Natalia Perminova, FBK Legal Lead Legal Advisor on changing the amount of penalty

Rossiyskaya Biznes Gazeta publishes an article of Natalia Perminova, FBK Legal Lead Legal Advisor where the author is reviewing the draft decree of Higher Arbitration Court On Individual Issues of Applying the Article 333 of the RF Civil Code. Therein it is suggested that the court should be provided the right to decrease amount of penalty if it is obviously inadequate to the consequences of liability violation. According to Ms. Perminova, so far the courts, as a rule, treated disputes “from the point of defending the debtor considering him to be the weak link which needs to be defended from the creditor”. “However this approach is far not always eligible and debtors quite often, when taking decision regarding violated deadline for implementing liabilities are based on favorable arbitration practice”, the expert notes. The RF Higher Arbitration Court draft decree contains suggestion of establishing a different approach “…the penalty can be decreased by the court on the basis of the Article 333 of the RF Civil Code only when a relevant statement is available from the respondent party”. “Limiting the court interference into the parties relations, at first glance, looks rather justifiable, as the principle of freedom of contract is effective in civil law”, the lawyer comments. While “it seems to be more reasonable to suggest the parties should consider the issue of adequacy of the penalty charged”.