Civil law reform: a new block of amendments to the Civil Code of Russia
On 9 March 2015, Russian President Vladimir Putin signed a Federal Law titled Amendments to Part I of the Civil Code of the Russian Federation that bring changes to the Civil Code of the Russian Federation, some of which reflect aspects of foreign contractual law and deal with obligations. The law will come into effect on 1 June 2015.
With new amendments necessitate acting in good faith, even when breaking a contract.
Chapter 21 of the Civil Code of the Russian Federation has new regulations that introduce the concept of alternative and optional obligations, enabling a debtor to choose between two courses of action or to refrain from taking a certain step.
Section 1 of Article 395 of the Civil Code of Russia concerns the interest rate on borrowed funds in the event of a monetary obligation. The proposed percentage will be the average rates banks offer on deposits of individuals or of the creditor. The Bank of Russia will provide this information. Currently, the interest rate is based on the refinance rate. The new version of the law is not clear as to the period for calculating the rates, and the Supreme Court will provide clarification in this matter.
The document provides new ways to enforce obligations: independent guarantees, which extend the concept of a bank guarantee (Article 368 of the Civil Code), and the security deposit (Article 381.1 of the Civil Code). The independent guarantee supposes that the guarantor (a commercial organization), at the request of the principal, would be responsible for paying the third party (the beneficiary) a particular amount of money, apart from what is required. Under the new law, one party will pay another a certain sum to secure the performance of a monetary obligation, specified in the agreement, to fulfill a contract.
The law provides for a new Astrenta Institute to make cash awards in the event of an illegal act. SAC considered such a possibility in its Resolution of 4 April 2012, No. 22, Some issues about awarding claimants funds for lack of enforcement of an act, but there is yet no legislation on the matter. The new version of Article 308.3 of the Civil Code states that the court, at the request of the creditor, can award a sum of money to the creditor in the event of nonfulfillment of a legal act in the amount the court will determine, based on fairness, proportionality, and the need to prevent one from benefitting from illegal or dishonest behavior.
The new law also introduces enforcement institutions for the law regarding obligations that are analogous to English indemnity, that is, the compensation for new circumstances not connected directly with the violation of obligations. Article 406 provides that one party may need to reimburse another in certain circumstances, such as a loss resulting from an inability to perform an obligation or liability claims of a third party. The law contains a system similar to the English representations and warranties to compensate for false assurances.
The law provides for new types of contracts: a framework agreement, an agreement about options to sign agreements, an option agreement, and a contract with an on-demand performance or subscription agreement.
The amendments also introduce the notion of precontractual liability (culpa in contrahendo) for negotiating a contract with no real intention of reaching an agreement with the other party, and Article 434 of the Civil Code provides for damages in such cases. Damages may include the loss of opportunity for not signing an agreement and losses connected with the negotiations.
The link to the Russian version of this posting that includes a link to the complete version of the law is: http://artdelex.ru/rus/news/reforma-grazhdanskogo-prava-novyi-blok-popravok-v-gk-rf
