The Supreme Court of the Russian Federation (SC RF) has recognized as fair and necessary the right of claimants for indexation of the sums awarded to them in case of delay of payment by the defendant. Now the courts should not refuse such claims, even those filed before the June amendments to the legislation.

Elena Gladysheva, Managing Partner of RI-Consulting, answers Kommersant's questions:

1. Could you evaluate the position of the SC in general and its significance for practice, especially for business, especially in the current economic environment?

 
Ruling of the Supreme Court of the RF № 309-ES21-22349 dd. 09.08.2022 repeats the position set out earlier in Ruling of the Supreme Court No. 305-ES21-24614 dd. 30.06.2022, and in sending the case for a new hearing, the court pointed out that the indexation of awarded sums of money is a simplified procedure for compensating the claimant financial losses caused by untimely execution of the court decision by the debtor, the recovered amounts are depreciated due to economic factors.
The court also disagreed with the view of the lower courts that the applicant's right to claim interest under Article 395 of the Civil Code by bringing a separate action could act as an independent ground for refusing to index the sums of money awarded.

By issuing this ruling the SC once again corrected the errors committed by the lower courts with reference to the rulings of the Constitutional Court, according to which the claim for indexation and the claim for interest are two different ways of compensating the loss.

2. Could you explain the importance of indexation of awarded amounts, for whom does it matter in the first place? Do you agree with the way in which the Economics Board of the Supreme Court explains the importance and necessity of indexation?

Taking into account the dynamics of social relations, as well as taking into account inflationary processes and peculiarities of the Russian economy, the mechanism of indexation of the awarded amount is more important than ever. This mechanism is able to overcome inflation, monetary reforms, devaluation, etc., which, in our opinion, is an effective mechanism of inducement for negligent Debtors to more rapid execution of the court decision.

In its essence the indexation stipulated by the articles serves as an effective measure capable to compensate the inflationary losses caused by the long-term non-execution of the judgment, and the indexation mechanism is applied regardless of the guilt of the person obliged to pay the monetary funds.

3. The Supreme Court drew attention to both the ruling of the CC and the amendments to the Arbitration Procedure Code. However, earlier lawyers pointed out that it is not quite clear with which period to compare the consumer price index (with the previous year, month, etc.), it is not clear how to deal with regional differences and to take them into account.

Are there answers to these points in the decision of the SC and is it clear to the end how to calculate indexation? Or are there still gaps here?

Unfortunately, the questions of what period to compare the consumer price index to (the previous year, month, etc.) and how to deal with regional differences are still open, because the SC Decision does not contain any formula for calculating the indexation of awarded amounts. 

Read more about the background of the case in the publication of Kommersant