“Astreinte” – financial penalty in Russian law

How to recover “astreinte” (judicial penalty) for non-execution of a court decision and how does Russian legislation understand it?

According to Article 308.3 of the Civil Code of the Russian Federation, if the debtor fails to fulfill his or her obligation, the creditor has the right to demand the obligation performance in kind in court.

At the request of the creditor, the court has the right to award a sum of money (forfeit under Article 330 of the Civil Code) in his or her favor in case the debtor has failed to execute the said judicial act in the amount the court determines on the basis of the principles of fairness, proportionality and non-benefiting from bad faith conduct.

In simple terms, the court decision indicates that if the debtor does not comply with the actions prescribed by the court, he or she will be obliged to pay the amount determined by the court daily.

Thus, a court penalty (in Russian called "astreinte", Rus. астре́нт) is a good option to force the debtor to comply with the court decision, since otherwise the debtor shall pay a daily or weekly fine in favor of the plaintiff.

Indeed, in practice, court decisions are often not implemented, especially those on which one must fulfill an obligation in kind (transferring goods, performing some work, providing services, transferring documents), i.e. non-monetary obligations.

It is worth noting that astreinte is collected only if a non-monetary obligation has not been fulfilled.

It may be associated with non-execution of a court decision on, for example, property transfer, unauthorized building demolition, vacating of another's land, elimination of shortcomings in the work performed, documents reclamation (e.g. corporate documents, accounting documents, company participants’ general meetings decisions, technical documentation under a contract).


WHAT ARE THE WAYS TO ASSESS ASTREINTE?

In judicial practice, the courts take paragraph 60 of the Decree of the Plenum of the Supreme Court of the Russian Federation dated March 24, 2016 No. 7 as a basis and define astreinte in three possible forms:

➡ funds collected in solid form (fine);
➡ periodic charge and astreinte collection (forfeit);
➡ progressive recovery (collected for certain periods, for example, the first month the amount of 10,000 rubles, if the court decision is not executed, then the second and third months 20,000 rubles and 30,000 rubles respectively. Every month there is an increase in the amount of astreinte till the actual date of judgment execution).


HOW CAN THE COURT CALCULATE THE ASTREINTE AMOUNT?

The most logical way to calculate the astreinte is to relate its amount to the monetary value of the non-performing obligation.

For example, in one of the cases where the plaintiff made demands for the additional delivery of goods, the court accepted astreinte in the amount of 0.1% of the value of the undelivered goods (case No. A65-123 / 2017).

In another case, the plaintiff used a land plot tax return and calculated the astreinte amount from the amount of tax that the plaintiff pays for the land plot (case No A41-7055/13).

Based on our practice, we can notice that when we file an application with the court demanding the recovery of astreinte, the amount usually recovered is about 1,000 rubles per day.

Nevertheless, the final astreinte amount is determined by the court, our goal in such cases is to offer the court a logical and reasonable astreinte amount calculation method, based on the circumstances of the case.

The goal of astreinte is to make it unprofitable for the debtor not to comply with the court decision. This means that the court should determine an astreinte amount that will be less profitable for the debtor to pay than to execute the court decision.

Therefore, in order for the court to recover the astreinte in the maximum amount you want, you need to provide a rationale for your calculation in relation to what benefit the debtor is making by evading the court decision execution, describe what loss you are bearing as a result of such non-performance.

If you justify that the obligation imposed on the debtor has great property significance for the parties, and that only imposing an astreinte in the amount required by the claimant can contribute to the decision execution, you can count on the effective astreinte recovery.

WHERE TO FILE FOR ASTREINTE RECOVERY AND IN WHAT FORM?

A court penalty recovery application must be filed with a court whose decision is not enforced.
The court penalty is not an independent claim, so you do not need to file an application in the form of a lawsuit.

Such an application has the form of a court penalty (astreinte) petition.

The court penalty issue shall also be resolved during a court session, all persons participating in the case involved.

During the proceedings, the court authenticates the application and the documents attached to the application.

The following documents must be attached to the application:

❕ The court decision by which the court ordered the debtor to fulfill the obligation in kind;
❕ Enforcement Proceedings Decision from a bailiff;
❕ Printout from the Federal Bailiff Service website stating that the enforcement proceedings have not been terminated;
❕ Receipt and an inventory confirming that the persons involved in the case have sent a copy of the application;

This is the minimum list of documents required to file for astreinte recovery.



Should your debtor not comply with the court decision, we are here to help:
Tel: +7 909 961-19-09
Email: legalsolutions@inbox.ru
Visit us: Moscow, Zubovskiy bulvar, building 4, room 308