The Constitutional Court of the Russian Federation today announced its ruling on a challenge to the constitutionality of article 302, paragraph 1 of the Civil Code of the Russian Federation lodged by Alexander Dubovets, in which it accepted the plaintiff’s argument. Representing Mr Dubovets was Dmitry Stepanov, Partner at Egorov Puginsky Afanasiev & Partners.
The Constitutional Court noted that, if the State did not take timely measures to identify property as being subject to escheat and did not inherit ownership of such property, then a citizen acquiring this property (apartment) who neither knew nor ought reasonably to have known that he was acquiring this property from the individuals who possessed it in circumvention of the rights of the State should bear no liability for this fact. The citizen is the end buyer of a property in the transaction chain and, if he has paid a reasonable price for the apartment acquired, he should not then have to bear the responsibility for the State’s oversight, but is instead subject to the protections afforded to him as owner of the property. The ruling of the Court declares article 302, paragraph 1 of the Civil Code of the Russian Federation to be inconsistent with the Constitution of the Russian Federation in permitting apartments to be claimed from end-buyer citizens by the State in the event that it has failed to identify its right to the escheat property in a timely manner. In light of the Constitutional Court’s 22 June ruling, Alexander Dubovets’ case will be subject to review.
His challenge to the Constitutional Court was lodged after each of the conventional courts, including the Supreme Court, had found in favour of the respondent, the Moscow City Property Department. Neither had the arguments of the Office of the Prosecutor General or of the Civic Chamber of the Russian Federation in defence of a purchaser in good faith been accepted by these courts.
“We are pleased that the Constitutional Court has engaged with this case in a thorough manner and that justice has been restored”, Dmitry Stepanov commented. “In disputes like these, the citizen is on an unequal footing compared with the State. The State regulates the inheritance of properties and processes transactions, and citizens should be able to have every confidence in its registry infrastructure. If the State has failed to address all of the relevant issues when handling these processes, then it is the State, and not the citizen, that should bear the negative consequences of the system’s shortcomings, just as the Court has confirmed today. Our Client’s situation is one in which hundreds of good-faith purchasers throughout the country find themselves, and so the importance of the Constitutional Court’s ruling is hard to overstate.”