The practice concerning liability of controlling persons for debts of legal entities excluded from the unified state register of legal entities (EGRUL) following a decision from tax authority is being developed. In the past the Supreme Court and Constitutional Court of the Russian Federation took different views on this matter: from presumption of guilt for the controlling person to obligation of the creditors of the legal entity to monitor possible exclusion of such entity. In this article we will focus on the current court practice and the more correct approach.

According to the general rules that are applicable in case of bankruptcy^[1], subsidiary liability of the persons controlling the legal entity for the debts of such legal entity is frequently applied in practice. As provided by Art. 3, par. 3.1, of the Federal law dated 08.02.1998 No. 14-FZ “On limited liability companies” (hereinafter the “Law on LLC”), the persons controlling a legal entity excluded from EGRUL also bear subsidiary liability for the debts of such legal entity.

The court practice illustrated two possible approaches in applying subsidiary liability:

• holding the controlling persons not liable since the creditors must monitor the situation with their debtor (inter alia, its exclusion from EGRUL);
• holding the controlling persons liable if such persons allowed the exclusion from EGRUL of the legal entity with debts (unfair actions of the controlling persons in this regard are committed).

The Supreme Court^[2] clarified that exclusion of the company from EGRUL as a result of actions or omissions of the controlling persons are not considered as sufficient grounds for subsidiary liability of the controlling persons. It is required to prove that unreasonable and/or unfair actions (omissions) of the controlling persons led to inability of the legal entity to fulfil its obligations towards its creditors. This practically means that the controlling persons are liable for causing the bankruptcy of the legal entity. So, if the due procedure of liquidation of the legal entity was conducted, the debts of the such legal entity towards its creditors would still not be settled.

The Constitutional Court in its decision dated 21.05.2021 No. 20-П, on one hand, upheld the practice of the Supreme court as regards the grounds for holding the controlling persons liable. On the other hand, the Court pointed out that, in case of filing a claim with the courts to hold the controlling persons liable, the same controlling persons as defendant must prove that they did their best to fulfill their obligations towards the creditors of the legal entity. However, this interpretation was provided by the Constitutional Court merely in relation to physical persons as claimants, probably in order to protect physical persons from entrepreneurs. At the same time, the Constitutional Court added that this can also be appliable to physical persons.

Following this decision of the Constitutional Court, the courts have changed their practice and guilt of the controlling persons became a presumption only following to the exclusion from EGRUL of the legal entity with debts. This rule was applicable regardless of whom was the subject who filed a claim: either a physical person or an entrepreneur.

Considering this incorrect trend, the Supreme court has taken the decision by the Court Collegium for economic cases dated 03.11.2022 No. 305-ЭС22-11632 in the case No. A40-73945/2021 to clarify the following issues:

• subsidiary liability under Art. 3, par. 3.1, of the Law on LLC is only possible in case of causing bankruptcy (inability to fulfill obligations towards the creditors) of the legal entity excluded from EGRUL;
• there is no presumption of guilt in case of filing a claim by the creditors (entrepreneurs), so the claimant must prove that exclusion of the company from EGRUL occurred as a result of unreasonable and/or unfair actions (omissions) of the controlling persons that eventually led to the incapability of the legal entity to fulfill its obligations towards its creditors. The courts must determine whether the clamant presented any objections as regards the exclusion of the legal entity from EGRUL. This differs from the cases when claims are filed by physical persons when the guilt of the controlling persons is presumed^[3].

This position of the Supreme court represents the correct approach in terms of subsidiary liability. It is worthwhile mentioning that, even in bankruptcy cases, the Supreme court has never established the presumption of guilt just due to the fact that the claim was filed by a physical person. At the same time, it is obvious that the creditor, being an external person to the legal entity, is not able to prove its claim confirming the exact unreasonable and/or unfair actions (omissions) committed by the controlling persons if such creditor does not have access to the internal documentation of the legal entity.

Presumption of guilt of the controlling persons – as clarified by the higher court – in practice leads to the fact that the lower courts, in compliance with the instruction from the higher court, immediately take a decision concerning subsidiary liability of the controlling persons. Any attempts to prove the contrary by the controlling persons acting as defendant are unsuccessful. The position of the courts in this respect is that the controlling persons could act in a better way and thus prevent the legal entity from inability to fulfill its obligations towards its creditors, as well as exclusion of the legal entity from EGRUL. In the absence of such actions by the controlling persons, its subsidiary liability is reasonable.

