RUSSIAN CIVIL LEGISLATION: CHANGES IN CASE LAW
ALONGSIDE changes made this year to Russian civil legislation as part of an ongoing modernization process of the Civil Code, some notable changes have also emerged in case law.
Russian courts currently have changed their traditional
interpretation of many statutory regulation issues, and
are taking new approaches. This has affected the
implementation of existing statutes by parties to
contractual relationships. Below we point out some
examples of such changes in the case law.
“FUTURE” REAL ESTATE ACQUISITION
In general, the acquisition of “future” property
(property which does not exist upon a contract signing,
but will exist upon the contract’s closing) is allowed by
section 2 article 455 in the Civil Code of the Russian
Federation. However, the established case law in Russia
has traditionally maintained the position that such
acquisition is in fact impossible: the courts deem
contracts void where the subject matter is not
identified. At the same time it’s been widely recognized
that the cadastral number of the real property must be
the sufficient identification of such property in the
contract. From the statutory perspective, new real
property obtains its cadastral number only after the
completion of its construction.
In a recent Decree of the Plenum of the Supreme
Arbitrazh Court of the Russian Federation issued on
July 11th, 2011 (No. 54), the Court changed this approach
and gave the new following guidelines to the lower
courts in deciding on similar matters.
According to position of the Supreme Arbitrazh
Court, the parties to the sale purchase agreement of
future real estate are not required to indicate the
cadastral number of the acquired real property in the
agreement. The sufficient individualization is
permissible by other means like detailed descriptions of
future locations, future footage of the premises, etc.
Hence, absence of the cadastral number shall not
constitute a ground for voiding the agreement.
The Supreme Arbitrazh Court presumes that in the
case of a future real property sale the seller would first
become its owner by registration of the title to such
property upon completion of construction. Accordingly,
in case of housing construction the investor financing
the purchase of the future dwelling should become the
second owner in the chain of ownership after obtaining
the title from the initial owner. The initial owner should
assume the entity that has completed construction of
the relevant real property.
JURISDICTION IN REAL ESTATE DISPUTES
On May 26th, 2011, the Constitutional Court of the
Russian Federation adopted Judgment No. 10-P, which
confirmed the arbitral tribunals’ competence to decide
on disputes pertaining to real property. The possibility
of referring such disputes to arbitral tribunals was
discussed for a long time.
The relevant proceedings were initiated upon the
request of the Supreme Arbitrazh Court. According to
the position taken by state arbitrazh courts in previous
case law, the state’s registration of transactions and
other legal actions with immovable property constitutes
a “public element.” Thus, the presence of a public
element precludes consideration of such disputes by
the non-state court. This position was confirmed in the
Informational Letter of the Presidium of the Supreme
Arbitrazh Court of the Russian Federation dated
December 22, 2005, No. 96.