“Advokatskaya Gazeta” (Russian Advocacy Newspaper) presents the analysis of the details of the dispute between PJSC “Sovfracht” and JSC “Antipinsky Refinery” which resulted in the Supreme Court Ruling № 305-ES18-12293 dated 26 February 2019 (case No. А40-219900/2017). JSC “Antipinsky Refinery” was obliged by the lower courts’ decisions to pay the penalty to the contracting party for a two-year delay in payment for transportation services.

In August 2015, the parties entered into a “shipping agreement” for a range of railway freight transportation services. JSC “Antipinsky Refinery” having allegedly breached its obligation to pay for the services rendered under the contract, PJSC “Sovfracht” filed a claim with the Arbitrazh (Commercial) Court for recovery of the debt exceeding 1,8 billion rubles and penalties amounting to more than 283 million rubles. The defendant filed a motion to apply the one-year prescription period set forth in Art. 13 of the Federal Law on Forwarding Activities, as well as reduce the penalty according to Art. 333 of the Russian Civil Code.

Courts of three instances upheld the claim stating that the disputed contract cannot be defined as a shipping one but rather a paid services agreement.

The above conclusion was based on the following considerations. According to the documents submitted, PJSC “Sovfracht” rendered services to JSC “Antipinsky Refinery” for provision and maintenance of rolling stock (tanks), monitored the movement of wagons and paid the freight charges. JSC “Antipinsky Refinery” was obliged to communicate with the carrier, organise transportation etc. The courts indicated that the parties to the contract had not signed any shipping documents which form inherent part of a shipping contract according to Art. 7 of the Rules on Freight Forwarding Activities. In this regard the courts emphasized that since the claimant had not concluded a contract for the carriage of goods and, in fact, merely rendered the services for the provision of wagons, which are regulated by the general provisions set forth in Chapter 39 of the Civil Code, the general three-year bar is applied to the disputed contract, rather than the one-year one.

According to the TV&P lawyer Isabella Prusskaya, the incorrect denomination of a contract by the parties demonstrates corporate lawyers’ insufficient professional competence. Frequently parties do without legal assistance and just use a “model” contract for any transaction with their counterparties. When it comes to contracts, the price of which exceeds 100 000 rubles, the parties should apply to professionals who will help to draft the respective document correctly. Moreover, one should not expect that the courts will reduce the penalty. Each case is unique and the courts base their judgements on specific facts. In the case described it should be taken into account that PJSC “Sovfracht” rendered services for the transportation of petroleum products in the volume exceeding 6 million tons annually. However, JSC “Antipinsky Refinery” systematically defaulted on payment for a long period of time. Moreover, the initial debt for the services rendered exceeded one billion rubles.

“Advokatskaya Gazeta” (Russian Advocacy Newspaper) is the official body of the Russian Federal Bar Association (published since 2007). The Newspaper’s publications are devoted to the most important legal topics, case law, as well as legal practice and issues of advocacy.

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