24.11.2017 — Supreme Court: Creditor In Bankruptcy May Challenge Debtor’s Liabilities Even If Debt Was Enforced In Court

In a case recently adjudicated by the Supreme Court the judges were to decide whether the creditor in bankruptcy proceedings has the right to challenge the court decision against the debtor on the recovery of debt to a third party, if such a decision had been rendered before the bankruptcy procedure commenced. In the case at hand the court decision enforced the debtor’s large debt to a third party that had been awarded because the debtor acknowledged the claim. But after the bankruptcy proceedings were initiated, one of the creditors had doubts that the debt in question might be fraudulent and tried to challenge the previously rendered decision on the recovery of this debt claiming that in fact no money had been transferred by the lender. The courts of lower instances dismissed the claim. Yet, the Supreme Court ruled for the creditor and explained that in this situation the decision in question affects the creditor’s rights, therefore the creditor shall be entitled to challenge it.

In the case No. 59-КГ17-12 an individual did not repay the credit for a large sum to the bank, and soon after the bankruptcy proceedings were initiated against him. Still, alongside with this debt, another suspicious debt was included in the register of the creditors’ claims. The suspicious debt was based on the decision of the court of general jurisdiction that had been adopted on the verge of the debtor’s bankruptcy. The bank had doubts that this debt might be fraudulent; therefore he filed a claim on the extension of the time for challenging the court decision on the recovery of this debt. The appellate court dismissed the bank’s claim since the court decision had been rendered before the bankruptcy proceedings were initiated, therefore, in the opinion of the court, it did not infringe the rights of the bank.

Yet the Chamber for Civil Disputes of the Supreme Court disagreed with such an approach and decided that the bank shall have the right to challenge the decision of the court. At that the Supreme Court explained that if the decision of the court of general jurisdiction upon which the bankruptcy claim of another creditor is based affects the rights and obligations of the persons involved in the bankruptcy proceedings, other creditors shall be entitled to challenge such a court decision by reference to para. 8 of the Digest of court practice of the Supreme Court No. 3 (approved by the Presidium of the Supreme Court on 25 November 2015). The Supreme Court noted that the bank obtained the right to challenge the decision immediately after his claims were included in the register of the creditors’ claims. Therefore the decision of the appellate court was revoked and the case was remanded for a re-examination. 

23.11.2017 — Business Ombudsman Launched Mobile App To Protect Business During Inspections

Business Ombudsman Boris Titov presented a mobile app «Nabat!» to the business community. The application is aimed at protecting the rights of the entrepreneurs that were caught unawares by sudden state authorities’ inspections. Electronic service gives the opportunity to receive information about the inspection promptly, get advice from the specialists of the Business Ombudsman’s Central Office, detect the inspectors’ violations and file complaints to the supervisory authorities.

A mobile app provides opportunity to promptly contact the call-center of the Business Ombudsman Central Office and is able to process up to 100 000 applications at the same time. After the applicant’s identity is established, the call-center specialists advice on the course of actions to be taken (for example, scan the documents on the inspection and the identity and authorization documents of the inspectors), review the status of the inspection (scheduled, unscheduled and whether the information about it has been filed with the register) and help to detect and record the evidence of the violations and file complaints to the regulatory bodies or the prosecutor’s office.

The activation of the “rapid response alarm button” in a mobile app amounts to an official application to the regional Business Ombudsman, who has the right to familiarize with the documents, receive the official answers from the regulatory bodies within 15 days, provide support and assistance to the entrepreneurs.

The mobile app may be downloaded at: The mobile app has already been tested as the social project and gave good account of itself. According to the Business Ombudsman, the corrupt inspectors, in most cases, discontinue the inspection as soon as they find out that the information on the inspection has been promptly filed with the supervisory authorities.

22.11.2017 — Russia Declared That International Relations With Turkey Have Restored Almost Fully

President Mr. Putin announced, in a joint press conference with Turkish President Mr. Erdoğan in Sochi, that relations between Russia and Turkey “have been fully restored”. Both leaders admitted the extension of cooperation in trade, political and military spheres.

