Data
- Date:
- 19-10-2018
- Country:
- Russian Federation
- Number:
- A60-33076/2018
- Court:
- Seventeenth Arbitrazh Appellate Court
- Parties:
- Novex LLC v SU5Group LLC
Keywords
STATE CONTRACT - CONSTRUCTION CONCTRACT – BETWEEN A TWO RUSSIAN COMPANIES - REFERENCE TO UNIDROIT PRINCIPLES TO CONFIRM THE SOLUTION ADOPTED UNDER THE APPLICABLE LAW (RUSSIAN LAW)
CONTRACT INTERPRETATION - CONTRA PROFERENTEM RULE - REFERENCE TO UNIDROIT PRINCIPLES (ART. 4.6)
Abstract
This case arose out of a subcontract for the construction of a residential building in Sverdlovsk Region, Russia. The dispute was between Novex LLC (claimant, as assignee of rights from the subcontractor Stroykor LLC) and SU5Group LLC (respondent, the general contractor).
Cliamant sought recovery of debt, unjust enrichment, contractual penalties, interest, and fines under the subcontract. Respondent filed a counterclaim seeking penalties against the subcontractor, alleging late and defective performance.
The First Intance Court partially awarded Claimant's requests, including the debt, unjust enrichment, interest, and a reduced penalty under Article 333 of the Russian Civil Code. The court dismissed the counterclaim, finding no proper grounds for penalties.
The Appellate Court confirmed the lower court’s decision.
A crucial part of the appeal concerned interpretation of ambiguous contract terms. Respondent argued that the subcontract allowed it to withhold penalties from payments regardless of whether such penalties were imposed on it by the municipal authority.
The court applied Article 431 of the Russian Civil Code (contract interpretation) together with Article 4.6 of the UNIDROIT Principles of International Commercial Contracts (1994), which enshrines the contra proferentem rule: ambiguous clauses are interpreted against the party that drafted them.
The appellate court stressed that Respondent had drafted the subcontract, which largely copied the municipal contract, and there was no evidence of meaningful negotiation between the parties over the disputed clauses. Consequently, the ambiguity had to be resolved against Respondent.
The court emphasized that the UNIDROIT Principles, while not binding law, reflect widely accepted international standards of commercial contract interpretation and support the Russian approach under Article 431 Civil Code. The UNIDROIT Principles thus reinforced the decision to interpret the penalty clause narrowly, in favor of the subcontractor.
Abstract in English kindly provided by Roman Zykov
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