The court for the first time canceled a deal concluded without the permission of the legal commission

In August 2023, the 10th Arbitration Court of Appeal of Moscow invalidated the deal concluded between the German construction company Bauer Technology LLC and the Russian individual entrepreneur Ruslan Prudnikov. It was concluded without the permission of the government commission for control of foreign investments, as follows from the file of arbitration cases. This is the first case of cancellation of a deal without the permission of the legal commission in Russian judicial practice, they report “Vedomosti”.

Bauer Technology sold land and real estate to Mr. Prudnikov in August 2022. At the time of the transaction, the owner of the LLC was the German Bauer Spezialtiefbau. At the end of the same year, Bauer Technology, which had changed management (according to SPARK, the sole owner was Armenian citizen Andranik Gasparyan), appealed to the Moscow Region Arbitration Court with a demand to declare the deal invalid.

On May 11, 2023, the regional Arbitration Court refused to satisfy the company’s demands, but on August 14, the 10th Arbitration Court of Appeal of Moscow declared the deal invalid due to the lack of permission from the legal commission. On October 16, the Arbitration Court of the Moscow District confirmed the decision of the capital court. According to the resolution, Mr. Prudnikov is obliged to return the property to Bauer Technology, and the company to the entrepreneur – 130 million rubles.

Vedomosti reports that Mr. Prudnikov submitted an application to the government commission to obtain permission for the transaction after it was completed – at the end of October 2022. In February 2023, a representative of the Ministry of Finance informed the entrepreneur that he was not a proper applicant. A representative of Mr. Prudnikov told the publication that the entrepreneur intends to protest the cancellation of the deal in the Supreme Court.

On March 1, 2022, Russian President Vladimir Putin signed a decree according to which transactions for the sale of real estate between Russian residents and residents from “unfriendly” countries must be approved by a government commission. Settlements for such transactions must go to type C accounts. In March 2023, the Ministry of Finance proposed introducing fines for concluding transactions without the permission of the legal commission. Thus, for individual entrepreneurs and legal entities it is proposed to establish a fine in the amount of 20 to 40% of the transaction amount or up to 1 million rubles if the transaction was non-cash.

More details about the consequences of transactions made without the necessary approval can be found in the Kommersant Appendix. “Transactions are looking for detours”.

Erdni Kagaltynov