FBK Legal Expert Commentary for Pravo.ru

As reported by Pravo.ru, in 2013, the head of a peasant farm, Andrey Ochirov, entered into a land lease agreement without a tender. The agreement was valid until 2062. Ochirov paid rent according to the rates approved by the republican government, as stipulated at the time of the contract's conclusion. However, since 2015, the land plot has been transferred to municipal ownership, and the district administration adopted its own regulations, approving new, higher rental rates. Subsequently, the administration of the Yashaltinsky District of Kalmykia decided to recover 2.3 million roubles in land rent debt from the farmer for 2019–2022 and to terminate the long-term lease agreement (Case No. A22-3038/2022). Ochirov considered these calculations unfounded and later, after the municipality had filed the lawsuit, succeeded in having these rates declared invalid (Case No. 3a-23/2023 ~ M-22/2023).

Notwithstanding this, courts of three instances sided with the administration, reasoning that the regulations with inflated rates were declared invalid only from the moment the court decision came into force. Until then, they were in effect, meaning the debt was considered lawful. The farmer then appealed to the Supreme Court. The plaintiff's main argument is that the courts did not verify the accuracy of the administration's calculations for the entire disputed period, even though in another case, Ochirov proved the illegality of the rates used to claim the debt. The farmer argues that it is impermissible to apply invalid norms retrospectively and demand payment, especially since he had been paying dutifully according to the rates effective at the regional level. Additionally, he insists there are no grounds for terminating the 49-year lease agreement, as he did not commit any material breaches of the contract terms. Supreme Court Judge Irina Gracheva found these arguments worthy of consideration and referred the case to the Economic Collegium for a substantive review.

Anna Aktanayeva, Manager at FBK Legal, commented: ‘The Supreme Court has yet to assess the permissibility of fiscal sanctions in light of the tenant's evident good faith. The ruling in this case could set a significant precedent defining the limits of business liability when public and legal environment changes’.