12.02.2016 — ‘Uzlovaya’ Industrial Park Expands Capacity

Construction of the ‘Uzlovaya’ industrial park,  located in the Tula Region, one of the biggest industrial cites in central Russia, with an area of more than 2.500 ha, is ongoing at an accelerated pace. Considering the construction speed, it will be possible to run the main engineering infrastructure facilities of the industrial park by the end of 2016.

The industrial park has already been equipped with power transformers supplied by Siemens. FGC UES, the largest electricity transmission company grid in Russia, will provide 7 km long high voltage power lines. The power supply will suffice for the activity of all the residents of the industrial park. The ‘Industrialnaya’ substation is expected to be constructed, and the object is planned to be connected to the electricity supply, by March 2016. 

The Tula Region Development Corporation, responsible for the creation and development of industrial parks, is currently developing plans ensuring the transport (both, main line and railway) infrastructure. Design and survey works for the construction of a central water supply are also undergoing. The design of the central gas-distribution point has already been completed.

The ‘Uzlovaya’ industrial park will accommodate medium and large enterprises active in the sphere of logistics and production. Should the industrial park receive the status of a special economic zone (which is one of the main goals of the Development Corporation), its residents will enjoy additional customs and tax benefits provided on the federal level.

11.02.2016 — Taxpayers No Longer Powerless Against Tax Authority

The Russian Federation Council has approved a bill directly entitling individuals and legal entities to challenge acts of state authorities clarifying the legislation in force. The bill is expected to put an end to the argument as to whether it is possible to challenge letters and clarifications issued by the Tax and Customs authorities, as well as other documents which do not comprise legal rules, but seek to clarify existing legislation. 

There have been cases where the said clarifications allegedly did not comply with the legislation in force, yet the courts refused to consider their legality, referring to the fact that technically they were not law-making acts as required by the Arbitrazh Procedure Code and the Administrative Procedure Code. According to the new bill, clarifications of federal state authorities shall be reviewed by the Supreme Court, whereas clarifications issued by regional and local authorities shall be reviewed by relevant regional courts. The Court of Intellectual Property rights will be empowered to review clarifications of IP legislation. 

It seems that the bill was adopted after a recent Resolution of the Russian Constitutional Court issued as a result of a request made by the OJSC “Gazprom Neft” to check whether one of the Tax authority’s letter complied with effective legislation. The Constitutional Court held that the refusal of Russian courts to review clarifications made by state authorities on formal grounds was not in line with the Russian Constitutions. 

In practice, letters issued by the Tax authority are deemed to be even more important than the primary legislation itself. Thus, tax inspectors have applied such clarifications to taxpayers directly, in effect considering them to be law-making acts. The direct entitlement to challenge such clarifications substantially increases the level of protection from arbitrary actions by state and local authorities.

10.02.2016 — Supreme Court Clarifies Judicial Costs Recovery Rules

The Supreme Court has issued a Resolution on recovery of judicial costs incurred by the parties to the case. In the Resolution, the Supreme Court generally approved and developed the views of its predecessor, the Supreme Arbitrazh Court, expressed in 2012-2014. The Supreme Court has also clarified a number of issues which have been rather ambiguous due to inconsistent court practice. 

The winning party can generally recover incurred judicial costs from the losing party. With this regard the Supreme Court has noted that judicial costs can be recovered not only when the court has considered the merits of the case, but also when court proceedings were terminated, or the statement of claim was declined.

The Supreme Court recommended that lower courts assess the actual involvement of parties into the case. This approach allows to recover judicial costs not only by the parties themselves, but also by third parties involved in the dispute.  

To the delight of all practitioners, the Supreme Court has allowed to recover costs incurred through compulsory pre-trial settlements and through the collection of evidence before filing the statement of claim. Previously courts used to exclude these costs from the total amount of recoverable costs.

Nevertheless, certain approaches proposed by the Supreme Court may change the already established court practice on recovery of costs. Thus, the Supreme Court confirmed the right of lower courts to decrease the amount of costs alleged to be recoverable by the claimant, provided that the said amount is clearly unreasonable. Absence of clear criteria for assessment of reasonableness, and a broad discretion enjoyed by the court, may entail an arbitrary practice of decreasing judicial costs according to the judge’s own (subjective) views as to which costs may be considered reasonable.

The Supreme Court also noted that the reasonableness of judicial costs incurred through payment for legal representation cannot be explained by the fame and reputation of the lawyer. This provision will probably result in a total disregard of the previously adopted approach proposed by the Supreme Arbitrazh Court in its Resolution dated 15.03.3012 No. 16067/11, that required to consider the ranking of the legal representative when recovering judicial costs.

09.02.2016 — Higher Fees for Information on Real Estate from New Register

The Federal law “On state registration of real estate” dated 13.07.2015 No. 218-FZ will enter into force on January 01, 2017. The law provides for the creation of a Unified state register of real estate (Register), which will comprise not only cadastral entries and state registration of rights in real estate, but also other information about realty and land plots in question. Currently, the said information appears in different state registers and other sources, and therefore obtaining information on a particular real estate object can be rather burdensome.

Pursuant to the said law, the Russian Ministry of Economic Development has developed a draft Decree establishing the fees payable in order to obtain information from the Register. The fees will vary depending on whether information is to be provided in hard copy or in electronic form. Moreover, different charges will be effective for individuals, legal entities and state authorities making the relevant request.

Notably, the fees established by the draft Decree are substantially higher than the ones which are currently in force. Thus, the fee payable for an electronic extract on a real estate object from the Unified Register of Real Property Rights and Transaction amounts to RUB 150 if requested by an individual, and RUB 300 if requested by a legal entity, whereas pursuant to the draft Decree the fees for the same information will amount to RUB 525 and RUB 1.050 accordingly. The draft Decree is undergoing public discussion, which will last until February 23, 2015.

08.02.2016 — State Duma Committee Limits Liability of Self-Regulatory Organisations

The State Duma Committee on Land Relations and Construction has clarified that a self-regulatory organisation (SRO) can in certain cases be held liable for damages inflicted by independent contractors that are its members.

In its Letter dated 04.02.2016 No. 3.31-22/88, the State Duma Committee on Land Relations and Construction has clarified in which circumstances the SRO can be held liable for the violations of construction legislation alongside with the relevant independent contractor. The SRO bears secondary liability and shall compensate the damages using moneys from a special compensation fund. Thus, the SRO can be held liable provided that the following circumstances are met simultaneously:

  • there is evidence of infliction of death or personal injury, property damage, environmental damage, or damage to cultural heritage sites;
  • the said personal injury or damage is inflicted as a result of defects in engineering surveys, design documentation, construction or re-construction works, capital repairs.

Notably, however, the SRO is not liable to compensate damages inflicted as a result of improper performance of contractual obligations undertaken by independent contractors.