In reality, a due balance between the claimant and the defendant is needed. On one hand, the controlling persons (defendant) must be given the opportunity to present even a minimum clarification as regards the financial situation of the legal entity prior to its exclusion from EGRUL and to disclose the documents requested by the claimant^[4]. On the other hand, the claimant (the creditor), on the basis of the information and documentation obtained from the defendant, must prove the essence of a causal connection between the actions (omissions) of the controlling persons and the inability of the legal entity to pay its debts towards the creditors, as well as to prove the guilt of the defendant.

Should the controlling persons deny to present such clarifications and disclose the evidence, this theoretically may be considered as an unfair behavior by the controlling persons. In this case, presumption of unfair behavior and guilty actions of the controlling persons seems to be reasonable.

Download Article

The post EXCLUSION FROM EGRUL: POSSIBLE SUBSIDIARY LIABILITY OF THE CONTROLLING PERSONS appeared first on Studio Legale De Berti Jacchia Franchini Forlani.

Considering the new round of sanctions implemented by the Western countries against Russia, it is advisable to take all necessary measures in order to mitigate the possible negative consequences for contractual relationships involving Russian legal entities with foreign participation and/or dealing with export operations on international markets. In this Article we will focus on the possible contractual methods to ensure such legal protection, as well as their advantages and disadvantages.

First of all, prior to entering into contracts the parties must be thoroughly investigated. Due diligence must be conducted to double-check whether or not the potential counterpart is included in the sanction list. General Managers of the counterpart, its participants (shareholders), beneficiaries and subsidiaries must also fall within the scope of the due diligence process to verify their possible presence in the sanction list.

During the pre-contractual phase it is recommended to obtain from the counterpart a letter (warranty) confirming that neither the counterpart nor its controlling/affiliated persons are included (or are threatened to be included) in the sanction list. Each party shall be obliged to inform the other party concerning possible inclusion in the sanction list or any threat thereof.

In the contract it is advisable to include a specific sanctions clause. In practice, in most cases such clauses are inserted in the contracts or a separate agreement between the parties is entered into, provided that there is a real risk that such party or its affiliated persons may be included in the sanction list. Sanctions clauses can be divided in two types. The first type is structured in accordance with the indemnity mechanism (compensation of losses) pursuant to article 406.1 of the Russian Civil Code. The second one is structured in accordance with the representation mechanism pursuant to article 431.2 of the Russian Civil Code. Indemnity is applicable for future periods and is not connected with the breach of the contract. The amount of such compensation shall be agreed upon by the parties and cannot be decreased by the court (like for the penalty pursuant to article 333 of the Russian Civil Code). These sanctions clause are generally structured as follows:

• a party is obliged to notify the other party in case the former or its affiliated persons are included in the sanction list or there are real risks of their further inclusion in such list;
• the party included in the sanction list is obliged to compensate the other party for losses;
• the amount or the method of calculation of the losses shall be defined (ideally, the agreed amount should cover all the negative consequences incurred by a party and arising from the work with the other party that is under sanctions, i.e. potential fines, risks to be included in the sanction list, etc.).

The option with damages is generally not recommended for the following reasons. First, in the court practice there are no positive examples of awarding damages due to the work with sanctioned counterparts. Any penalty for sanctions provided for in the contract may be decreased by the court. Moreover, the claim for damages may be overruled with reference to the entrepreneurial risk of the parties in case of execution of the contract due to violations of public nature.

The option with representation assumes that the defaulting party (providing unreliable representations) must indemnify the other party all damages associated therewith. There is also the possibility to withdraw from the contract or to claim that the contract is invalid. However, the existing court practice illustrates difficulties in the implementation of this mechanism. For instance, in the Decision of the Supreme Court of Russia dated 15.10.2018 in the case No. 305-ЭС18-16082 the court overruled the claim for invalidation of the contract due to breach of the sanctions clause in the form of representation. The reason was the absence of any evidence confirming the intention of the defaulting party to provide unreliable information that may have an impact on the other party’s decision to enter into the contract.

