The Chamber of Industry and Commerce of the Russian Federation discussed how court rulings are being executed in the territory of the Central Federal District

An enlarged session of the Subcommittee on Anticrisis Management of the Committee on Security of Entrepreneurial Activity of the Chamber of Industry and Commerce of the Russian Federation took place on October 31, 2011. The participants of the session discussed problematic questions of institutionalization of the procedures of bankruptcy and execution of decisions of the arbitration courts in the territory of the Central Federal District. Reports were delivered by:

• Nikolay Getman, Director of the Department of Economic Security of Entrepreneurship of the Chamber of Industry and Commerce of the Russian Federation;
• Anatoly Vyborny, Chairman of the Subcommittee on Anticrisis Management of the Committee on Security of Entrepreneurial Activity of the Chamber of Industry and Commerce of the Russian Federation;
• Oleg Sviridenko, Chairman of the Federal Court of Arbitration of the Central District;
• Elena Raitskaya, Chief of Section of the Department of Innovational Development and Corporate Management of the Ministry of Economic Development of Russia;
• Sergey Bogdanov, Deputy Chief of the Moscow Department of the Federal Bailiff Service;
• Yury Fedorov, Deputy Chairman of the Subcommittee on Anticrisis Management of the Committee on Security of Entrepreneurial Activity of the Chamber;
• Partner at the Law Firm "YUST", Advocate Artem Kukin.

The event was opened and presided by Anatoly Vyborny. He stressed the urgency of the event’s topic and told the participants about the stages of the work of forming the Russian legislation on insolvency and bankruptcy. He believes that the society needs clear-cut rules, which protect the creditors’ rights and do not violate those of the debtors. The bankruptcy institute should not be regarded as a means to seize alien property. System problems, such as the bankruptcy of individuals, transborder insolvency, rehabilitation procedures, as well as the issues of education and retraining trustees in bankruptcy also wait to be resolved. Besides, cases of sales of pledged property at clearly lowered, in the debtors’ opinion, prices are being criticized.

The speech by Artem Kukin, Partner at the Firm, who had presented his vision of the existing problems, provoked the participants’ interest. For example, he explained that, pursuant to Article 91 of the Basic Legislation on Notarial Activity, an execution inscription could only be put by a notary on a pledge agreement in the case the claims were indisputable. The very fact of the notary receiving objections from the debtor or the pledgor evidences the existence of a dispute. Therefore, the rules of enforcement against the pledged property by an execution inscription do not work in practice.

The grounds for suspending enforcement proceedings are another stumbling block. Debtors, pledgors and guarantors actively appeal against the bailiffs’ resolutions, sometimes alleging pure formalities.

A.Kukin noted: “The issue of which court should consider the complaints against the bailiffs’ actions – a court of arbitration or common law court - should be kept in mind. The Supreme Arbitration Court of the Russian Federation (SCA) believes that it has the exclusive competence for this – see the Resolution №11 of the Board of SCA dated 09.12.2002. The Supreme Court of the Russian Federation (SC) has the opposite view – see the Digest of Court Practice of the SC for the second quarter of 2004 dated 16.10.2004. This results in the following: first a dishonest debtor turns to a court of arbitration and then requests that the case be dropped for the motive of wrong jurisdiction”.

In this connection, it was suggested to shorten the time periods for considering the complaints filed within the framework of execution proceedings and to legally decrease the number of motives for their suspension, as measures to raise the level of protection of the exactors’ rights.

The event ended with a press briefing. In particular, Arthur Trapitsyn, First Deputy Chairman of the Subcommittee on Anticrisis Management of the Committee on Security of Entrepreneurial Activity of the Chamber, Chairman of the Council of Non-Commercial Partnership “Self-Regulating Organization of Trustees in Bankruptcy “Merkuriy”, voiced the plans to create an international center of trustees in bankruptcy, where an exchange of opinions on the issues of improving the anticrisis management and bankruptcy legislation would be held.