Draft law: respondents in arbitration proceedings will be obliged to pay for the non-performance of non-cash obligations

A suggestion has been made to the State Duma to oblige the respondents in arbitration proceedings to pay the claimant for the period of non-execution of the court act on obligations not involving exaction of money. The court will fix the amount and the time of payment according to the respondent’s capabilities.

The draft law No. 258289-6, moved in the lower chamber of the Parliament by Rinat Hayrov, Ayrat Hayrullin and Irek Boguslavsky, all of them form the Edinaya Rossia faction, suggests expanding part 1 of Article 91 of the APC (Security Measures) with the following clause: “Imposition on the respondent of the obligation to pay to the claimant the monetary amount as fixed by the court for the period of non-execution of the court act, the content of which is: the respondent’s obligation to perform certain actions not involving exaction of monetary amounts or transfer of property, or the obligation to refrain from certain actions”.

These changes to the APC will improve the execution of court acts in the courts of arbitration, or so the authors of the draft believe. The explanatory note on the draft law says: “The Russian court practice includes a significant limitation, which prevents the execution of claims to perform obligations not connected with exaction of monetary amounts, [when] a court is not able to ensure the execution of [such] court act”. The deputies are convinced: “The negative attitude of Russian courts to the upholding of such demands is based on the impossibility to actually enforce the performance of [such] obligations [on the respondent]”. To be more convincing, they cite an example, when a court dismissed a claim to compel the debtor to perform his duty of taking care of a forest, despite the fact that the time limits and the works were detailed in the project of the forest development and in the schedule to the agreement. The judge saw it in the following way: by passing such judgment, he would be obliged to “fix the procedure, mechanism and time limits for the performance specifically, ascertain the possibility of actual performance [thereof]”.

The authors of the draft insist that the suggested provision does not contradict the current Russian legislation, since, pursuant to part 1 of Article 91 of the APC, the courts may take security measures not stipulated by law (“the court of arbitration may take other security measures”).

However, there is another point of view on the initiative of the Edinaya Rossia members. Advocate Alexander Bolomatov, Associated Partner of the Law Firm "YUST", said to Pravo.Ru: “This measure might become an efficient way to ensure the execution of judgments, but it alone, without limitations and corrections, endows the court with an immense executive power, which could lead to abuses. It is obvious that, should the provision be adopted, the courts will be afraid to employ it and will decide to await explanations by the HCA of Russia”. Meanwhile, notes the advocate, the fate of the money paid by the respondent under security measures remains unclear in the event of a judgment in his favor. A.Bolomatov concluded: “Formally, the money paid in the form of a fine may be exacted from the claimant, even though the fine is credited to the budget. Therefore, said norm by itself, without additional mechanisms of its implementation, may only do harm”.

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