The Supreme Court stated that enforcement proceedings must be terminated if the judicial act can no longer be executed in practice. The dispute arose from a request by a bankruptcy trustee seeking to compel a former director of the debtor to transfer pledged property. The new director argued that the property had never been handed over by his predecessor and that the bailiffs were unable to locate it. Despite this, courts of three instances refused to terminate the enforcement proceedings.

The Supreme Court took the opposite view. It stressed that enforcement must cease when, after the writ has been issued, objective and irremediable circumstances arise that make execution impossible. The case materials showed that the disputed property had not been transferred to the new director and that no evidence of its existence or location had been found — a fact confirmed by judicial acts issued in related proceedings. Compulsory enforcement measures were also ineffective. In such a situation, continuing enforcement merely imposes restrictions and financial sanctions on the debtor without bringing the judicial act any closer to execution.

After reviewing the case file, the Supreme Court set aside the decisions of the lower courts and terminated the enforcement proceedings.

In her comment to Advokatskaya Gazeta, Ekaterina Schmitt, attorney at the law firm “Timofeev, Vahrenwald & Partners”, noted that the ruling strengthens the established approach that only property actually existing and available to the debtor can be subject to recovery. If the property is shown to be absent and could not have been transferred to the current director, the requirement to deliver it becomes unenforceable. Schmitt also pointed out that the Supreme Court resolved a conflict between an earlier act ordering the recovery of the property and later decisions denying damages for its non-transfer: in one dispute, courts assumed the director possessed the property, while in another they found he did not. The Supreme Court reminded that the purpose of enforcement proceedings is to achieve real execution; if execution is objectively impossible, continuing the proceedings turns into a sanction without any result and disrupts the balance of interests, she explained.

“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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