The trend on Astrent
K. I. RUSAKOMSKY IN DECEMBER ISSUE OF «THE CORPORATE LAWYER» MAGAZINE
THE TREND ON ASTRENT
Expert: Kliment Rusakomsky
Managing partner of Legal Group Paradigma
Until recently the protection of rights and interests of the claimant was absent, eliminating adverse effects associated with the pending execution of judicial decisions. Now we have astrent – the penalty in the case of default of the judicial act. How the courts apply it? Whether needs the claimant to specify the concrete sum of money? When there is any obligation to pay?
Long way to Russia
The institute of astrent is a form of financial incentive the debtor to the voluntary execution of the court decision by which he undertakes to perform certain actions in favor of the claimant. At application of astrent, additional expenses in the form of duty to pay money are assigned on the debtor, besides a duty to make certain actions up to the moment of the actual execution of the court decisions. Аstrent in any case don’t substitute public legal measures against the debtor, and acts as an additional civil guarantee of ensuring interests of execution creditors in the sphere of the property and personal non-property relations.
The motherland of astrent (from the French astreinte) is considered the France where judges in the nineteenth century resorted to this means of improving executive discipline of the debtors.
The term "astrent" is unknown for the Russian legislation, but in fact a regulatory framework for the widespread introduction of this mechanism in the domestic practice of law laid down in the Resolution of Plenum of the Supreme Arbitration Court dated of 04.04.2014 No. 22 (hereinafter –the Resolution No. 22). In this document is a stated competence of the creditor according to the obligation fixed in Articles 330, 395 and 809 of the Civil Code of the Russian Federation, such as:
- to require the infliction of penalty or other interest on the actual day of execution of the obligation by the debtor (point 1 of the Resolution No. 22);
- as a separate requirement to claim on warranty if take place the non-execution of court decision (point 2, 3 of the Resolution No. 22). Means the percent’s for use of the others person’s money for the amount as a consequence of the non-execution of the judgment awarded by court (to monetary requirements), money for the non-execution of the judgment (to non-monetary requirements).
Further development of astrent connecting with adoption of the Federal law dated of 08.03.2015 No. 42-FZ "Amending in the part one of the Civil Code of the Russian Federation", from which in the Civil Code was introduced the Article 308.3 "the protection of creditor’s obligation rights". In accordance with this provision for the non-execution of the court decision, on request of the claimant from the debtor may be charged a sum of money which by direct instruction of law is a kind of penalty. The size of this sum should be determined by the courts and based on the principles of fairness, proportionality and the avoidance of profiteering from illegal or unfair behavior.
For practice is important point 2 of the Article 308.3 of the Civil Code, which doesn’t exempt the debtor from liability for the non-performance or improper performance of obligations, even in the case of astrent application. This holds especially true in relation to monetary claims, when from the debtor after the entry into force a judicial decision and prior to its actual execution can be simultaneously charged both the interest for use of the others person’s money according to the Article 395of the Civil Code of the Russian Federation, and the money for the non-execution of court decision in time.
After the appearance of Article 308.3 of the Civil Code, point 2 of the Resolution No. 22 containing information about charge of interest for use of the others person’s money in the manner prescribed in Article 395 of the Civil Code, as a consequence of non-execution of the judgment (point 133 Resolution of Plenum of Supreme Court of the Russian Federation dated of 23.06.2015 No. 25), has lost practical meaning, and terminated. For so short period uniform practice of application amendments in the civil legislation couldn't develop. Courts mainly consider the cases in which astrent is used with reference to the Resolution No. 22. At the same time the originality of claim requirements defines some nuances of use of this institute.
All depends on the nature of the claim
From the moment of recognition point 2 of the Resolution No. 22 invalid, the courts reviewing the case on appellate or cassation procedure, haven’t grounds for application of astrent in the courts of first instance until 30 June 2015, because there is no grounds for its application, and in this situation it is impossible to use the Article 308.3 of the Civil Code of the Russian Federation. In this case, courts are limited by collecting from the debtor interests on all amounts for use of the others person’s money until the date of actual performance of the obligation under the Article 395 of the Civil Code of the Russian Federation.
The court pointed to the absence of grounds for the application both point 2 of the Resolution No. 22 in connection with its abolition, and the Article 308.3 of the Civil Code because the complaint was based on point 2 of the Resolution No. 22 (The Resolution of the Seventeenth Arbitration Appeal Court dated of 12.08.2015 No. 17АП-8790/2015-CC). This judicial act is interesting because the court recognized two independent requirements:
- about calculation of interest for use of the others person’s money as a species of liability for the breach of any obligation;
- about charging of interest as a responsibility measure for the non-execution of the court decision.
The court's position is agreed with the Article 308.3 of the Civil Code. Thus, there is a legal basis for inclusion both requirements in the statements of claim about collecting of money resources.
How to make
The basis for the court to consider the question of the application of astrent by point 1 of the Article 308.3 of the Civil Code is the creditor's claim. Considering termination of point 2 of the Resolution No. 22 and absence in the procedural law an order of the statement of relevant requirements, there are quite sharp questions: when it is possible to submit the requirement of astrent and how to issue it: in the separate statement of claim, in the request for pronouncement the additional decision or otherwise?
There are differences in order to make a claim about application of astrent for monetary and non-monetary requirements. point 3 of the Resolution No. 22 specifies that for the non-monetary claim this requirement is declared in the statement of claim or in petition in the process of litigation, i.e. in the process of the court before removal of court in the deliberation room.