Rather frequently, in practice, the parties consider sanction risks as force-majeure. Sanction risks are normally described as follows: prohibitions and limitations applied by state authorities to import operations (including economic sanctions, official requirements, quota and price control), nationalization, expropriation and confiscation of any assets, inclusion of the party and its affiliated persons in the sanction lists. The court practice in this regard is rather contradictory. There are court decisions that confirm sanction risks as force-majeure and consider them as acts beyond the will of the parties to the contract (Decision of the Supreme Court of Russia dated 14.08.2018 in the case No. A40-32123/2017). However, there are also other examples in court practice where such circumstances were considered as commercial risks of the parties that, for example, do not exempt the supplier from the obligation to deliver the equipment in due time as envisaged by the contract (Decision of the Commercial court of the North Caucasus District dated 13.09.2018 in the case No. A53-3447/2018).

Summarizing the above, we would like to highlight that none of the described contractual methods may give full protection against sanctions. Therefore, it is very important during the pre-contractual phase to consider the grounds for unilateral out-of-court termination of the contract. Within the context of court proceedings, it is always possible to face with a court ruling concerning the principles of public nature and entrepreneurial risk of the parties. It is also crucial to pay proper attention to sanction compliance and due diligence regarding the choice of the counterparts.

Download Article

The post SANCTIONS RISKS IN TERMS OF ENTERING INTO CONTRACT AND ITS EXECUTION appeared first on Studio Legale De Berti Jacchia Franchini Forlani.

Notwithstanding the moratorium for Employers in Russia may often face problems of conflict of interests with their employees. This generally occurs when employees use their job position for their own interests. In this article we will focus on the measures that may prevent such situations.

First of all, the notion of conflict of interest must be clarified to the employees. By conflict of interest, it is deemed a situation when the personal interest of the employee contradicts the interest of the employer and has an impact (even potential) on due performance his/her job duties. Conflict of interests may eventually lead to losses for the employer or damage business reputation. Furthermore, examples of cases referred to conflict of interest must be listed either in separate regulations or in a specific section of the anti-bribery regulations. Situations where the employee holds a position in another company competing with the employer may be one of such cases. The list must not be limited, as it is not possible to determine in advance all possible situations. This list enables employees to understand the actual situation and correlate it with the provisions of the documentation.      

Obligations of employees to inform the employer about the real or potential conflict of interests must be provided in the internal documentation. In case of non-fulfilling such obligations the employer is entitled to implement disciplinary measures towards the employees. Termination is only applicable for the employees of state corporations, public and state companies (as per article 349.1 of the Russian Labour Code). In all other cases only a notice and reprimand can be implemented. In particular, in the appellate decision of the Moscow city court dated 30.10.2018 in the case No. 33-47375/2018 the court upheld the notice concerning conflict of interest which was given by the employer to the employee. According to the materials of the case the employer concluded an agreement with the company where the employee’s spouse had a participatory interest. The employee violated the provisions of job description and code of corporate ethics (with due acknowledgement against receipt of these documents) and did not notify the employer about this conflict of interests.        

Upon receipt by the employee of the information about conflict of interest, the employer must determine the further actions according to the internal documentation, which can either be a full prohibition of conflict of interests or a reservation for the employer of the possibility to take a decision on how to proceed in the case at issue. For those employees who take decisions on behalf of the company (such as General Director, Deputy General Director, Chief Accountant), it is advisable to provide for a full prohibition of conflict of interests.

Referring to anti-bribery regulations, it is worthwhile mentioning that it is not compulsory to adopt such regulations according to the law, yet it would be advisable to have it. This is especially important for those companies interacting with foreign counterparts. Moreover, this may help to avoid liability of the employer for corruption offences performed by its employees and to apply appropriate disciplinary measures towards employees.

According to article 13.3 of the Federal Law dated 25.12.2008 No. 273-FZ “On prevention of corruption”, companies must elaborate and adopt measures to prevent corruption. At the same time, there is no specific obligation to adopt a special internal act in the Russian law. No fine for the absence of the anti-bribery regulations is provided by the law as well. However, absence of such regulations does not allow to implement operative sanctions against employees who commit the corruption offences.        

In the absence of the anti-bribery regulations, employers must proceed with long-lasting criminal investigation procedure, which may take ages for corruption crimes. Provided that in the anti-bribery regulations anti-corruption obligations and prohibitions are contemplated, employees may be punished for the occurred offence prior to completion of criminal investigation. This possibility remains even if there is not enough evidence for criminal procedure.

