Under the proposals, when terminating or amending contracts the courts would have the power to determine the date from which the parties' obligations are deemed to cease. Currently, Article 453 of the Civil Code of the Russian Federation provides that a contract is deemed to be terminated or amended from the date on which the relevant court decision enters into force.

The Ministry of Justice believes that the proposed amendment will allow the courts to consider current market conditions and adopt a fairer and more reasonable approach to determining the moment of termination of a contract, especially where there are difficulties in its fulfillment due to the disruption of logistics chains, imposition of sanctions, etc.

This initiative is supported by the Government Commission on Legislative Activity, and has been approved by the Ministry of Finance, the Ministry of Economic Development and the Ministry of Trade and Industry.

"The Civil Code does provide for the amendment or termination of a contract on a date other than that on which the relevant decision comes into force . This applies in the case of adhesion contracts (which include consumer contracts with standard terms, such as credit agreements, communication services agreements etc)," notes Alyona Kucher. If such an agreement is amended or terminated by the court at the request of a party, it is deemed valid in its amended version, or invalidated, ab initio.

The proposals are entirely consistent with business practice, Alyona Kucher believes. "The artificial linking of the amendment or termination of obligations to the entry into force of the court decision may be unfair or unreasonable, as the date when the court decision comes into force is quite arbitrary, having no relation to the nature of the transaction, the protection of the interests of the parties or any other business considerations" she points out.

"The court's discretion in certain matters will provide a much-needed counterbalance to an overly literal and formalistic approach, which should be kept to a minimum when it comes to contractual relations, where the main priorities are freedom of contract, protecting the interests of the parties and other business considerations which depend on the specific circumstances of each case."

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