The ubiquity of COVID-19 has raised a huge number of issues, a number of which are addressed to the courts. The legal community around the world had to take a fresh look at issues such as procedural time limits, statutes of limitations and force majeure circumstances.
The Supreme Court of the Russian Federation made an attempt to answer these and other questions in its Review published on 21 April 2020 (http://www.supcourt.ru/press_center/news/28855/) (hereinafter "the Review"). All Russian lawyers eagerly awaited this document, but the drafts of the Review that were available in the Internet did not bode well and were seriously criticized. Let us try to find out what the Supreme Court of the Russian Federation has done (or has not done). It should be noted that in the analysis below we have focused on commercial disputes.
IS IT POSSIBLE TO DELAY, SUSPEND OR EXTEND?
Thus, according to the Review, the court may delay the trial, suspend the proceedings or extend the time limits of a particular case, but subject to the specifics of each such case. The issues of delay or suspension shall be adjudicated by the judge examining the case on his own, and the issue of extension of time limits (in this case, the Supreme Court of the Russian Federation apparently means the term for consideration of the case) – by the chairman of the respective court. The Review sets forth the following criteria that should be taken into account when making such decision (1) the opinion of the parties to the proceedings and (2) the regime that has been introduced in the region where the respective court is located.
Moreover, as far as suspension is concerned, the Review refers us to paragraph 4 of Article 144 of the RF Arbitration Procedural Code which is not applicable to legal entities. The Review does not contain any other clearer criterion. Moreover, the Review does not address some particular questions, for example, what should be done in a situation when one party to the proceedings insists on suspension and the other party objects and insists on consideration of the case. It is also not clear what rules judges should comply with when "moving" a case from, for example, an appeal instance in one region to a cassation instance in another region, or when referring a case to a court in another region, provided that the restrictive measures imposed may vary significantly from region to region.
COVID-19 VS PROCEDURAL DEADLINES
According to the "general" position set forth in the Review, non-working days from March 30 to April 30, 2020 introduced by the Decree of the President of the Russian Federation dated March 25, 2020 (https://rg.ru/2020/03/26/prezident-ukaz206-site-dok.html), are included in the procedural time limits and do not constitute grounds for their transfer to the first working day following such non-working days (May 6, 2020), since these non-working days do not apply to federal government bodies. This involuntarily raises the question of whether the position of the Supreme Court of the Russian Federation is only an "internal instruction" or it should also apply to the parties to the court proceedings?
For arbitration courts, for some unknown reason, the Review introduces a separate rule according to which the court has the right on the first working day (May 6, 2020) to delay the trial and schedule a new trial session (within one month). Moreover, the Supreme Court of the Russian Federation in the Review points out the possibility to restore procedural deadlines, if they are missed due to the justifiable reasons. The list of justifiable reasons, as expected, is related to the identity of the applicant for such restoration and will most likely not work for legal entities and, as a result, will not be effective in relation to a huge number of commercial disputes.
COVID-19 VS LIMITATION PERIOD
With regard to the impact of COVID-19 on the limitation period, the Supreme Court of the Russian Federation takes a similar "general" position as it is referred above in relation to the procedural terms, according to which non-working days within the period from March 30 to April 30, 2020 cannot be considered as non-working and, therefore, are not constitute grounds 2 for postponing (1) the terms of performing obligations and (2) the limitation period. The reason for this, according to the Review, is that non-working days should be the days that are non-working for everyone and, given that, these days are not non-working for some activities, they cannot be considered as non-working. This is a very strange argument, because, firstly, it contradicts the Decree of the President of the Russian Federation, and, secondly, it is extremely illogical, for example, if we compare the activities of law enforcement agencies that work even on non-working days with all other activities.
The Supreme Court of the Russian Federation connects the possibility of suspension of the limitation period with recognition or non-recognition of COVID-19 as a force majeure circumstance, which is left for discretion of a particular court with reference to "emergency, inevitability and irreducibility". Taking such argumentation, we suppose that one should not seriously rely on the possibility to suspend the limitation period and especially in commercial disputes. The possibility to restore the limitation period with reference to COVID-19 is available for individuals only, as specified in the Review, and, therefore, this mechanism is not suitable for commercial disputes.
IS COVID-19 A FORCE MAJEURE?
As mentioned above, the question of whether or not COVID-19 is a force majeure will have to be answered by the court on a case-by-case basis and, therefore, such recognition cannot be universal and applicable to all cases. Obviously, courts will have to find a connection between the effects of COVID-19 and a specific obligation which has not been performed. But the following exception was set forth, according to which it will be possible to avoid liability for failure to perform an obligation due to the lack of funds for its performance if it is related to (1) the restrictive measures introduced, and (2) whether the actions of a particular party may be considered "reasonable and careful" (in order to assess the actions of such a person, courts will have to compare them with the actions of other persons from the same sphere of activity). This approach may, unfortunately, make legal practitioners smiling, since the latter are well aware of how formalistic most judges are when the adjudicate on matters left for" their judicial discretion".
The Supreme Court of the Russian Federation has also confirmed that if COVID-19 is recognized (apparently by a court) as a force majeure circumstance, the debtor will not be liable for the delay in performing such an obligation and the losses caused by such failure. The review also points out the possibility (if COVID-19 is recognized by the court as a force majeure circumstance) for the creditor to terminate its obligation. The debtor is not given such a "special" option, which is extremely odd, as it leaves the debtor as a "hostage" in a situation with the introduced restrictions and dependent on the decision of the creditor. Apparently, it is assumed that the debtor will have to refer to the provisions of Articles 416, 417 and 451 of the Civil Code of the Russian Federation to terminate the obligation on his initiative.
CONCLUSIONS
To sum up all the above, we would like to note that the Supreme Court of the Russian Federation in its Review not only failed to answer majority of questions, but in some cases definitely created even greater confusion. For example, the final status of the days from March 30 to April 30, 2020 is not clear at all. In addition, the Supreme Court of the Russian Federation has not clearly determined whether the COVID-19 pandemic is a force majeure or not, and on the basis of what criteria parties in the proceedings are entitled to request, and the courts will be obliged to adjudicate that the force majeure event took place. There is one more rhetorical question: why the position of the Secretary of the Plenum of the Supreme Court of the Russian Federation Victor Momotov 10 days before the release of the Review at the St. Petersburg International Legal Forum expressed significantly different position. All of the above will obviously create an additional burden on the already overloaded judicial system after its return to normal mode of functioning.