Anti-bribery regulations are particularly important for those employers that deal with foreign companies. Large foreign companies require from their counterparts specific warranties related to the fact that employees do not take or give bribes and do not perform any other undue actions.

Particular attention must be paid to the provisions concerning gifts. Gifts may be fully prohibited either received or given, provided that such gifts exceed a certain amount (for instance, more than RUR 3,000). Another possibility is to envisage the obligations of employees to inform about the gifts of any amount and to reserve the right of employer to request from employees the refusal of the gift or its return.

Provisions on representation costs must also be carefully drafted in the internal documentation. The limits and principles for calculating these costs must be clear for employees. These costs must be reasonable; in other words, there should be no concealed remuneration for taking by the employee certain decision on behalf of the employer. Moreover, the excluded expenses must be determined (e.g., for entertainment, leisure, etc.).

In a court case the employee of a bank was fired pursuant to article 81, par. 7, part 1, of the Russian Labour Code (for loss of confidence in employee operating with monetary or other valuables) for violation of anti-bribery regulations. Based on the materials of the case, the employee secretly received monetary funds from clients and directors of the companies that opened accounts in the bank. Besides, the employee did not inform the employer about the fact that he was the General Director and participant of four companies. Pursuant to the decision of the Moscow State court dated 08.06.2018 No. 4г-6522/2018, such termination was considered legal.

It is worthwhile mentioning that there is no special ground for termination in case of non-compliance with anti-bribery regulations. It is only possible to terminate employees for the first committed violation when anti-bribery regulations are violated: (i) by an employee operating with monetary or other valuables (according to article 81, par. 7, part 1, of the Russian Labour Code), or (ii) by an employee of State corporations or State companies (according to article 81, par. 7.1, part 1, of the Russian Labour Code).  

Summarizing the above, it is advisable to consider the issues connected to conflict of interests in the internal documentation by determining its definition, listing the possible situations and defining the further actions. This allows the employer to implement the corresponding actions towards employees. Employees, in turn, understand how to act properly in practical situations. Even though anti-bribery regulation is not a document compulsory by the law, it is advisable to have it, especially for companies interacting with foreign counterparts. This may help to avoid liability of the employer for corruption offences performed by its employees and allows to apply appropriate disciplinary measures towards employees.

Download Article

The post CONFLICT OF INTERESTS AND ANTI-BRIBERY REGULATIONS IN RUSSIA: WHAT TO CONSIDER appeared first on Studio Legale De Berti Jacchia Franchini Forlani.

Pursuant to article 78 of the Labour Code of the Russian Federation an employment contract can be terminated at any time by means of a mutual termination agreement entered into between an employer and its employee. In general, this is considered the safest method for terminating an employment relationship in the interest of the employer, since the employee cannot challenge it afterwards.

The Supreme Court of the Russian Federation in its Plenum Resolution dated 17 March 2004 No. 2 “On application by the courts of the Labour Code of the Russian Federation” at paragraph 20 adopted the following approach. While resolving disputes connected with the termination of an employment contract on the basis of a mutual termination agreement, the courts must consider that such agreement may only be terminated on the basis of mutual consent of both the employer and the employee. The appellate decision of the Moscow State Court dated 26 January 2021 No. 33-3719/2021 overruled the claim of an employee who changed her mind after signing a mutual termination agreement and decided not to terminate the employment contract, since the mutual termination agreement is presumed to be voluntarily signed. The same position can be found in other court decisions^[1].

However, there is also another approach taken by the courts, which however is not that straightforward. In fact, it is not fully clear whether such practice is just the consequence of the reinforced protection of the interests of the employees during the Covid period or can represent a new approach. Anyway, this must be taken into consideration in the current times when mutual termination of an employment relationship takes place.

In this article we will analyse certain practical situations and the relative court decisions resolving the same.

1. Termination on the same day
   
   From the legal viewpoint, the only important issue is that final settlement with the employee and execution of all the required documentation must take place on the last working day. At the same time, in case of termination on the same day there is a risk of further challenge of such termination since it could be argued that the employee was taken by surprise.
   
