The team of the Exiora Law Firm won a resounding victory in the Supreme Court of the Russian Federation and put an end to the case of invalidation of the chain of transactions

The team of the Exiora Law Firm won a resounding victory in the Supreme Court of the Russian Federation and put an end to the case of invalidation of the chain of transactions

The peculiarity of this dispute was the fact that the opponents’ cassation appeal was submitted to the board of the Supreme Court of the Russian Federation, but after consideration, the complaint was refused.

The principal received a statement of claim from the original rightholder of the building several years after the acquisition of a real estate object in Crimea in the amount of more than 100 million rubles. He disputed the transactions on the basis of which the object was transferred from one owner to another. In addition, a third person with independent legal claims to the same real estate object joined the lawsuit. The Court of first instance supported the position of the Principal and dismissed the claim.

However, the appeal overturned the judicial act of the first instance and declared the chain of transactions invalid, and the basis for the emergence of the Principal’s rights to the building was missing. The task of Exiora’s lawyers was to get the decision of the court of appeal overturned and keep the real estate object for the Principal.

The lawyers of the bureau investigated the specifics of the circumstances in which the bank sold the real estate object, the facts of notarization in one of the links in the chain of transactions, checked the actions of the notary and a number of other procedural actions. In November last year, the cassation appeal of the Principal, with the legal support of the Bureau, was satisfied, the court upheld the decision of the court of first instance.

Meanwhile, a third person filed a cassation complaint with the Supreme Court of the Russian Federation. The case was requested, and the complaint was referred to the Judicial Board for Civil Cases of the Supreme Court of the Russian Federation. The lawyers of the Bureau faced a difficult task in preparing a reasoned response to the appeal in order to identify the grounds for refusal to satisfy it. As part of the tasks set for the panel of judges, an in-depth analysis of judicial practice in cases of vindication of property, as well as invalidation of transactions over the past 20 years was prepared with references to specific precedents of both the Supreme Court of the Russian Federation itself, and the Supreme Arbitration Court of the Russian Federation, the Constitutional Court of the Russian Federation. As a result, the satisfaction of the appeal already submitted was refused.

The team of Exiora, with the direct participation of lawyers Alexey Moroz, Yuri Sbitnev and Yulia Testova, managed to win a resounding victory and put an end to the case, retaining the real estate object for the Principal.

The progress of the case and the resounding victory were highlighted by the Advocate Newspaper.

Yuri Sbitnev, partner of Exiora, noted in a comment to AG that the transfer of a third party’s cassation complaint to the Judicial Board of the Supreme Court caused him sincere surprise, since the legal issue under consideration had been investigated for a long time. He noted that all legal approaches to the issue under consideration were developed back in the 2000s and have taken root in long-term judicial practice.

«Firstly, the consistent recognition of transactions as invalid, bypassing the rules on vindication, was suppressed by the Constitutional Court of the Russian Federation back in 2003 in Resolution No. 6-P, and since then the Supreme Court has repeatedly only confirmed this rule,» – he explained.

Secondly, a buyer who does not own real estate has the right only to recover damages, and not to challenge transactions, which is also reflected in the Resolution of the Plenums of the Supreme Court and the Supreme Arbitration Court of the Russian Federation No. 10/22 of April 29, 2010 “On some issues arising in judicial practice in resolving disputes related to the protection of Property Rights and others property rights.” Thirdly, Yuri Sbitnev stressed that the conclusion of a preliminary DCP without checking who the owner is indicates unfair behavior of the buyer, which was also determined by the Supreme Court in Resolution No. 7 of the Plenum of March 24, 2016 “On the application by courts of certain Provisions of the Civil Code of the Russian Federation on liability for breach of Obligations».

«Nothing unusual or contrary to the uniformity of judicial practice was passed by the court of cassation instance, on the contrary, the applicant’s attempt to appeal to the Supreme Court of the Russian Federation to carry out an audit of established legal approaches caused us reasonable concern. Fortunately, the Supreme Court maintained the continuity of the previously stated positions and dismissed the cassation appeal. A different decision could have really irreversible consequences for civil turnover and the protection of property rights in general», – commented Yuri Sbitnev.

His colleague Yulia Testova shared that the main issue that was of significant importance during the consideration of this case was the issue related to the choice of an appropriate way to protect the right, in conditions when the disputed real estate object passed through a chain of transactions from one owner to another. The lawyer explained: the opponents in the dispute believed that the disputed real estate object would be returned by recognizing the chain of transactions involving the disputed object as invalid and applying the consequences of the invalidity of transactions. At the same time, the approach to resolving the issue of the appropriate way to protect rights in the presence of these conditions was developed in the framework of the Resolution of the Constitutional Court of the Russian Federation No. 6-P/2003, Yulia Testova clarified.

The lawyer said that in court they first of all presented arguments with references to judicial practice that the appropriate way to protect rights is a vindication claim in accordance with Articles 301, 302 of the Civil Code. At the same time, as Yulia Testova emphasized, it was also very important that the applicant of the cassation complaint was not the non-owning owner to file a vindication claim, but indicated a violation of his right, since he was a party to the preliminary DCP, in whose favor the disputed real estate object was allegedly sold. In fact, the claim was essentially made by an improper entity, the lawyer believes.

Yulia Testova noted that arguments were given regarding the inadmissibility of the seizure of a real estate object from a bona fide buyer who openly owned and used the object for a long time, as well as similar approaches of the Armed Forces. Arguments were given that the opponents chose not only an inappropriate way to protect the right, but also missed the limitation period for challenging transactions within the framework of the wrong chosen method of protection, which was an independent basis for rejecting the claim, the lawyer explained.

«In addition, arguments were given regarding the inadmissibility of providing legal protection to inconsistent, unpredictable and unscrupulous behavior of an opponent, in respect of whom judicial acts established the use of fictitious document flow using the construction of a “preliminary agreement” signed “retroactively.” By refusing to satisfy the cassation appeal, the Supreme Court of the Russian Federation once again confirmed the position that has existed in judicial practice for more than 20 years: circumventing the rules on vindication by demanding that the chain of transactions be declared invalid is unacceptable», – Yulia Testova stressed.

Read more about the case in the Advocate Newspaper.