Summary of legislative amendments from january 29, 2019 to february 11, 2019

13 february 2019

Civil law:

Does a buyer need to return defective goods to a seller?

A woman purchased iPhone 6S, which went wrong a year later. She sent to Apple's Russian representative office a written complaint, demanding that the phone's value be repaid and that the moral damage be compensated for. The expert examination confirmed a defect in workmanship. After the expert examination, the buyer took the phone back. Apple's representative office agreed to repay iPhone's value to the woman, but only after its return to them.

The woman ignored this letter and filed to a court a suit on recovery of the phone's value, a penalty for the refusal to satisfy the consumer's demand voluntarily, compensation for the moral damage and the attorney's fees.

The first instance settle the claims partially and reduced the amounts of the compensation for the moral damage and the attorney's fees. The appeal instance affirmed the court decision, but supplemented it with the plaintiff's duty to return the phone to the defendant company within 10 days upon the effective date of the judicial act.

Apple's Russian representative office appealed the judicial acts in the Supreme Court and stated that the company was ready to settle the conflict amicably with the consumer, for which purpose it sent to her the message with the request to return the defective goods, but she refused and applied to the court.

Having heard all the arguments, the Supreme Court of the Russian Federation cancelled the appeal ruling and remitted the case to the appeal instance for fresh examination.

The specialists recommend that consumers return purchased goods of poor quality to their seller or manufacturer. And, if they refuse to receive such goods, the goods might be sent by mail.

The Federation Council plans to increase the consumer fraud penalty up to RUB 400,000

The senators have developed a legislative proposal, which will increase the punishment for consumer fraud ten times: individuals will have to pay RUB 10,000–20,000, officials RUB 30,000–40,000, and legal entities RUB 300,000–400,000.

In the opinion of the Federation Council's members, the increase in the penalties will discipline sellers of products of poor quality.

The Supreme Court has explained whether gifts of former lovers shall be returned after parting

A man presented to his girl-friend a car Mercedes-Benz, and after parting he made her sign a paper in which she undertook to return the car to him. Later on, the man filed a suit claiming that his former beloved enter into an agreement on compensation-free transfer into his ownership of the car, presented by him. It should be noted that the girl was an owner of the car based on the sale and purchase agreement. However, the paper, in which she promised to return the car to the plaintiff, but failed to perform the undertaking in due time, was submitted for the materials in the proceedings.

The defendant filed a counter claim on recognition of the paper as invalid and explained that the plaintiff took the paper from her by fraud.

The first two instances settled the plaintiff's claims and compelled to return the property to the former lover, referring to the inadmissibility of the unilateral repudiation of the obligations.

The Supreme Court of the Russian Federation considered such position of the courts as inconsistent. In preparing the case for the proceedings, the court determined neither a nature of legal relations in dispute nor an applicable law. Moreover, the courts did not take into consideration that the right to repudiate an agreement may be stipulated in regulations on certain types of agreements.

Besides, the fact that the sale and purchase agreement was not disputed and the girl was the owner of the car under it, not under a gift agreement, was not taken into consideration.

Finally, the case was remitted to the appeal court for fresh consideration.

The Bank of Russia suggested that the limit of payments for life and health injury under a third-party liability insurance be increased

The Central Bank of the Russian Federation approved the suggestion of the Ministry of Finance that payments under a third-party liability insurance be increased from RUB 500,000 to RUB 2,000,000. In accordance with the current laws, relatives of a person, deceased in a plain or train, may get RUB 2,000,000 under an insurance policy, and family members of a person, deceased in a motor vehicle crash, may obtain a lesser compensation of RUB 500,000. Experts stated more than once that the difference in payments was unfair. Therefore, the Ministry of Finance suggested that these limits be equaled, and the Central Bank supported this initiative.

Insurers note that, in the event of adoption of these amendments, an insurance policy will get more expensive by 10-15%.

The Supreme Court has explained how to obtain the ownership of a land, for which there are no documents

A woman brought an action against municipal authorities, which refused to register her title to the land, acquired under her father's will. The man got the plot for garden works in 1990s. When entering upon the inheritance, it was found that any documents of title for the land were missing. The courts of three instances refused to recognize the woman's title, as the plot of land was given to the man for temporary use. Hence, she did not acquire either a right of perpetual use or a right of lifetime inheritable possession.

The Supreme Court did not agree to the position of the lower-level courts.