   For instance, such approach was adopted in the decision of the Second Cassation Court of General Jurisdiction dated 27 July 2021 No. 88-16841/2021. In the absence of any legal regulations concerning execution of a mutual termination agreement, the court in this decision considered the fact that the employee was deprived of the possibility to estimate the legal consequences and make a choice to sign the mutual termination agreement which was submitted by the employer on the date of its signing.
2. Postponed termination
   
   The Court Collegium for Civil Cases of the First Cassation Court of General Jurisdiction in its decision dated 9 November 2020 in the case No. 8Г-23106/2020 resolved a dispute concerning postponed termination. From the material of the case it results that the mutual termination agreement was executed in October 2018 whereas the agreed termination date was September 2019 (i.e., 10 months after execution of the agreement). In the spring of 2019 a second child was born to the employee and in August (one month prior to the forthcoming termination) the employee signed an application for cancellation of the mutual termination agreement. At the agreed termination date the employment contract was terminated. The courts of first and appellate instances^[2] took their decisions in favour of the employer. In its turn, the Cassation Court overruled the previous decisions and remanded the case for a new trial before the lower court taking into consideration the following arguments. The mutual termination agreement with a termination date postponed for 10 months was signed during the period of childcare leave. Upon conclusion of the mutual termination agreement, a second child was born and thus the circumstances changed. Absence of any income, as well as psychological pressure (confirmed by the relevant audio recording) at the time of signing of the mutual termination agreement was also taken into account. Eventually, the court of first instance by way of second trial took a new decision whereby the employee was reinstated in her job. The termination order was declared illegitimate, average lost earnings and compensation for moral damages were awarded to the employee.
   
   In another court case the cassation instance overruled the previous decisions of the lower court instances^[3]. The mutual termination agreement signed on 16 May 2018 provided as termination date 31 March 2019. On 5 and 13 March the employee, being a single mother with a 9-year old child, sent an application for cancellation of the mutual termination agreement. At the agreed termination date the employment contract was terminated. The Court Collegium for Civil Cases of the First Cassation Court of General Jurisdiction dated 14 September 2020 in the case No. 8Г-5380/2020 remanded the case for a new trial to the lower court, paying attention to the following circumstances. The reasons for signing the termination agreement one year before were not determined. The preceding negotiations with the employee concerning the possible termination were not examined. The reasons for cancellation of the mutual termination agreement were not investigated. Therefore, the free will of the employee could not be guaranteed.
   
   The Court Collegium for Civil Cases of the Eighth Cassation Court of General Jurisdiction in its decision dated 3 December 2020 in the case No. 8Г-18822/2020 declared illegitimate the simultaneous execution of the employment contract and the mutual termination agreement with postponed termination date. The decisions of the lower court instances^[4] were overruled. From the material of the case it results that the employer proposed to the employee to execute a fixed-term employment contract. Following the refusal of the employee, a mutual termination agreement was proposed as a condition for entering into the employment contract for an unlimited duration.
   
   
3. Termination of women from “protected categories”
   
   In the appellate decision of the Court Collegium for Civil Cases of the Moscow State Court dated 18 August 2020 in the case No. 33-30337/2020 legal analogy was implemented confirming the right of an employee, who became aware of her pregnancy upon signing the mutual termination agreement, to cancel said agreement. In particular, the court overruled the decision of the court of first instance^[5] and applied the provision of paragraph 1 of article 261 of the Russian Labour Code that prohibits termination of a pregnant woman at the initiative of the employer even through termination under a mutual agreement provided by paragraph 1, part 1, of article 77 of the Russian Labour Code. This approach was afterwards confirmed in the decision of the Court Collegium for Civil Cases of the Second Cassation Court of General Jurisdiction dated 18 February 2021 in the case No. 8Г-29101/2020.
   
   
4. “Forced” termination under mutual agreement
   
   In the decision of the First Cassation Court of General Jurisdiction dated 21 December 2020 in the case No. 88-28288/2020 the court overruled the decisions of the lower court instances^[6] and remanded the case for a new trial to the lower court. From the materials of the case it results that termination date took place two weeks after execution of the mutual termination agreement. Prior to the termination date the employee informed the employer of the willingness to cancel the mutual agreement stating that it had been signed under pressure from the management. There were no additional circumstances, such as pregnancy, children, etc. and, moreover, the employee did not provide any direct evidence confirming the alleged pressure. Eventually, the court of first instance (decision of the Kirovskiy District Court of Saratov city dated 16 March 2021 in the case No. 2-897/2021) resolved the dispute for the second time and took a decision that upheld the claim of the employee.
5. Mutual termination agreement instead of termination due to disciplinary grounds
   
