Liability for breach of obligations | White & Case LLP International Law Firm, Global Law Practice
Liability for breach of obligations

Liability for breach of obligations

Resolution of the Plenum of the Supreme Court of the Russian Federation No. 7 dated 24 March 2016 'On courts applying certain provisions of the Civil Code of the Russian Federation concerning liability for a breach of obligations'.

On 24 March 2016, the Supreme Court adopted Resolution No. 7 of the Plenum of the Supreme Court of the Russian Federation "On courts applying certain provisions of the Civil Code of the Russian Federation concerning liability for a breach of obligations" (the "Resolution").

The Resolution clarifies particular issues of liability for a breach of obligations, taking account of amendments to Part 1 of the Civil Code of the Russian Federation (the "Civil Code"), such amendments having come into force on 1 June 2015.1

The Resolution is highly significant for practice, since it provides a much-needed clarification as to important civil law issues. For the three months or so that the Resolution has been in effect, its provisions have been applied in almost three thousands decisions adopted by lower courts.2 In this overview, we analyze the most interesting of these.

Applying rules for the recovery of losses

The aim of the Resolution is to simplify the recovery of losses through recourse to the courts and to make this an efficient tool for protecting a right that has been violated.

The Supreme Court highlights the standard and burden of proof for losses, underscoring that when an amount of losses is proved, it is sufficient to prove their existence to a reasonable level of certainty.3 Further, the presumption that there is a causal link is introduced. It is sufficient for a claimant to prove that the losses it has incurred are an ordinary consequence of a breach of the obligation.4 In practice, a court has relied on this as a ground for concluding that a causal link is deemed to exist between a company's expenses on restoring its accounting documentation and an administrative receiver's refusal to pass such documents to a new administrative receiver.5

The Resolution aims to simplify the proof of loss of profit. For this, it is sufficient to supply any evidence that profit could have been generated, including by making a calculation based on the profit the claimant received before the obligation was breached.6

The Resolution clarifies particular aspects of applying rules for force majeure circumstances. On the whole, it repeats the positions formulated by the Supreme Commercial Court of the Russian Federation (the "SCC"). An important modification is that, when a force majeure circumstance arises, a debtor is obliged to notify a creditor of the onset of such circumstance.7 In turn, the creditor is vested with the right to repudiate the contract when force majeure circumstances occur.8 However, the Resolution does not resolve whether, by virtue of the law, the debtor has the same right to repudiate the contract, in particular if the force majeure circumstances remain in effect over a protracted period of time.

 

Click here to download PDF (English and Russian).

 

1 Federal Law No. 42-FZ dated 8 March 2015 'On amending Part 1 of the Civil Code of the Russian Federation' ("Law No. 42-FZ").
2 Most references relate to the issues of recovering a penalty, reducing the amount of a penalty and recovering interest under article 395 of the Civil Code.
3 Para 1 of clause 5 of the Resolution.
4 Para 2 of clause 5 of the Resolution.
5 Resolution of the Commercial Court for the Urals Circuit No. F09-2267/16 dated 26 April 2016 in case No. A60-21369/2015.
6 Para 3 of clause 3 of the Resolution.
7 Clause 10 of the Resolution.
8 Clause 9 of the Resolution.

 

This publication is provided for your convenience and does not constitute legal advice. This publication is protected by copyright.
© 2016 White & Case LLP