6 April 2005
Nikita Sokolov's, lawyer of Yegorov, Puginsky, Afanasiyev & Partners, comment in "Vedomosti"

Логотип для миниатюрных форм

Three years for war

Anastasiya Onegina, Alexander Bekker, Anna Nikolayeva

While reducing the statute of limitations for privatization deals, the Kremlin is changing the regulations for corporate conflicts. The presidential administration proposes that the term within which disputed deals can be revised should be tripled. As yet, conflict participants aren't sure if this is good or bad.

President Putin promised ten days ago that the statute of limitations for privatization deals would be reduced from ten years to three. "I think this helps the business community to get more confidence in the future," he explained.

The business leaders were satisfied: stakes in the largest companies - LUKoil, Norilsk Nickel, Sibneft, YUKOS, Surgutneftegaz, Mechel and a scores of others - were privatized at mortgage auctions; the State Auditing Chamber found violations in almost each of the deal afterwards. An investor's commitment to invest a certain amount into an object to be purchased (another privatization scheme) proved no better. A 20% stake in the Apatit company, which the prosecutor's office is now accusing YUKOS co-owners Mikhail Khodorkovsky and Platon Lebedev of stealing (both are in jail), was bought at a similar auction with investment terms. According to the current laws, such deals could be declared void as knowingly contradicting "the basics of law, order and ethics" and disputed within a decade.

According to our source, the Kremlin intends to go beyond the amnesty on "privatizers." The presidential administration submitted amendments for Article 181 of the Civil Code into the government on Monday; the amendment sets a three-year statute of limitations on all deals which could be declared void, according to three presidential administration officials. This means that the statute of limitations could be tripled for most deals. If the violations are minor now - for instance, a contractor has no required license - the lawsuit demanding for cancellation of a deal could be submitted within a year after a plaintiff discovers a violation.

Some lawyers are shocked by the fact that the statute of limitations is to be extended. "This will spread complete lack of confidence in the market. The people who might have no guesses that they are violating the law, would be prosecuted the same like those who were knowingly doing this," says Rooman Minenko of the Egida legal center.

"The Civil Code shouldn't be altered drastically to solve momentary tasks of setting the business at ease . Suffice it to amend the privatization law to shorten the statute of limitations on privatization deals," notes lawyer Petr Dostovalov.

By relieving the "oligarchs" the Kremlin is altering rules of corporate wars. The majority of corporate conflicts arise in the deals concluded about a year ago, says lawyer Alexander Shmakov of the Russian Experts group.

"Reducing the statute of limitations from ten years to three suits the business community and the officials involved in privatization. Extending the statute of limitations for minor violations may affect business, especially small enterprises," says a manager with a large Russian financial and industrial group. However, this will enhance protection of persons whose rights were infringed in conclusion of disputable deals, objects Nikita Sokolov, an attorney with Yegorov, Puginsky, Afanasiev and Partners.

The government and the Duma are ready to support the Kremlin. "If the deal was struck in the shadow, one can seat in a shelter for a year and sleep well; thanks to amendments one will have to be under the sword of Damocles for three years," a governmental official is rejoicing. In opinion of Pavel Krasheninnikov, chairman of the Duma's profile committee, the three-year statute of limitations for disputable deals is "normal," especially since it had been in force until 1995.

However, a sword is a double-edged item, jokes attorney Minenko. The conscientious buyers will have to "keep trembling for three years" or resell their assets a multiple of times - according to a Constitutional Court's decree, this is the only case when reclaiming it in favor of the initial owner will be impossible. "At any event the scale of corporate wars won't be reduced with the aid of amendments," concludes Svyatoslav Bychkov, a spokesman for Ilim Pulp, which has been involved in such a conflict for many years.