16.12.2016 — Religious Convictions of Local Population Must Be Considered Before Establishing Production Bases in Russia

As a result of protests, the authorities prohibited the developer to erect a disinfectant production facility in Bogolybovo, Vladimir Region, place of religious pilgrimage and the seat of a renowned religious site. The developer had to seek an alternative construction site to locate the production base, with the local authorities’ assistance.

In selecting the production base location, developers are advised not only to consider the geographic and technological factors, but also have regard to the local population’s opinion regarding the planned project. Protests of the local population are quite a widespread cause of the projects’ failure, especially when it comes to hazardous activities potentially harmful to the environment.

The mentioned situation in Bogolyubovo is a landmark case in this regard, which shows that moral compulsions, such as religious convictions of the local population, can be an impassible barrier to an industrial project.

15.12.2016 — Constitutional Court: Courts Can Reduce Compensation for Copyright Violations

The Constitutional Court has prescribed to amend the legislation on copyright violations. Currently, the violator is obliged to pay compensation in the amount ranging from 10 thousand to 5 million rubles, and the courts are not entitled to reduce the amount even if it significantly exceeds the copyright holder’s actual losses. According to the Constitutional Court, this rule is contrary to the principle of proportionality and the court’s obligation to establish all circumstances of the case.

The Constitutional Court issued this ruling under the request of the Arbitrazh Court of Altai Krai. The Arbitrazh Court considered a case on recovery of compensation for unlawful sale of an MP3 disk with a number of unlawfully copyrighted tracks. The disk was sold for 75 rubles (slightly over 1 USD), whereas the compensation payable for the violation amounted to 1.8 million rubles or approximately 30.000,-- USD (10.000,-- rubles per each track on the disk). The disk was sold by an individual woman taking care of a disabled child, rather than a large company.

In such circumstances, the Arbitrazh Court considered it unjust to award the compensation in its full statutory amount, finding it necessary to significantly reduce it. However, since it found that the legislation did not entitle the court to reduce compensations for copyright violations, it referred the question to the Constitutional Court.

The Constitutional Court supported the Arbitrazh Court’s position, stating that the legal rules providing for non-reduceable compensation for copyright violations are contrary to the Russian Constitution, since they prevent the court from duly assessing the situation in each particular case, having regard to the fact that the offence was committed for the first time, while the compensation amount payable is grossly disproportionate to the copyright holder’s losses. As a result, the Constitutional Court prescribed to amend the legislation on the matter. 

14.12.2016 — Starting from 1 January 2017, State Authorities Will Not Be Able to Request Documents Prior to Inspections

Under the recent legislative novelties, it will be prohibited for state authorities to request documents or information from legal entities and sole entrepreneurs until an inspection is officially started. Companies are entitled to reject the requests for information and documents until an inspection is officially commenced.

After the bill enters into force, it will be advisable for companies to actively monitor a specialized website with the list of all planned inspections from state authorities ( This register allows finding out the date of inspection in advance. Using this information, companies can determine whether the authorities’ request for documents or information is lawful in a given case.

It should be also noted that registers on inspections in certain areas of economic activity are kept separately on websites of designated authorities. For instance, the schedule of inspections for transport companies is published on the website of the Federal Transportation Inspection Service (Rostransnadzor) (

13.12.2016 — It Will Be Easier to Collect Debts from Companies’ Controlling Persons

The State Duma has passed in the final reading legislative amendments simplifying the procedure for holding a company’s controlling persons liable for the company’s debts. The bill increases the time limits during which their liability can be engaged and excludes the option of the company’s simplified liquidation if a bankruptcy case is already open in its respect.

The legislative amendments primarily aim at strengthening the legal protection of companies’ creditors in bankruptcy proceedings. The bill particularly solves the abusive practice of liquidating indebted companies without settling with the creditors. It will be impossible to liquidate the company under the simplified administrative procedure if the bankruptcy case is opened in its respect.

The bill also increases the chances for collecting the company’s debts from its controlling persons in bankruptcy proceedings. It will be obligatory for the courts to rule on the matter even if the company has no funds to pay for the bankruptcy proceedings, including if the bankruptcy petition has been rejected. In such cases, it will be possible to engage the controlling persons’ liability through a separate lawsuit. Currently, this option is unavailable.

The currently existing prohibition of collecting the company’s debts from its controlling persons after the bankruptcy proceedings are finished will also be repealed. Controlling persons may be held liable for the company’s debts for three years after the bankruptcy case has been closed, if the circumstances forming ground for their liability became known to interested parties at a later stage. 

12.12.2016 — Debt Collection Agencies Will Be Controlled by Ministry of Justice and Federal Bailiff Service

Since January 2017, only companies listed in a newly-established register of professional debt collectors will be able to collect debts from individuals. The Ministry of Justice and the Federal Bailiff Service will be empowered to regulate and control such debt recovery activities in accordance with the Presidential Decree No. 670 dated 15 December 2016.

The Ministry of Justice is empowered to pass legal acts regulating collection of overdue debts by individuals and sole entrepreneurs (in respect of debts arising from business activity), as well as debts on utility bills.

At the same time, the Federal Bailiff Service will manage the register of professional collectors and control their activities.