In this case the buyer of the premises in the building did not register his title to the land plot, wherefore the seller continued to pay land tax, since according to the information in the property register he still was the registered owner of the land plot. Thereafter the seller filed a claim against the buyer on the recovery of the sums paid as land taxes as unjustified enrichment. The Supreme Court sided with the seller. The judges pointed out that by virtue of law and in accordance with the principle of unity of the land plot and the buildings located thereon (Russian analogue of the principle superficies solo cedit) the buyer of the premises acquires ownership title to the land plot underneath it, thus the buyer is also obliged to pay the relevant land tax from the moment of registration of the transfer of ownership title to the premises, regardless of the registration of ownership title to the land plot.

In this case (case No. А40-60970/2017) a dispute arose between the seller and the buyer of the premises in the building regarding the payment of the land tax in respect of the land plot under the building. Having purchased the premises, the new owner did not register his title to the land plot under the building in the Unified State Register of Immovable Property (EGRN). Therefore tax authorities made the previous owner pay the land tax, since in the register he was still indicated as the owner of the land plot. Subsequently, the previous owner filed a claim to the court on the recovery of the sums paid as land taxes as unjustified enrichment.

The Supreme Court referred to the principle of unity of the land plot and the building located thereon (Russian analogue of the principle superficies solo cedit), and explained that the transfer of title to real estate in any case entails the transfer of title to the land plot underneath it. Moreover, by virtue of law, ownership title to the land plot under the building arises from the moment of the registration of the transfer of ownership title to the respective premises in the building, and therefore from that moment the buyer is obliged to pay relevant part of the land tax. Thus, if the seller continues to pay land tax after the premises were sold to the buyer, the seller may recover the sums paid as unjustified enrichment.

On 14 September 2018 the Board of Directors of the Central Bank decided to raise the key rate from 7,25% to 7.5% per annum. This is the first tightening of the monetary policy since 2014, when Western countries introduced sanctions against Russia in response to the annexation of Crimea. According to the Central Bank, geopolitical risks will continue to form volatility in the Russian financial market, contribute to inflation and capital outflow. The main reason for raising the key rate was the upward revision of the inflation forecast for 2019.

The Bank of Russia raised the key rate by 25 points, and currently it amounts to 7,5% per annum (please see the Central Bank’s notice as of 14 September 2018). The decision to raise the key rate was influenced by several factors, the main of which was the change in the external conditions, which resulted in increased pro-inflation risks. Thus, the Central Bank raised its inflation forecast dramatically. So, while earlier the inflation forecast for 2018-2019 was at the level of 3.5-4%, now the Central Bank suggests that it would reach 5-5.5% by the end of 2019.

Experts predict that unless additional negative factor come up, the key rate will remain stable until the end of the year. The next meeting of the Board of Directors of the Central Bank where this issue will be considered is scheduled for 26 October 2018.  

In one of its recent cases, the Supreme Court resolved the issue what constitutes a loss of real property, from which the obligation to recover losses arises. In the case at hand an individual tried to recover losses from the local authorities that had sold the land plot situated at the forest reserve fund by mistake. The individual did not know about it, and built a house thereon. The courts of lower instances dismissed the individual’s claim arguing that the claimant has access to his house located on the disputed land plot, the house had not been demolished nor seized, and therefore the claimant had not suffered any losses as a result of termination of his ownership title to the land plot. The Supreme Court disagreed with this approach and explained that when deciding whether the claim on the recovery of losses shall be granted, the courts shall not limit the loss of property solely to actual loss (demolition), and that in such cases courts shall determine whether the claimant has the right to possess, use and dispose of the property in compliance with law. Therefore the decisions of lower courts were reversed and the case was remanded for a retrial.

In this case (case No. 50-KG18-14), the local authorities rented out the land plot to an individual and issued a construction permit allowing to build a house on this land plot. The individual began the construction of a house, registered its ownership title to the unfinished building and purchased the land plot. However, later on it was found out that the land plot is in the forest reserve fund and by virtue of law can be only state owned, thus the local authorities had not had the right to dispose of it. As a result, a court decision was issued invalidating the transaction and declaring that the individual had no ownership title to the land plot. The individual filed a claim on the recovery of damages from the local authorities, but the court of the first instance and the appellate court dismissed the claim arguing that the individual had not suffered any losses, since he enjoyed unrestricted access to the unfinished construction and it had not been demolished or seized.