The official meeting of the Russian and the Turkish Presidents was held on 13 November. Mr. Putin opened the press-conference with the announcement that Russian-Turkish relations have restored almost in full, the rate of trade increased by 36% in comparison to the last year drop. Mr. Erdoğan agreed and expressed confidence that the cooperation between the two countries will flourish. The two leaders discussed bilateral relations as well as regional issues, including the war in Syria.  

Please let us remind you that the international relations between Ankara and Moscow deteriorated after a Turkish Air Force fighter jet shot down a Russian Sukhoi Su-24 aircraft near the Syria–Turkey border in November 2015.

21.11.2017 — Supreme Court: Person Selling Property Twice Will Be Liable For Final Purchaser’s Losses

In the Digest of Court Practice No. 4 (2017) the Supreme Court examined a typical situation when a property is sold twice in chain order, and finally one of the final purchasers is unable to obtain the title to the property. At that challenging the last transaction and filing a claim for the recovery of the purchase price are often non-effective remedies. The Supreme Court declared that in such a case the final purchaser may file a claim to the first seller that sold the property twice and seek compensation for damages.

The Supreme Court resolved a problem that has been essential in the court practice, namely when a seller intentionally sells a property to two purchasers. In the case adjudicated by the court the bad-faith purchaser sold the property to several purchasers, after that it was resold in chain order. The final purchaser paid the purchase price, but received no ownership title. Moreover, he could not claim the property from another final purchaser that acquired it in chain order due to the rules on the protection of innocent purchaser. The disadvantaged purchaser filed a claim against the last seller, but only managed to recover losses in part. Then the purchaser tried to recover his losses from the first seller that initiated the double sale.

The court of the first instance and the appellate court dismissed the claim for the lack of evidence of the fact that the first seller and the last seller acted together. Still, the Supreme Court granted the claim and explained that the torts liability may be applied in this case (Article 1064 of the Russian Civil Code) and the claim may be filed against the person whose actions initially caused the loss, namely the first seller.

At that the Supreme Court highlighted that the fact that the purchaser has already been awarded compensation of losses from the last seller does not preclude him from filing another claim to the first delinquent seller in case the last seller is unable to repay the awarded sum of losses. Otherwise the purchaser would be deprived of the right to judicial protection and his infringed rights would not be restored. 

20.11.2017 — Russian Government Increases Taxes Despite Moratorium On Raising Tax Burden

The recently adopted law on the federal budget for 2018-2020 provides for the increase of the existing duties and introduces new charges. Despite the fact that these duties and charges formally are not classified as taxes, they will raise the overall tax burden on business by more than Rubles 100 bln. (approximately USD mln. 1,715). Therefore the entrepreneurship called the Russian President’s attention to the fact that such an increase violates the President’s moratorium on the raise of the tax burden, introduced in 2014 and effective till the end of 2018. 

The representatives of the major business unions (Russian Union of Industrialists and Entrepreneurs, Business Russia, Chamber of Commerce and Industry, Opora Russia) addressed an official letter to the Russian President Vladimir Putin arguing that the recently adopted law on the federal budget for the next year and the planning period (2018-2020) violates the 4-year long moratorium on the stability of the tax burden in 2014-2018.

The recently adopted budget introduces three new duties: disposal charge for capital equipment in heavy engineering and power engineering industries, investment duty in sea ports and fees for importing plant and equipment. Moreover, the existing duties will increase, too. For example, the disposal charge for automobiles increased by 15%. At that from a formal perspective such payments are not classified as taxes, still, according to the experts, are of a fiscal nature and in any case rise the tax burden.

According to the authors of the letter, the increase of the tax burden will inevitably lead to the disinvestment to the Russian business. Thus, the manufacturing cost will increase in all spheres, and as a result the price of goods for the final consumers will increase, too.