There is a third method, referred to in par. 7 of the considering point: "If the plaintiff did not require the award of funds in the case of the non-performance of the judicial act and therefore the court hadn’t awarded it, and the judgment is not executed on the merits, the claimant may apply to the court which made the above decision, for the recovery of money for the non-execution of act". The final procedural decision in consideration of claimant’s application under the Article 324 of the Arbitration Procedure Code would be the definition (the Definition of the Arbitration Court of the Saratov region dated of 26.09.2014 on the case № A57-5294/2011).
It’s different, when we are talking about the application of astrent for monetary requirements. In this case there are no legal grounds for use of the Article 324 of the Arbitration Procedure Code. Courts ascertain the legitimacy of the claim about application of astrent only if the requirement have place before pending a decision on the merits. In other words, relevant requirements must be included in the initial claim or pending in order to change the ground and subject of the claim (The Definition of the Supreme Court of Russian Federation dated of 24.07.2015 No. 306-ЭС15-11012 on the case № A65-3721/2014, of 04.09.2015 No. 309-ЭС15-8875 on the case №A60-19047/2014).
The mechanism of additional decision is not working
Prefecture of the CAO of Moscow has addressed in Arbitration court with the claim to LLC "Spectrum-M" on recovery of debts and penalties. Requirements of astrent weren’t stated by the plaintiff. The court met the claim in full amount. Later, the Prefecture appealed to the court with a claim to pronounce the additional decision to charge percent for use of the others person’s money on the entire amount of money from the date of come into force judicial act to the date of its actual execution.
In satisfaction of this requirement it was denied, the decision of the court of first instance were upheld by the Nineteen AAC and the AC of the Moscow district. The latter court noted that the plaintiff when he turning to the court with a first claim don’t put forward requirements about collecting of percent for use of the others person’s money, which means that there are no grounds for further decision, which established in part 1 of the Article 178 APC RF (the Definition of the Arbitration Court of the Moscow district dated of 02.07.2015 No. F05-8192/2015 on the case № A40-45519/14). Thus, the requirement of astrent for monetary claims should be filed before making a decision on the merits from the court on the first instance or by presenting an independent claim.
It should be recognized, that the mechanism of additional solutions in this situation is not applicable.
How many hang in grams, or the Size of astrent
To the claimant for the non-monetary requirements it can be difficult to determine payable by the debtor sum of money for the unsatisfied judgment, because law in this situation doesn’t give clear guidance. Difficulties will have the execution creditors according to their monetary requirements which will base their requirements on the Article 308.3 of the Civil Code of the Russian Federation.
The law in this part sets uniform rules for determine the amount that must be payable by the debtor (the amount, determine by the court based on the principles of fairness, proportionality and the avoidance of obtaining benefit from illegal or unfair behavior), and it is normal that there will be no grounds for determination the size of astrent in the order provided by point 1 of the Article 395 of the Civil Code of the Russian Federation.
The exact amount that should be recovered from the debtor and the procedure for its determination should be set forth in claim or in the application for recovery of money for the non-performance of a judicial act. Some of guidelines for applicants are includes in section 3 of Ordinance No. 22. So, money awarded to the plaintiff from the debtor for the non-performance of a judicial act, can be established in a firm sum of money, as a lamp sum, or in the monetary amount, as a periodical payment. It is also acceptable progressive payment.
From our point of view, the applicants are quite free to establish their desired monetary amount for non-execution of the judicial act and the criteria of its establishment. However, at the same time have to be observed the basic restriction stated in point 1 of the Article 308.3 of the Civil Code.
MBI "Urban Management" (Rybinsk) justifying the amount that must be paid for the non-performance of a judicial act, proceeded at the rate of 1% for each day of delay, from the cost of the works performed under the contract with the debtor. This size of penalty was fixed in the contract between the debtor and the creditor. The courts accepted such procedure of determine the amount that should be recovered and satisfied by the claim of the claimant (The Resolution AC of the Volga-Vyatka region dated of 30.07.2015 No. Ф01-2677/2015 on the case №A82-8072/2014).
The applicants, referring to the long non-execution of the judgment (more than two years), asked to collect from the debtor 50 thousand rubles for everyone. In this case, any calculation hasn’t been presented to the court, the amount has been determined randomly. However, these requirements have been satisfied in full amount (The Resolution AC of the East-Siberian district dated of 24.08.2015 No. F02-3908/2015 in case №A19-9572/2011).
In this case the following circumstance attract attention: at the moment of making demands for compensation for the non-execution of the judicial act the act has been already executed, executive procedure has been ended by the actual performance. The Court of appeal has noted that "for award of money as compensation for expectation, it doesn't matter whether the judgment on the date of consideration is executed or not. Matter establishes the fact of expectation, i.e. delay of performance of judicial act ". In our opinion, such conclusion doesn't match the meaning of paragraph 1 of point 3 of the Resolution No. 22 according to which astrent is applied to simultaneous achievement of two purposes:
- inducement the debtor to timely execution of judgments;
- compensation the claimant for waiting.
Astrent unable to perform the assigned to him stimulating role if application doesn't reach at least both of called purposes. In the given example, compensation is very punitive in nature, becoming the measure of liability for the non-performance of a judicial act. This is contrary to legal entities of astrent. Given question is problematic and now doesn’t expressly permit in judicial practice.
There are examples of entirely different position: as the basis for refusal in satisfaction of the cassation complaint, it was stated on the fact of execution of the judgment at the time of filing the application for the recovery of compensation for the non-execution of court decision (The Resolution of the Far-Eastern district dated from 25.08.2015on the case № F03-3378/2015).
P. S. About astrent
Company lawyers should be interested so in the development of subject of astrent and its application in the light of its statutory definitions as a form of penalty, so in the distribution on him general norms of penalty. In addition also deserve attention applicability of astrent to cases within courts of general jurisdiction and its ratio with other measures of responsibility for untimely performance of the judicial act.