   The appellate decision of the Court Collegium for Civil Cases of the Chelyabinsk Regional Court dated 15 September 2020 in the case No. 11-8883/2020 established that proposal from the employer to sign a mutual termination agreement and its preliminary drafting do not constitute any pressure on the employee. In such case, the termination for disciplinary violations is replaced by mutual termination agreement and the employee exercises the right to terminate the employment contract. The same approach can be found in the appellate decision of the Court Collegium for Civil Cases of the Supreme Court of the Bashkortostan Republic dated 24 January 2019 No. 33-1325/2019.  

***

Summarizing the above, an ambiguous court practice must be considered by the employer when entering into a mutual termination agreement with an employee. It cannot be excluded that the employee may change his/her decision and apply to the court arguing that the agreement was signed under pressure. As a result, the court may declare that the termination is illegitimate.

Download Article

The post MUTUAL TERMINATION AGREEMENTS: RECENT PRACTICE appeared first on Studio Legale De Berti Jacchia Franchini Forlani.

According to article 425, par. 3, of the Civil Code of the Russian Federation, the parties may agree to apply the terms and conditions of a contract also with respect to the period prior to the execution of the contract. However, this may raise certain legal issues.

In this article we will review some recent court cases illustrating the approach of the Russian courts towards the questions concerning retroactivity of contracts, the impact of retroactivity on the contractual arrangements and the deadline for submitting the relevant claims.

1. Retroactivity clause not applicable
   In a court case the parties entered into an addendum to a delivery agreement, whereby they agreed to anticipate the due dates for payment. It was also specified that this addendum had retroactive effects (namely, it applied to the contractual arrangements between the parties starting from the date of execution of the original contract). Consequently, the supplier claimed the application of penalties for all previous deliveries that had already been made (even though these deliveries were in compliance with the due payment dates indicated in the original agreement). Both the first and appellate court instance^[1] upheld such claim.
   
   However, the commercial court of Volga-Vyatka district in the decision dated 21.02.2020 No. Ф01-7960/2019 in the case No. А43-8071/2019 took a different position. In particular, the court held that no penalties for late payment could be claimed in respect of contractual obligations, the time of performance of which had already expired prior to the execution of the addendum to the agreement.
   
   In the course of the retrial, the court^[2] pointed out that the retroactivity issue could only be settled together with the liability issue. In the addendum the parties could foresee the negative consequences for the purchaser arising from the anticipation of the due payment dates. Therefore, the purchaser should have specifically approved the fact that the addendum changed the number of overdue days and thus increased the amount of penalties due. In the absence of such a specific agreement, the penalties could not be applied retroactively. Eventually, the cassation instance^[3] confirmed such approach.

2. Retroactivity clause confirmed
   In another case, by means of an addendum to a contractor agreement, the term of performance of works was postponed, however at that time the delay in the performance of the works had already occurred.  
   
   The courts in all three instances^[4] took the position to recover from the contractor the penalty starting from the term of performance for the works agreed in the original contract until execution of the relevant addendum.
   
   However, the Court collegium for economic disputes of the Higher court of the Russian Federation in the decision dated 29.10.2019 No. 305-ЭС19-11225 in the case No. А40-114941/2018 overruled the previous decisions. The parties stated that the addendum had retroactive effects and it was valid within the term of validity of the agreement. Yet the lower courts had not taken this into consideration. Since the addendum did not specify that the parties allowed the application of the penalty to the delay occurred prior to its execution, the Higher Court of the Russian Federation overruled the decisions with regard to the penalty.
   
   Following the retrial, the penalty was recovered only in respect of the delay that occurred after the term of performance for the works had been postponed. This position was upheld in the decision of the commercial court of the Moscow district dated 02.02.2021 No. Ф05-3320/2019 in the case No. А40-114941/2018.

3. Retroactivity clause challenged
   When the parties enter into an agreement or an addendum containing a retroactivity clause without putting forward any objections thereto, the chances to challenge this clause are rather low. The courts have confirmed the validity of the retroactivity clause in the following cases:
   • the addendum was signed without a list of disagreements^[5];
   • the list of disagreements or another document with the objections to the draft of the agreements was not forwarded^[6];
   • the agreement was signed without objections and notices^[7].

