GILS Dispute Resolution: Russia

RUSSIA

CASE №1:

А21-7789/2021 

The Government of the Kaliningrad Region made a decision to seize a 3 300 square metre land plot from the Client. The amount of compensation was determined at RUB 220 000, which did not correspond to the actual value of the land plot. Despite the type and category of the land plot being withdrawn as agricultural land in the Unified State Register of Legal Entities, in fact, the general plan and ZPZ for the land plot established the category: residential land, type of permitted use: for medium-storey residential development. The Client wanted to receive commensurate compensation for the withdrawn land plot. 

GRATA International Russia (St. Petersburg) was involved in the project at the appeal stage. The Client lost the court of first instance. 

The result the Client wanted was achieved in the court of cassation. The Court of Cassation cancelled the judicial acts and sent the case for a new examination. 

At the new hearing, the amount of compensation was increased 100 times and determined to be almost RUB 21 000 000! 

GRATA International Russia (St. Petersburg) lawyers managed to change the approach of the courts to the consideration of the issue of establishing the amount of compensation for the withdrawn land plot and take into account not only the characteristics of the land plot from the Unified State Register of Land Plots, which was still the focus of the courts in view of the outdated practice, but also take into account the factual circumstances that establish the value and marketability of the withdrawn real estate object (for example, the current general plan and ZPZ with different characteristics than in the Unified State Register of Land Plots). 

So far, this has only been the case in a Constitutional Court ruling, but the issue there concerned the development of infrastructure from the date of the decision to seize to the actual seizure, which is different from the dispute at hand.

Pavel Balyuk.

CASE №2:

Rosprirodnadzor sued the Client (a Russian subsidiary of a global brand in the construction materials industry) for recovery of environmental impact fees in the amount of RUB 5 000 000 due to the Client's failure to apply an increasing coefficient when calculating the fee. 

As a result of this dispute (A56-21808/2022) GRATA International Russia (St. Petersburg) managed to prove to the court that the Client's enterprise disposed waste within the established limits on the basis of the document on approval of waste generation standards and limits for their disposal No 26-7852-Q15/20-P, valid from 18.05.2015 to 05.02.2020, which was still in force at that time, so the claims of Rosprirodnadzor are not justified.

Svetlana Kudryashova.

CASE №3:

By the decision of the Arbitration Court of the Samara Region dated November 28, 2023 in case No. A55-27380/2022, the amount of unjust enrichment in the amount of RUB 21 888 160,75 was recovered from the Ministry of Internal Affairs in favour of the Client, as well as the cost of paying state duty in the amount of RUB 131 302. 

The decisions of the Eleventh Arbitration Court and the Arbitration Court of the Volga District upheld the judgement and the complaints of the Ministry of Internal Affairs. 

Details: On March 17, 2022, a State contract for the supply of goods for state needs (hereinafter referred to as the Contract) was concluded between the Federal State Institution “Volga District Directorate of Material and Technical Supply of the Ministry of Internal Affairs of the Russian Federation” (hereinafter referred to as the Ministry of Internal Affairs) and the Limited Liability Company “STK” (hereinafter referred to as the Client). 

Under this contract, the Client agreed to supply desktop PCs and laptops. The contract price is RUB 227 977 686. 

In order to ensure the execution of the Contract, Sberbank PJSC (hereinafter referred to as the guarantor) issued an Independent Guarantee (hereinafter referred to as the Guarantee). 

In accordance with the terms of the bank guarantee, at the request of the plaintiff, the guarantor accepted the obligation to pay at the request of the defendant, an amount equal to the price of the Contract, but not exceeding RUB 23 028 49,18, in case of non-performance or improper performance the plaintiff of obligations under the Contract, including obligations to return the advance payment, obligations during the warranty period, obligations to pay penalties (penalties, fines) provided for in the Contract, obligations to compensate for losses (if any).

Due to sanctions restrictions, the Client will not be able to deliver the goods and the Ministry of Internal Affairs exercised the right provided for by the bank guarantee and turned to the guarantor for payment of funds in full, that is, in the amount of RUB 23 028 049,18. The guarantor fully satisfied the defendant’s demand on August 10, 2022. 

Subsequently, the guarantor presented the Client with a demand for reimbursement of the funds paid under the guarantee. The client reimbursed this amount. 

Believing that the Client thereby suffered losses, and on the side of the Ministry of Internal Affairs there was unjust enrichment equal to the amount of money received under the guarantee, the Client appealed to the Arbitration Court of the Samara Region to the Ministry of Internal Affairs to recover the amount of unjust enrichment in the amount of RUB 23 028 049,18 rubles. 

By the decision of the Arbitration Court of the Samara Region dated November 28, 2023, the claim was partially satisfied: the amount of unjust enrichment in the amount of RUB 21 888 160,75 was recovered from the Ministry of Internal Affairs in favour of the Client, as well as the cost of paying the state duty in the amount of RUB 131 302. 

This court case is classified as difficult to rank in the system of Russian arbitration courts.

Its complexity lies in determining the range of legal circumstances that are relevant to the case and in the heterogeneous judicial practice on these circumstances: 

• whether, in principle, unjust enrichment arises on the side of the state customer in the circumstances of this case;
• in what cases could the state customer take advantage of the guarantee and the limits of its interpretation specifically in our case (what was agreed upon by the parties?);
• is it possible to recover legal costs from the losing party if the losing party (Ministry of Internal Affairs) is by force of law exempt from paying state fees as a state body. 

In addition, the recovery of a significant amount of RUB 21 888 160 from a government body in the absence of contractual grounds, based on tortious obligations, is a rare judicial practice in Russia. 

Lawyers from the Samara office of GRATA International supported this legal case in full from the very beginning: 

• a legal position on the case and a judicial strategy were formed;
• all necessary procedural documents were prepared during the consideration of the case and the Client’s interests were represented in courts of all instances. 

Note: based on the materials of this court case, an article was published in the media “Advocatskaya Gazeta” about the consideration of these cases (co-authors are lawyers of the bureau participating in this case) https://www.advgazeta.ru/pechatnaya-ag/403/

Dmitry Samigullin, Aleksandra Levenkova.