When the land was given to the man, the Land Code of the Russian Soviet Federative Socialist Republic was in force in the country. And it stated that state-owned lands might be transferred to individuals by soviets of people's deputies for use, lifetime inheritable possession and into ownership.

Besides, the Supreme Court of the Russian Federation mentioned the law "On enactment of the Land Code of the Russian Federation", stating that, if a land was allocated for a private farm or fruit and vegetable gardening before enactment of the Land Plot, a person, holding such a plot, shall be entitled to register a title to it.

If an individual has a document, on the basis of which a plot was given to it for a personal farm before enactment of the Land Code of the Russian Federation, and it does not state a right, on which such a plot was provided, it shall be considered to be provided to an individual on the right of ownership. As a result, the Supreme Court reversed judgements of the lower-level courts and sent the case back for a new trial.

The court has explained a legal nature of agreements with carsharing companies

In summer 2018, a man got a driver's licence and decided to use carsharing services. However, all the companies refused to execute a car lease agreement. The rules for use of vehicles for car sharing demand that the driving experience be at least one year, and two years in some services. The man filed to the court a claim on compulsion to execution of the agreement and on compensation for the moral damage. He stated that the car lease agreement was, in its nature, a hire contract, being public, and, therefore, it should be entered into with every person, applying to the company.

Representatives of carsharing services did not agree to that position, as they were of the opinion that "carsharing" agreements were, in their nature, agreements on lease of crewless vehicles and, therefore, they were not public contracts.

Their position was supported by the Lefortovo District Court of Moscow. The lease of vehicles is governed by special regulations of the Civil Code of the Russian Federation and, consequently, they, but not the regulations on a hire contract, should be used in disputes. In accordance with the provisions in Article 426 of the Civil Code of the Russian Federation and the nature of the legal relations in dispute, agreements on short-term lease of vehicles are not public contracts. Therefore, carsharing services may establish for car lessees additional requirements and restrictions for execution of agreements, on the basis of the freedom-of-contract doctrine.

At the moment, the plaintiff has filed an appeal petition to the Moscow City Court.

The Supreme Court has told whether gift cards may be returned back to a shop

In performing an inspection of the Вershka retail chain by the Federal Supervision Agency for Customer Protection and Human Welfare (Rospotrebnadzor), the violation of consumer rights was detected. The inspecting authority found a provision, prohibiting from returning purchased cards, in the terms and conditions for use of gift cards. The shop was held liable under Article 14.8 Part 2 of the Administrative Offences Code of the Russian Federation (violation of other consumer rights).

Bershka did not agree to Rospotrebnadzor's position and applied to the Moscow City Commercial Court with a claim on cancellation of the order on penalty. The court supported the shop's position and stated that the purchase of a gift certificate was, in its legal nature, an option agreement. According to the Civil Code of the Russian Federation, under the option agreement, either party may demand, subject to the terms and conditions specified in the agreement, that the other party make the specified actions within the established dates. And, if the authorized party does not state its demand within the stated dates, the option agreement shall be terminated and the payment shall not be repaid. If the gift card might be returned, it would lose its main function, as it could be replaced by monetary funds against the grantor's will. In this instance, the circulation of certificates would approach bank transactions, being a licenced activity. Also, it would create the possibility of uncontrolled cash assets turnover within the Russian Federation using certificates, which fact also entails potential corrupt practices.

However, the Ninth Commercial Appeal Court supported the position of Rospotrebnadzor. The court stated that the laws of the Russian Federation did not include any special rules for goods, bought at discount, in the sale or under a gift certificate. These methods of sale of goods are solely promotional events and do not change the civil law relations between a seller and a consumer as to exchange and return of goods, bought by such a method. Therefore, in these legal relations, the regulations on retail sale should be applied by analogy, and the purchased gift cards are a confirmation of making an advance payment by consumers and of their right to buy goods in future. The shop may not retain the advance payment; otherwise, this fact may be indicative of a seller's unreasonable gains. As a result, the appeal instance reversed the judgement of the Moscow City Commercial Court, and the Supreme Court of the Russian Federation denied Bershka the transfer of the cassation petition for consideration.

Inheritance law:

The Supreme Court has told when the right of claim in respect of moral damage may be inherited

The Saki District Court of the Republic of Crimea compelled two persons, who committed an offence in respect of a woman, to pay to her compensation for the moral damage, caused by the offence. Later on, the Supreme Court of Crimea reduced the amount of the compensation from RUB 250,000 to RUB 100,000 from each of them.