4. Retroactivity in cases when disagreements on the text of the contract are resolved by the court
   In a court case there was a dispute between the parties concerning the payment of services that were rendered, inter alia, prior to the execution of the agreement in the course of the court proceedings. According to the courts^[8], prior to the execution of the agreement there were certain arrangements between the parties, the agreements contained a retroactivity clause and the parties did not argue the items concerning retroactivity while entering into the agreement in the course of the court proceedings.
   
   In another court case in the course of the pre-contractual disputes there were disagreements between the parties concerning the application of the retroactivity clause. As stated by the court^[9], since neither the law nor the agreement provided explicitly for the retroactivity clause and, in the absence of consent of both parties, such clause cannot be confirmed by the court.

5. Retroactivity clause entered into after the court’s decision
   In a court case, after using a land plot for a certain period of time the parties decided to enter into a lease agreement, whereby the lessee was obliged to pay for the use of the land for the previous period (i.e., 3 years prior to the registration of the agreement). The appellate instance^[10] held that unreasonable gains cannot be recovered for this period. The commercial court of the North-western district in its decision dated 05.10.2020 No. Ф07-5924/2020 in the case No. А26-5814/2019 upheld the decision of the lower instance court and ruled out that the lessor is only entitled to request payment under the lease agreement by way of court proceedings, unless the lessee performs such payment spontaneously.

6. Impact of retroactivity clause on statutory limit for claims
   In a court case the lessor tried to recover the debt arising from unpaid rent under a lease agreement for the period of more than 5 years. The first and appellate instances^[11] have confirmed that the statutory limit for some of the claims had already expired. However, the commercial court of the West-Siberian district as cassation instance in the decision dated 14.07.2020 No. Ф04-2655/2020 in the case No. А75-16375/2019 has taken a different position on this issue.
   
   As per the materials of the case, in 2018 the parties entered into an accession agreement to a lease agreement, with attached thereto the calculation of payments due for the preceding period (2013-2018). The cassation instance interpreted this as an acknowledgement of debt. It followed that the statutory limit for the claims started to run once again. Therefore, the decisions of the lower courts were overruled and the debt was recovered by the lessor with respect to the whole period.

Conclusions
The court practice examined above shows that the retroactivity clause in the contracts must be carefully structured, in order to avoid the possibility of different interpretations. By doing so, the risk of further challenges by the courts can be significantly reduced (which is particularly important since the courts in certain cases may either uphold or overrule the retroactivity clause).

Download Article

The post RETROACTIVITY OF CONTRACTS: RECENT COURT PRACTICE appeared first on Studio Legale De Berti Jacchia Franchini Forlani.

Download Programme

Register

The post LEGAL ASPECTS IN THE MANAGEMENT OF A WEBSITE – Webinar CCIR, April 29th, 2021 appeared first on Studio Legale De Berti Jacchia Franchini Forlani.

Article 130 of the Russian Labour Code provides that measures ensuring increase of salary level are included in the primary state guarantees as regards salary payment. In turn, increase of salary level entails salary indexation due to the increase of consumer prices for goods and services (Art. 134 of the Russian Labour code)…

Download Article

The post SALARY INDEXATION: WHAT EMPLOYERS SHOULD CONSIDER? appeared first on Studio Legale De Berti Jacchia Franchini Forlani.

Amendments to the legal provisions regulating certain aspects concerning highly-qualified specialists (hereinafter “HQS”) are planned.
It is expected that permanent residence permit may soon be obtained by certain categories of HQS…

Download Article

The post PLANNED AMENDMENTS TO THE FEDERAL LAW DATED 25 JULY 2002 NO. 115-ФЗ “ON LEGAL STATUS OF FOREIGN CITIZENS IN THE RUSSIAN FEDERATION” appeared first on Studio Legale De Berti Jacchia Franchini Forlani.

The post COVID-19: FOCUS TAX AND ADMINISTRATIVE LAW appeared first on Studio Legale De Berti Jacchia Franchini Forlani.

Download Programme

The post COVID-19: FOCUS TAX AND ADMINISTRATIVE LAW – Webinar, De Berti Jacchia and CCIR, February 4th, 2021 appeared first on Studio Legale De Berti Jacchia Franchini Forlani.