The Supreme Court overruled the decisions of the lower courts and pointed out that to decide whether the claimant has suffered losses as a result of the local authorities’ illegal actions, the courts had to establish whether the plaintiff had the right to possess, use and dispose of the unfinished construction. In particular, they were to determine whether the former owner of the disputed land plot had an opportunity to complete the construction and register his ownership title to the house, reside in it, sell or otherwise dispose of it, given that it is forbidden by law to construct residential premises on the forest reserve lands. Consequently, this position of the Supreme Court demonstrates that in case the owner of the land plot loses title to it due to the fault of the local authorities, the latter shall recover losses to the former owner.

At the beginning of the following year the amendments will come into force regarding mandatory state environmental impact assessment for all hazardous facilities. Based on the results of this assessment, state authorities will issue a comprehensive environmental permit for a period of 7 year. This document will replace numerous environmental permits. Currently, the Government is working on a bill on transitional period provisions for the facilities of the 1^th category (related to primary impurities): it is proposed to release such facilities from the obligation to undergo environmental impact assessment, since their design documentation will be examined for environmental compliance during the state examination of the design documentation in accordance with the town-planning legislation.

State environmental assessment (SEA) for all hazardous facilities becomes mandatory from 1 January 2019. These are facilities afflicting the most damage to the environment, namely, operating in the field of mining, smelter, chemical, pulp and paper industry, waste disposal, and agricultural plants. In order to obtain a comprehensive environmental permit companies and individual entrepreneurs operating such facilities will have to file a relevant application to the Federal Service for Supervision of Natural Resource Usage (Rosprirodnadzor). The comprehensive environmental permit will include information regarding all aspects of the company’s hazardous activities and will replace all the environmental permits that are currently required (permission for maximum permissible discharge, waste limits, list of environmental measures, etc.). Generally, comprehensive environmental permits will be issued for a period of 7 years. Along with that it is planned to amend the Code on Administrative Offences of the Russian Federation by adding a new offence – operation of hazardous facilities without a comprehensive environmental permit, in case such a permit is necessary (Art. 8.47 of the Code on Administrative Offences of the Russian Federation). The fine for companies will be up to RUB 100,000 (approximately EUR 1,320).  

The Government is currently working on a bill that is supposed to reduce administrative barriers in this field: it is proposed to shorten the term for state environmental assessment and introduce transitional provisions for the facilities of the 1^th category which fall within the period of transition. According to the bill, the state environmental assessment will not be mandatory if the respective facilities obtained construction permits before 1 January 2019 or if the design documentation was submitted for state expert examination before 1 January 2019 since the environmental compliance is reviewed during state examination of the design documentation in accordance with the town-planning legislation.  

In the case at hand a company that had lost in the arbitration claimed that it had not been aware of the arbitration clause in the lease agreement, since the clause was contained in the unregistered addendum to the lease agreement, which had been concluded by the company’s predecessor. According to the company, the addendum to the agreement was invalid and thus the arbitral tribunal had no jurisdiction over the dispute. However, the Supreme Court did not agree with company’s arguments, stating that the plea of lack of jurisdiction of the arbitral tribunal should have been raised during the arbitral proceedings. Since the company has never raised objections to the jurisdiction of the arbitral tribunal during the arbitration proceeding, such arguments cannot be accepted at the stage of issuance of the writ of execution by the state court due to the principle of prohibition of contradictory behavior (estoppel).

In this case (case No. А40-209731/2014) the individual entrepreneur and the company argued about the validity of the arbitration clause which was contained in the unregistered addendum to the real estate lease agreement. The dispute arose right after the arbitral tribunal compelled the company to reimburse the cost of permanent improvements made by the tenant in accordance with the provisions of the lease agreement; this obligation, as well as the arbitration clause, was stipulated in the addendum to the lease agreement. The issue was that the addendum was concluded not by the company itself, but by its predecessor, moreover, the addendum was not registered in the public real estate register, and therefore the company got to know about the existence of the arbitration clause only in the course of the arbitral proceedings.  

Having received the arbitral award on the recovery of the cost of permanent improvements to the leased property, the company filed a claim to a state court on the invalidation of the arbitral award. The company argued that the addendum, where the arbitration clause was contained, had not been registered, and thus the arbitral tribunal had no jurisdiction over the dispute. The company argued that since the addendum, where this clause was contained, had not been registered, this led to the lack of its publicity, and therefore the company was unaware about the existence of the arbitration clause.

However, the courts of all instances dismissed the company’s arguments. The Supreme Court explained that since the company was aware that the arbitration proceedings against it had been commenced and had not made any statements on the lack of jurisdiction of the arbitral tribunal during the arbitration proceedings, it lost the right to object against such issues in state courts (estoppel).