The Supreme Court will consider a dispute over compensation for the delay in payment for monuments to Heroes of Labor
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The Supreme Court (SC) will consider a dispute over compensation for the costs of making and installing tombstones on the graves of Heroes of Socialist Labor. By law, such expenses must be reimbursed from the federal budget, but often you have to go to court for this right. An entrepreneur who has completed work but has not received payment for it demands recovery of this money from the state, with interest. Lower courts decided that under such obligations the state cannot be required to pay a penalty for delayed payments. Lawyers support the interest requirement, noting that such compensation costs are usually not included in the budget, so obtaining compensation on the first demand is problematic.
The Supreme Court will clarify the obligation of the treasury to reimburse expenses for tombstones for Heroes of Labor. Individual entrepreneur Nikolai Olenin manufactured and installed eight tombstones under agreements with the relatives of the deceased Heroes of Labor, and the relatives then ceded to him their right to demand compensation for these expenses (a total of 4 million rubles) from the state. The Law of 1997 “On the provision of social guarantees to Heroes of Socialist Labor, Heroes of Labor of the Russian Federation and full holders of the Order of Labor Glory,” as well as government decree No. 740 of December 5, 2006, establish the financing of tombstones for these individuals “from the federal budget.”
The entrepreneur submitted such a statement to the Ministry of Labor and Social Protection of the Population of the Stavropol Territory, but was refused. Then Mr. Olenin filed a lawsuit against the regional Ministry of Labor and the branch of the pension fund for the recovery of 4 million rubles. losses and another 214 thousand rubles. interest accrued for delayed payments. The Arbitration Court of the Stavropol Territory in September 2022 recovered compensation, but refused to award interest. The court considered that these legal relations with the state do not relate to the monetary obligations implied by Art. 395 of the Civil Code of the Russian Federation, which establishes interest for late fulfillment of obligations. The appeal and cassation agreed with this decision.
The individual entrepreneur complained to the Supreme Court, insisting on his right to receive a penalty for delayed payments and citing the fact that this is an ordinary civil obligation, failure to fulfill which “is the basis for charging interest on the amount of the principal debt for the use of other people’s funds.”
The fact that payment of compensation for a gravestone is an expenditure obligation of the state “does not relieve responsibility for its violation,” Nikolai Olenin pointed out. Based on these arguments, the case was transferred to the Economic Collegium of the Supreme Court, and the hearing is scheduled for October 25.
There are quite a lot of disputes about compensation for tombstones, and in most cases the fund “evades payments for formal reasons,” for example, due to technical errors in the first or last name or because of disputes about the location of the tombstone, says Irina Shavykina, senior lawyer at YurTechConsult . However, the approaches of the courts are not uniform. For example, in Bashkiria on August 31, an appeal recovered from the ministry and the fund the amount of payments along with interest.
Partner at the Grishin, Pavlova and Partners law group, Polina Pavlova, says that the difficulties of the state voluntarily fulfilling some of its obligations are due to the fact that “these funds are not always included in the budget.”
The budget “is not approved taking into account the possible appeal of citizens for compensation,” because when all possible appeals are taken into account, “there is a high probability of undisbursed funds at the end of the period,” adds Alisa Andreeva, partner of the Legal Assistance agency. According to her, a budget surplus is “as undesirable as a deficit,” so any institution tries to avoid this situation. As a result, if the costs of such unforeseen obligations are not included and there are doubts about the validity of such requirements, then “it is easier for the state to hedge its bets and shift the resolution of the issue to the judiciary,” says Ms. Pavlova.
Senior lawyer at the law firm Gurichev, Malinin and Partners, Gleb Gavrilin, considers the requirement to pay interest for delayed payments justified. Ms. Shavykina believes this is reasonable “from the point of view of protecting the economic interests of performers and preventing government agencies from delaying the process of paying compensation.” It is worth considering, Ms. Pavlova points out, that interest is calculated from the end of the period for voluntary execution, in addition, the court can reduce the amount of interest if it considers it disproportionate.
However, according to Mr. Gavrilin, if the Supreme Court supports the plaintiff’s arguments, “there will be no radical revision of the procedure for interaction of government agencies with similar creditors” due to the peculiarities of budget formation.
Even if the Supreme Court recognizes that the state is obliged to pay interest for the use of funds, most likely, this “will not affect the speed of payment in favor of the applicant,” believes Irina Shavykina. Although a uniform practice on this issue “may reduce the percentage of refusals to pay on formal grounds,” she admits. According to Polina Pavlova, this may also contribute to the inclusion of additional funds in the budget for unforeseen expenses.
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