Data
- Date:
- 12-09-2018
- Country:
- Russian Federation
- Number:
- A70-17666/2017
- Court:
- Eighth Arbitrazh Appellate Court
- Parties:
- Kaptransstroy v TechnoSpecStroy
Keywords
LEASE CONTRACT - BETWEEN TWO RUSSIAN COMPANIES – REFERENCE TO UNIDROIT PRINCIPLES TO CONFIRM THE SOLUTION ADOPTED UNDER THE APPLICABLE LAW (RUSSIAN LAW)
NOTION OF FORCE MAJEURE – EXEMPTION FOR NON-PERFORMANCE - FAILURE TO GIVE TIMELY NOTICE – REFERENCE TO UNIDROIT PRINCIPLES (ART. 7.1.7)
Abstract
This case concerned a dispute between two Russian companies over unpaid rent under a lease contract for construction machinery. LLC Kaptransstroy (Lessor) and LLC TechnoSpecStroy (Lessee) concluded a contract for the lease of a Caterpillar 320D excavator with crew, including services for its operation and maintenance.
The contract provided for monthly rent to be calculated on the basis of log sheets or, if such documents were absent, by multiplying the minimum daily hours by the number of days in the reporting month. Part of the monthly rents remained unpaid.
Therefore, the Lessor brought proceedings before the Arbitrazh Court of Tyumen Region seeking recovery of the debt plus interest. The claim was uphled despite the Lessee's reference to force majeure due to high water levels of the Khor River.
The Lessee appealed, but the Appellate Court rejected the appeal.
The Court found that a mixed contract was at stake, combining elements of lease (Chapter 34(1) of the Russian Civil Code) with service provisions (Chapter 39). It considered both the Russian Civil Code and Article 7.1.7 of the UNIDROIT Principles of International Commercial Contracts, which defines force majeure as an impediment beyond a party’s reasonable control, unforeseeable at the time of contract, and unavoidable in its effects. The Court emphasized that force majeure exempts only from liability for non-performance but does not extinguish the obligation itself.
By refferring to the UNIDROIT Principles (Article 7.1.7) the Court alligned Russian jurisprudence with international standards on contract performance and force majeure. The court reiterated that only events truly beyond control, unforeseeable and unavoidable can be qualified as force majeure, while ordinary natural fluctuations, foreseeable by a professional business operator, do not meet this threshold.
Moreover, the lesse failed to notify the lessor in a timely manner, since it reported the event a month after the alleged impediment arose. The court found this behavior inconsistent with principles of reasonableness and good faith. As such, the lessee did not prove the extraordinary and unforeseeable nature of the event, nor complied with contractual notification duties.
Abstract in English kindly provided by Roman Zykov
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