State Duma adopted amendments aimed at implementing the President’s and Government initiatives

03 April 2020
Julia Kuzmenko
Senior Associate

Deputies of the State Duma adopted the Law “On making amendments to certain legal acts of the Russian Federation on the prevention and liquidation of emergency situations” in terms of regulating relations arising in connection with the need for emergency response to calls related to the spread of coronavirus infection (“Law”)1.

The law establishes three main issues.

I. Elimination of the pandemic impact on business and the economy

  1. The most important measures, entailing material legal consequences, in our opinion, are so-called rent free period, which are stipulated in respect of real estate lease agreements concluded before the decision of the state authorities of the subject of the Russian Federation in 2020 to introduce a high-alert or emergency on the territory of the federal subject:
    • the lessor is obliged to conclude an additional agreement to the real estate lease agreement within 30 days from the moment of the lessee’s request of the rent payment delay provided for in 2020;
    • the amount of rent in respect of such agreements may be changed by agreement of the parties at any time during 2020;
    • the lessee under real estate lease agreements has the right to demand a reduction in rent for the period of 2020 due to the inability to use the property due to the appropriate regime (high-alert or emergency) on the territory of the subject of the Russian Federation;

These novelties are clearly pro-tenant. It seems, that to ensure a balance of interests and supporting measures also in favor of the owners of real estate the Government will develop “Requirements to terms and conditions of rent free period” as it is stated by the Law (Note: Find out more about developed requirements in our additional UPDATE).

Thus, it turns out, that currently the first option is not feasible due to the absence of governmental clarifications, while the third option in anyway will require parties to agree the new amount of rental payments. That’s why the best option for parties is to agree a schedule for changing the amount of rental payments.

  • Regulatory aspects for public procurement are introduced:
    • under discretion of the Russian Government additional cases when the procurement for state and municipal needs can be carried out without time-consuming competitive procedures are going to be developed;
    • the contract period, the contract price, the unit price of the goods, works, services due to force majeure caused by Coronavirus can be changed by parties’ Agreement;
    • certain allowances are provided for the calculation of penalties resulting from non-performance or improper performance of a contract due to the Coronavirus. For example, the failure penalty may be calculated not only from the contract price, but also from the price of a stage of contract execution.
  • In exceptional cases (e.g. in case of emergency, significant change in the ruble exchange rate) the Government of the Russian Federation is entitled to impose a moratorium on initiating bankruptcy cases on creditors’ claims and to determine the duration of the moratorium and to extend it if reasons of a moratorium are not passed. Applications submitted to the Arbitrazh court during the moratorium are subject to return. Notice of the creditor’s intention to apply for recognition of the debtor as bankrupt is not subject to posting on the Internet.
  • In order to support tour operators in the field of outbound tourism, it is possible to change the terms of making contributions to personal liability funds. There is also a mechanism for using such funds to refund tourists.
  • In respect of small and medium enterprises, inspections are not conducted from April 1 to December 31, 2020, unless otherwise established by the Government and with the exception of inspections, the grounds for which are causing harm or threat of harm to the life or health of citizens, the occurrence of an emergency.

    • II. Elimination of the pandemic consequences for citizens’ health

    1. A special procedure for registration and circulation of medicinal drugs and medical devices for use during the war, emergency situations, emergency prevention, prevention and treatment of diseases that pose a danger for the wider public is established.
    2. Government of the Russian Federation in case of an emergency or a threat of a disease that is dangerous to others, will be able to restrict the wholesale and retail trade of medical products for a certain list for 90 days.
    3. The Law allowing the sale of over-the-counter medicines via the Internet with home delivery has been adopted. The Law also establishes the possibility of selling prescription drugs, except for potent psychotropic and narcotic substances, in terms of an epidemic or emergency. Their sale will be determined by the Government of the Russian Federation2.
    4. In the context of an emergency situation and (or) a threat of the spread of diseases that pose a danger for the wider public, the Government of the Russian Federation has the right to determine the specifics of the implementation of the basic program of mandatory medical insurance.

    III. Additional powers of the Government of the Russian Federation to improve the effectiveness of the fight against coronavirus

      1. Russian Government is entitled to take a decision on the implementation the powers of the coordinating body of the unified state system for the prevention and elimination of emergency situations and to introduce a high-alert or emergency on the entire territory of Russia or part of it, as well as to establish mandatory rules of conduct during the operation of special modes. The list of reasons for the introduction of the emergency is supplemented by the fact of the spread of a disease that is dangerous to the wider public.

      1 https://sozd.duma.gov.ru/bill/931192-7
      2 https://sozd.duma.gov.ru/bill/285949-7