The Constitutional Court of the Russian Federation Has Determined the Procedure for Reimbursement of Court Fees Incurred by Defendants in Separated Disputes in Bankruptcy Cases

29 March 2024
Dmitry Filippov
Junior Associate

On 19 March 2024 the Constitutional Court of the Russian Federation adopted Resolution No. 11-P/2024 in the case concerning the verification of the constitutionality of the provisions of Article 110(1) of the Arbitration Procedural Code of the Russian Federation, Article 5 and Article 137(3) of the Federal Law «On Insolvency (Bankruptcy)» in connection with the complaints of citizens I.E. Galliamova and E.P. Chervyakova («Resolution № 11-P/2024»).

Background

In Resolution No. 11-P/2024, the Constitutional Court of the Russian Federation considered the problem of the order of priority of satisfaction of claims for reimbursement of court fees of defendants in separate disputes.

Initially, the Supreme Arbitration Court of the Russian Federation in 20121 unambiguously determined that court fees of the creditor and other entities in whose favor a judicial act was passed in a separate dispute are not current payments and are subject to satisfaction after repayment of the principal amount of the debt and interest due.

Subsequently, court practice2 has developed a different legal approach, according to which only court fees of bankruptcy creditors are not current payments and are reimbursed after repayment of the principal amount of debt and interest due. As a general rule, court fees incurred after the initiation of bankruptcy proceedings belong to the category of current payments. 

The said contradiction between different legal positions on the issue of the priority of reimbursement of court fees was resolved by the Constitutional Court of the Russian Federation.

Position of the Constitutional Court of the Russian Federation

In a separate dispute over a claim of a bankruptcy creditor against the debtor, the creditor exercises its property interest aimed at distribution in its favor of a part of the bankruptcy estate. The emergence of such a dispute is caused by the initiative of the creditor himself, and the court fees incurred represent voluntarily assumed costs. Applying to them the priority provided for the satisfaction of derivative claims ensures the interests of other creditors and the proportionality of the distribution of the bankruptcy estate.

However, defendants in separate disputes may not have a principal claim against the debtor. The property interest of entities whose claims against the debtor have been recognized by the court as unfounded is directed only at reimbursement of expenses incurred in connection with their forced participation in a separate dispute. In this case, the claims of defendants in separate disputes for reimbursement of court fees have all the characteristics of a claim for current payments.

In bankruptcy cases, entities controlling the debtor (ECD) are also involved as defendants in separate disputes. The status of ECD implies a presumption that the property interests of the debtor and ECD are substantially the same. Even if the ECD has not been held liable in a separate dispute, the very status of the ECD implies a certain “guilt” for the negative outcome of the organization’s work. Consequently, it is not unfair to satisfy the ECD’s claims for reimbursement of court fees after the main creditor claims have been satisfied.

At the same time, certain circumstances, such as: (1) peculiarities of the entity controlling the debtor (including the degree of its corporate control), (2) the amount and circumstances of the expenses claimed for reimbursement, (3) the presence or absence of independent creditors in the bankruptcy case and other facts, may indicate that there is no reason to lower the priority of reimbursement of court fees.

Thus, the legislator should introduce amendments clarifying the procedure for reimbursement of court fees incurred by defendants in separate disputes in a bankruptcy case.

Henceforth, until the legislative regulation is amended:

  1. court fees of the defendants on the claim to declare a debtor’s transaction invalid, if the defendants are not ECD, shall relate to current payments and shall be reimbursed as part of the fifth queue of current payments;

  2. such a solution is not excluded also in case of reimbursement to ECD of court fees incurred in the course of consideration of a claim to bring it to subsidiary liability or a claim to declare a transaction invalid, provided that the application of such priority of satisfaction of claims is justified by specific factual circumstances of the case and does not entail violation of the balance of rights and legitimate interests of all entities participating in the bankruptcy case;

  3. reimbursement of court fees as part of the queue of current payments should, in any case, be accepted when reimbursing court fees of a ECD whose liability was refused due to the absence of relevant features of this entity.


1 Paragraph 18 of the Resolution of the Plenum of the SAC RF of 22.06.2012 № 35 «On some procedural issues related to the consideration of bankruptcy cases».
2 See for example: Resolution of the Arbitration Court of the Volga District dated 21.12.2023 № F06-15307/2022 in case № A55-22817/2020, Resolution of the Arbitration Court of the Urals District dated 27.02.2024 № F09-407/21 in case № A60-19055/2020, Resolution of the Arbitration Court of the Urals District dated 24.11.2023 № F09-6379/20 in case № A76-14929/2020.