On 31 October 2024 the Constitutional Court published Resolution No. 49-P on the case of checking the constitutionality of Articles 195, 196, paragraph 1 of Article 197, paragraph 1 and paragraph two of paragraph 2 of Article 200, paragraph two of Article 208 of the Civil Code of the Russian Federation (hereinafter - the “Resolution”), in which it considered the application of limitation period to claims for seizure of property obtained through corrupt activities in favor of the state.
Background
The General Prosecutor’s Office filed a claim to the court to seize (1) property obtained in 2001-2004 as a result of corrupt activities of a civil servant, and (2) property subsequently acquired with the proceeds of corruption. The defendants insisted in court that the prosecutor’s office had missed the limitation period for these claims, since the period should be calculated from the moment when the Russian Federation, represented by its authorized bodies, became aware of the violation of its right, in the relevant case - from the date of registration in the Unified State Register of Legal Entities of the defendants’ shares in the business entities. The court of first level noted that the limitation period does not apply to acts of corruption, since the object of defense in such disputes is not a subjective right, but the interests of society and the state. On this basis, the court seized shares and stakes in the authorized capital of business entities worth over 9 billion roubles in favor of the state.
In the court of appeal, the defendants also pointed out that the prosecutor’s office had missed the limitation period, so the Krasnodar Regional Court (hereinafter - the “Applicant”) suspended the proceedings and filed a request to the Russian Constitutional Court.
In the request, the Applicant pointed out that two opposite approaches had emerged in judicial practice in anti-corruption claims: in some cases, the courts prioritized private interests and the stability of civil turnover, allowing the application of the limitation period; in other cases, on the contrary, the courts proceeded from the priority of public interests and anti-corruption goals, and therefore refused to apply the limitation period to anti-corruption claims.
Position of the Russian Constitutional Court
The rules of limitation allow one party to block the judicial resolution of a dispute on the merits if the other party has applied for the protection of its rights long after it became aware of the violation of its rights. This institution is oriented towards private law relations based, among other things, on equality and autonomy of will of its participants. However, the requirement to return property to the state is aimed at realization of the public interest in combating corruption, rather than restoring the property status of participants in civil turnover, and is not inherently a way of protecting civil rights.
Thus, it is inadmissible to apply the limitation period provided for by the Civil Code of the Russian Federation to the claims of the prosecutor’s office to return to the state the property acquired in violation of anti-corruption prohibitions. Accordingly, the current legislation does not establish any time limit restricting the possibility for the prosecutor to file a claim in this category of cases.
At the same time, the conclusions drawn in the Resolution apply only to anti-corruption claims of the prosecutor’s office. These conclusions cannot be automatically extended to questions on the applicability of the limitation period to other claims of the prosecutor’s office aimed at the transfer of property to public entities or recognition of their right to property, including those based on violation of the privatization procedure.