After a short time, the woman died, failing to receive the compensation. Her daughter applied to the Supreme Court of the Republic of Crimea with a petition on procedural succession. However, the court denied, giving the reasons that the legal relations in dispute were not included in the estate and they did not allow legal succession, as the claim on compensation for the moral damage was of personal nature. The daughter applied to the Supreme Court of the Russian Federation.

The Collegium for Civil Cases of the Supreme Court of the Russian Federation noted that the lower-level instance committed a violation. If the compensation for the moral damage was awarded to the plaintiff, but the plaintiff failed to receive it while alive, this money shall pass to the estate and may be received by heirs.

The judgement of the Supreme Court of the Republic of Crimea was cancelled, and the case was sent back for fresh examination.

Banking law:

Now your credit history may be obtained through the Public Services Portal

As of January 31, you may learn your credit history and credit score free of charge at the Public Services Portal, but maximum twice a year.

This new feature will help to assess chances for a credit quickly and without additional expenses. However, you should remember that a good score does not guarantee granting of a loan, because a final decision is made by a bank.

Deputies want to compel payment service providers to inform clients of blocking of their accounts

This proposed law will compel payment service providers to inform individual clients of blocking of monetary funds on their accounts promptly on a day of blocking, stating a reason.

Recently, persons' complaints in respect of blocking of accounts without a notice to clients have become more frequent. As the deputies note, this leads to significant loss and other negative consequences caused by unavailable access to funds, when needed.

Tax law:

The President of the Russian Federation suggested that the amnesty of capital be prolonged for a year

Putin suggested that the term of the amnesty be increased by one more year for businessmen, who transfer their monetary funds to Russia and register their business in special administrative districts, on the island of Oktyabrskiy in Kaliningrad and on the island of Russkiy in Vladivostok.

The President also recommended that entrepreneurs be released for one year from payment of personal income tax from profits of foreign companies, controlled by them, if they become tax residents of the Russian Federation.

Deputies suggested that the tax deduction for training be increased

The legislative proposal provides for an increase in the social tax deduction for training of children by the intramural form from RUB 50,000 to 100,000 and in the limit amount of the social tax deduction from RUB 120,000 to 240,000.

The initiative is caused by the growth in the cost of training. It rose 5 times over the last ten years.

Intellectual property right:

The court dismissed the suit of the Russian Authors Society on recovery of royalties for music in a taxi

When going by taxi, a representative of the Russian Authors Society (RAO) established a fact of illegal use of musical works, included in the repertoire of the Russian Authors Society. The Society sent a complaint before action to the carrier and proposed that the conflict be settled amicably. However, the carrier ignored the complaint. The Society believed that its rights were infringed, as the taxi company neither entered into a licence agreement with it nor paid a royalty remuneration, and, consequently, the pieces of music were used illegally in the car. The Russian Authors Society filed to the court a suit on collection of compensation for infringement of the exclusive right, for further payment to right holders. The video recording, confirming the illegal use of the musical compositions by the defendant in the passenger compartment of the taxi, was submitted for the materials in the case. The Moscow City Commercial Court satisfied the claim to the full extent.

However, the Ninth Commercial Appeal Court cancelled this judgement and stated that the video recording did not confirm the fact of infringement of the plaintiff's exclusive rights by the defendant itself, as it was made by a phone and did not enable to determine a source of sound exactly. To elicit a fact of illegal playback, the video should be recorded at least from two points. Moreover, it was impossible to ascertain reliably from the presented video recording that the musical tracks were played back by the defendant's driver.

Also, the court of the appeal instance noted that the passenger compartment of the taxi might not be recognized as a place, open for free attendance, as the entry into the taxi passenger compartment was not free of charge.

At the moment, the Russian Authors Society has filed a cassation petition.

Social security law:

Deputies suggested that a leave after childbirth be granted to fathers

Deputies of the State Duma of the Russian Federation suggested that a 10-day leave after childbirth be granted to fathers. This initiative was forwarded to Maksim Topilin, the Minister of Labour and Social Protection.

The leave is planned to be added to the existing unpaid 5 days, which a farther may take after childbirth.

Enforcement proceeding:

It will be easier for bailiffs to search for debtors

The draft law on new authorities of bailiffs for interstate search for persons has been adopted in the first reading.

Court bailiffs will have a possibility to interact with competent authorities of foreign states in the manner, specified in international treaties. In particular, this refers to co-operation of Russia with CIS countries.

Bailiffs will be able to ask for information about debtors, interview individuals, make inquiries, study documents and inspect property.

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