the leased premises. In that case remuneration for using the land plot will be payable regardless of the premises lease agreement provisions.

09.11.2016 — Capital Outflow from Russia Has Decreased by 5 Times since the Beginning of 2016

According to the Russian Central Bank, net capital outflow has fallen to 10.4 billion USD in January – October 2016. Thus, it has decreased by 5 times as compared to the relevant period last year. Last year the capital outflow was primarily caused by the banks’ repayment of their foreign debts. On the other hand, this year the increase of foreign financial assets by other sectors of economy played a significant role in net capital outflow.

Based on the preliminary balance sheets, the Central Bank has reviews its previous forecast and decreased the projected capital outflow for 2016 from 25 billion USD to 14 billion USD, whereas the figures for 2017 were reduced from 25 billion USD to 18 billion USD. In 2018-2019 net capital outflow is forecasted to be 25 billion USD.

Net capital outflow in the previous years was significantly higher. Thus, 61 billion USD was withdrawn from Russia in 2013, while the capital outflow in 2014 amounted to 154.1 billion USD, decreasing in 2015 to 56.9 billion USD.


08.11.2016 — Court Upheld LinkedIn Ban for Violating Personal Data Localization Requirements

Moscow City Court upheld state authorities’ decision to block LinkedIn, a social network for business contacts, in Russia. The website was blocked for violation of the newly introduced legislation requiring personal data of Russian citizens to be stored on servers located in Russia.

Previously, the first instance court supported Roskomnadzor in its decision to block LinkedIn for violating human rights of Russian citizens, including their privacy. The decision was particularly based on the new provisions of the Federal Law “On Personal Data” requiring companies to store personal data of Russian citizens in Russia. LinkedIn was also deemed to be in violation of the storage procedure for personal data of non-users.

Since this decision was upheld by Moscow City Court in the appellate hearings, the prohibition has entered into force. Due to this, access to LinkedIn within Russia will soon be restricted, with the company being listed as a personal data violator.

07.11.2016 — Starting from 2017 Average Real Estate Prices Will Be Published Officially

Starting from 1 January 2017, the Unified Register of Real Estate (EGRN) will be created, merging information on cadastral registration of real estate and on the registered property rights to such real estate. These two blocks of data are currently divided between two different state registers (the Cadastre and the Register of Rights to Real Estate). The new Unified Register will also make new types of data on real estate publicly available, including average real estate prices, information on vacant possessions and other information.

Creation of the Unified Register will not only make it possible to access all official information on real estate using one online service, but also decrease the time limits for cadastral registration and property rights registration to real estate objects. Starting from 2017 it will be possible to perform cadastral registration and property rights registration simultaneously. This will only take 10 working days, which is two times faster than now. In Moscow the property rights registration will take even faster, up to 7 working days.

Implementation of the EGRN will not require real estate owners to get their registration documents re-issued, as old documents will retain their legal force. Nonetheless, the merger of the Cadastre and the Register of Rights to Real Estate will permit to identify inconsistencies in real estate data, which are sometimes encountered in practice. In this case owners will be obliged to take positive measures to eliminate the inconsistencies and present correct information to the registration authorities.