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Russia’s Finance Ministry appealed to the Constitutional Court of the Russian Federation for an explanation of a resolution

The Finance Ministry of Russia appealed to the Constitutional Court of the Russian Federation to clarify its Resolution No. 13-P, of 17 June 2013. This is the first such request from the Ministry of Finance to the Constitutional Court.

On 23 December 2010, the State Duma adopted Federal Law, No. 360-FL, On amendments to the Federal Law "On additional social security for crew members of civil aircraft” Part 2, Article 2, of the law canceled the restriction on surcharges for extra pension payments to crew members of civil aircraft. The legislature pointed out that the rule is retroactive and is valid from 1 January 2010. In this regard, the airline turned out to be in arrears in extra payments, from January to December 2010, for the pensions of aircrew members.

On 17 June 2013, the Constitutional Court adopted Resolution No. 13-P, which declared the provision unconstitutional because it retroactively worsened the position of the airlines. The Constitutional Court decided that the retroactive nature of the norm violates the Constitution of the Russian Federation since its retroactive provision unlawfully restricts the right of the payer of the contribution to freely use the payer’s property for business purposes.

In addition, the abolition of restrictions on the basis for calculating mandatory public pension contributions violates the prohibition of retroactive law because it worsens the position, stability, and economic conditions of taxpayers who make compulsory payments. It also negatively affects the principle of legal certainty. Recognizing the norm as unconstitutional, the Constitutional Court ruled that the fees paid to the Pension Fund of the Russian Federation should not be subject to refund or offset future payments. A contradiction between the ban on the return of overpaid credit payments and the need to compensate for actual losses from excess contributions to the Pension Fund appears in the Resolution of the Constitutional Court. While recognizing the norm as unconstitutional, the Constitutional Court did not explain how the airlines, which suffered losses from the application of the norm, will protect their violated rights.

After the adoption of the resolution, the Constitutional Court declared unconstitutional Part 2, Article 2, of Federal Law, No. 360-FZ, of 23 December, indicating the ban on the return of payments or the use of the payments to offset future claims, the airlines decided to use other ways to protect their violated rights.

The airlines are appealing to the arbitration courts about recovering damages that resulted from excess contributions to the Pension Fund. The arbitration courts and the Supreme Court concluded that the carriers have the right to collect the losses, which the legislature caused, from the Russian budget. The Constitutional Court, recognizing the rights of contributors that the unconstitutional law affected, did not restrict the airlines in choosing other ways to protect their rights, aside from the return of contributions and a credit against future payments.

Currently, the airlines are appealing to the arbitration courts to recover, from the Russian Federation, the losses that they incurred from the unlawful actions of the legislature, that is, the State Duma, and the executive, specifically, the Pension Fund of the Russian Federation. The defendant in this case is the Ministry of Finance of the Russian Federation, and compensation is to come from the federal budget.

At the moment, the claims of the airlines amount to more than RUB 900 million. JSC UTair Aviation (case No. A40-96861/2014) managed to recover the largest amount, RUB 157.8 million. Now, the Moscow Arbitration Court is hearing the case of JSC Aeroflot-Russian Airlines for the recovery of RUB 374.4 million (case No. A40-105803/2015). The budget losses, together with other requirements for satisfying the claims, may exceed RUB 1 billion, and it is not until June 2016 that the statute of limitations, for these cases, will expire.

In the UTair Aviation case, the Moscow Arbitration Court referred to a regulation of the Resolution of the Presidium of the Russian Federation, No. 6171/10, dated 29 September 2010, according to which the recognition of a normative act as invalid the moment a court decision enters into force. It should not prevent a person, who made payments, based on the illicit normative act, from restoring the subjective right for which this act provides. In addition, the Supreme Court of the Russian Federation, in the same case, pointed out that the state is responsible for damages it caused as a result of an improper regulatory legal act. As a result, the airlines have the right to choose how to protect their rights, except those means that, in this case, the Constitutional Court recognized as unacceptable. Furthermore, the Supreme Court agreed with the findings of the lower courts that the requirement of the state to compensate for damages or losses, resulting from the unlawful actions of its bodies, is justified, under Articles 16, 1064, and 1069 of the Civil Code.

The Russian Federation Ministry of Finance, in its appeal to the Constitutional Court of Russia, indicated, in the Constitutional Court Resolution No. 13-P, of 17 June 2013, that contributions are not a loss, therefore, it is not possible to use budgetary funds to reimburse for such “losses.”

In connection with the unresolved question about the admissibility of other ways to protect the plaintiffs’ civil rights, the Russian Ministry of Finance appealed to the Constitutional Court for an explanation of its decision, noting that the court did not provide a means to compensate for overpaid contributions to the Pension Fund. The broad interpretation of the resolution of the Constitutional Court is unacceptable; therefore, the demands for the airlines to recover such “losses” are unjustified and illegitimate.

Despite the dispute, it is uncertain whether the Constitutional Court will explain the resolution because part of the criteria for considering the admissibility of an appeal to clarify a Constitutional Court decision is to consider is the relationship between the decision and the original complaint. Since the court previously reviewed Part 2, Article 2, of Federal Law, No. 360-FZ, of 23 December 2010, for compliance with the Constitution of the Russian Federation, explaining the rules of civil law is unnecessary. In addition, the Constitutional Court rarely explains its decisions. In the period from 1995 to 2014, the Constitutional Court explained only six decisions.

If the Constitutional Court decides to clarify Resolution No. 13-P, of 17 June 2013, the participants of the civil case will see whose interests will have greater priority. Of course, the losses to the federal budget, resulting from the recognition of the norm as unconstitutional and the court’s award of damages, are huge, but the federal budget received additional funds, which the Pension Fund of the Russian Federation was not entitled to claim and now are subject to recovery in court. The Constitutional Court will face a choice between safeguarding the rights of market participants, through compensation for losses that the state caused, and protecting of the interests of the federal budget.