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Defence Ministry, RZhD battle over railways
Even though Russian Railways (RZhD) is accustomed to court proceedings, it does not often spar with state bodies, especially the Defence Ministry. However, a year ago, under the leadership of Anatoly Serdyukov, the Ministry filed a suit against RZhD, claiming that RZhD had illegally destroyed railways owned by the Ministry. Although there were doubts as to whether the Ministry actually owned the railways, it was obliged to pursue the suit to the end in the face of the recent high-profile scandal.
The Ministry inherited 12.3 km of railways in the village of Shepelevo, Leningrad Region, at the end of 2005. According to the Ministry, the state unitary enterprise 18 Arsenal Navy used the main lines, which were built from 1936-1950, to deliver cargo to military towns. The rails passed through four land plots of the Ministry, but it was never able to take full advantage of them. After several months, the Federal Property Management Agency decided that the railways were now owned by the Federal Computer Centre for Market IT; however, following a long judicial process, the Ministry was able to have this decision overturned. In 2009, however, the federal state unitary enterprise Investment Activity Directorate obtained ownership of these railways.
At the same time, another process was underway. Specifically, in 2007, an RZhD affiliate in St. Petersburg signed an agreement with the GIK construction company to deconstruct the railways. According to the Ministry’s calculations, it lost RUB 210 million as a result, and this money should have been used to restore the main lines. In June 2012, the Ministry filed a lawsuit against RZhD for compensation arising from this loss. The case lasted for two years, with the court ruling that the Ministry had not proved ownership of the disputed railways, as the Ministry had not produced a property registration certificate. Additionally, the court was not clear as to why the Ministry had taken several years to dispute RZhD’s ownership. At the end of May, the Moscow City Arbitration Court ruled against the claim.
RZhD has informed RBC daily that “the main lines were the property of RZhD and were transferred to the company as indicated in a number of documents”. Furthermore, RZhD has added that there was no need to use the railways, among other reasons; therefore, the decision was taken in 2007 to deconstruct them. The Defence Ministry has not responded to RBC Daily; however, according to the court docket, the Ministry has continued with its suit, as there was a hearing on this matter on 29 July in the appeals court.
Maxim Sokolinsky of ART DE LEX believes that the Defence Ministry has a slim chance of winning the suit owing to having let the period for action expire. “Moreover, it seems that the matter has to do with different objects, and there are serious doubts that the Ministry may be a plaintiff in this case”, states Mr. Sokolinsky, who reckons that initially the courts should have been used to ascertain to whom the railways actually belonged. It seems as though the Ministry at some point lost track of what it owns, so it began taking any and all steps to seek compensation for loss of the railways.
The Ministry inherited 12.3 km of railways in the village of Shepelevo, Leningrad Region, at the end of 2005. According to the Ministry, the state unitary enterprise 18 Arsenal Navy used the main lines, which were built from 1936-1950, to deliver cargo to military towns. The rails passed through four land plots of the Ministry, but it was never able to take full advantage of them. After several months, the Federal Property Management Agency decided that the railways were now owned by the Federal Computer Centre for Market IT; however, following a long judicial process, the Ministry was able to have this decision overturned. In 2009, however, the federal state unitary enterprise Investment Activity Directorate obtained ownership of these railways.
At the same time, another process was underway. Specifically, in 2007, an RZhD affiliate in St. Petersburg signed an agreement with the GIK construction company to deconstruct the railways. According to the Ministry’s calculations, it lost RUB 210 million as a result, and this money should have been used to restore the main lines. In June 2012, the Ministry filed a lawsuit against RZhD for compensation arising from this loss. The case lasted for two years, with the court ruling that the Ministry had not proved ownership of the disputed railways, as the Ministry had not produced a property registration certificate. Additionally, the court was not clear as to why the Ministry had taken several years to dispute RZhD’s ownership. At the end of May, the Moscow City Arbitration Court ruled against the claim.
RZhD has informed RBC daily that “the main lines were the property of RZhD and were transferred to the company as indicated in a number of documents”. Furthermore, RZhD has added that there was no need to use the railways, among other reasons; therefore, the decision was taken in 2007 to deconstruct them. The Defence Ministry has not responded to RBC Daily; however, according to the court docket, the Ministry has continued with its suit, as there was a hearing on this matter on 29 July in the appeals court.
Maxim Sokolinsky of ART DE LEX believes that the Defence Ministry has a slim chance of winning the suit owing to having let the period for action expire. “Moreover, it seems that the matter has to do with different objects, and there are serious doubts that the Ministry may be a plaintiff in this case”, states Mr. Sokolinsky, who reckons that initially the courts should have been used to ascertain to whom the railways actually belonged. It seems as though the Ministry at some point lost track of what it owns, so it began taking any and all steps to seek compensation for loss of the railways.