27.01.2017 — Too High Population Density Can Prevent the Implementation of Construction Projects

The Supreme Court banned a real estate developer from constructing new high-rise buildings, since the construction activity could have resulted in a rapid increase of the district’s population density. This issue was considered by the court due to the claims on behalf of the district’s residents who objected to the construction of new 17-storey buildings instead of dilapidated buildings within the developer’s implementation of the agreement for the territory development that was concluded with the local authorities.

Initially, the disputable territory comprised low-rise residential buildings and cottage houses. However, in 2013 a real estate developer interested in developing the territory had entered into an agreement with the municipality whose conditions implied the resettlement of residents from 52 dilapidated buildings and the construction of new real estate objects on a total area of over more than 500 000 sq.m and in the total amount of 35 billion rubles.

A successful project realization was prevented through objections of local residents who appealed against the authorities' decision directed towards the development of buildings on the territory by referring to the consequences of the project implementation, namely in the form of a rapid increase in the district’s population density from 4 000 persons up to 25 000 persons.

The Supreme Court, while attempting to find a compromise solution, resorted to the urban planning documents valid for the relevant territory. According to the provisions of the mentioned documents on the disputable territory only the construction of buildings not exceeding 9 storeys is permitted, and this is the reason, why the conditions for the realization of the construction project, that implies the construction of new 17-storey buildings, shall be subject to reconsideration.

26.01.2017 — Customer Is Not Entitled to Demand the Expense Report from the Performer for the Purpose of Reducing the Contract Price

The Ministry of Economic Development of the Russian Federation explained that the customer, after the fulfillment of the contract concluded with public authorities, is not entitled to demand from the performer the report оn the expenses carried by the latter and to claim for a reduction of the contract price by referring to the mentioned expenses. Therefore, if the performer achieves any funds savings, after the payment of the full contract price was performed by the customer, these funds will not be returned to the latter.

Disputes that are widely spread throughout the court practice consist of claims of customers who, after the fulfillment of the agreement, having discovered essential savings on the performer’s side, claim for a reconsideration of the contract price by referring to its initial increase. The laws establish that at the presence of a fixed contract price and the performer’s fulfillment of the full amount of works established in the contract, the savings gained by the performer shall not be subject to refund to the customer as long as the compliance to quality requirements of the works fulfilled is provided.

In this connection the Ministry of Economic Development drew the public customers' attention to the fact, that they are not entitled to include the condition оn submittal of the financing report оn expenses carried and copies of the primary accounting documents confirming the mentioned expenses carried by the supplier (contractor, performer) into the contract. At the proper fulfillment of the contract, after the signing of the delivery and acceptance certificate by the customer for the works fulfilled (goods, services), the latter has the duty to pay the price established for them in the contract and is not entitled to demand its reconsideration by referring to the performer’s expense savings (Letter of the Ministry of Economic Development of the Russian Federation dated 14.11.2016 No. D28i-3142). 

25.01.2017 — Russia Ranks 131st in the Corruption Perceptions Index 2016, thus Sliding Down 12 Positions

According to the ranking’s results published by the global civil society organization Transparency International for the year 2016, Russia gained 29 points from 100 and takes place 131 out of 176 countries being in the same row with Iran, Kazakhstan, Nepal and Ukraine.

Last year Russia was ranked higher (place 119). Despite the fact, that Russia lost some points this year and dropped from place 119 to place 136, Transparency International pointed out a number of positive aspects relating to Russia. As efficient anti-corruption measures TI recognized the fact, that Russia signed the OECD agreement, thereby joining OECD’s standards on the automatic exchange of financial account information with the tax service of another country, Russia’s anticorruption measures undertaken towards state officials (in particular, the ban on the possession of foreign financing instruments), as well as the establishment of the companies' liability for the non-storage and non-actualization of data on its beneficiaries.

At the first place is ranked Denmark jointly with New Zealand (both received 90 points) following by Finland at the second place (89 points), at the third place ranks Sweden (88 points). The lowest amount of points achieved South Korea (12 points), South Sudan (11 points) and Somalia (10 points). 

24.01.2017 — Supreme Court: Audio Recordings Made Without Consent Can Be Used As Evidence In Court

During the consideration of a debt recovery dispute the claimant submitted as essential evidence for the presence of debt, among others, an audio recording he made secretly, without the consent of the debtor, during the funds transfer. Despite the arguments of lower courts that refused to accept this evidence by referring to the infringement of the secrecy of private life, the Supreme Court accepted the audio recording as admissible evidence and sent the case for new consideration.

Audio recordings made without the prior consent of the participants in the conversation had always been considered as problematic evidence, and regarding the admission of its inclusion into the case file an ambivalent court practice existed earlier. The courts considered quite often by referring to the provisions of information protection laws, this evidence as inadmissible and received against the will of the participants in the conversation, while infringing their rights to privacy.

The Supreme Court Collegiums on Civil Cases announced another position by drawing the attention of the courts to the fact, that, if the recording of the telephone conversation was effected by one of its participants and the conversation referred to the contractual relations between them, the ban for obtaining information without the consent of the other party, established by the Federal Law “On Information Protection”, shall not apply for the mentioned case (Resolution of the Supreme Court of Russia dated 06.12.2016 No. 35-KG16-18). The mentioned position of the Supreme Court of the Russian Federation may result in a change of the court practice towards an increasing acceptance of audio recordings of private conversations as evidence in court.

23.01.2017 — Special Opinion: Issues of Disagreement of Constitutional Court Judges in Yukos Case

After the Constitutional Court on 19 January put an end to the long dispute in the Yukos case by having recognized the right of the Russian authorities not to fulfill the decision of the ECHR regarding the payout in the amount of €1,8 billion to the former Yukos shareholders, two judges of the Constitutional Court of the Russian Federation declared their special opinion. The judges explained the position on the inadmissibility of the statement on behalf of the Ministry of Justice that has the purpose of reconsidering the decision of the ECHR at the national level by referring to the Constitutional Court’s lack of competence in considering such cases and the contradiction that exists between the decision taken by the Constitutional Court of the Russian Federation and the jus cogens norms.

Two judges, Konstantin Aronovsky and Vladimir Yaroslavzev, announced their disagreement with the decision of the Constitutional Court. According to К. Aranovsky, the statement of the Ministry of Justice directed towards the reconsideration of the arguments of ЕСHR, as well as the decision of the Constitutional Court of the Russian Federation, in which the Court provided another legal evaluation of the facts established by the ECHR, contradict with the purposes of constitutional justice and are inadmissible from a procedural point of view. V. Yaroslavzev announced a similar position by additionally indicating, that the reasons for the given situation are in many ways due to the inconsequent and highly ambivalent actions of the Russian authorities which led them to a «legal deadlock».

It should be recalled that in 2011, when the ECHR recognized the infringement of rights of the Yukos shareholders on behalf of Russia, the Russian authorities did not appeal against this decision and, furthermore, sent in the year 2013 a measure plan regarding the execution thereof to the Committee of Ministers of the Council of Europe. Only in 2014, when the ЕCHR announced the final reimbursement sum that is subject to payment in favor of the Yukos shareholders, the Russian authorities started to look for an opportunity for not fulfilling the decision they had recognized earlier. However, according to V. Yaroslavzev, the tactics of appeal against the decisions of ЕСHR at the national level contradict with the core principles of international law (jus cogens), since the solution of this issue needs necessarily to be found at the level of international agreements and an open dialogue between Russia and the Committee of Ministers of the Council of Europe.