The Supreme Court will decide who can return the overpayment to the state
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The Supreme Court of the Russian Federation (SC) will decide whether the company can cede the right to return the overpaid amount from the budget. In this case, we are talking about a fine imposed for a violation that the court found to be absent. Assignments of claims are common in the business environment, but when the debtor is a government agency, they are used less frequently. Sometimes debts are sold to companies within the group, in some cases to a third party, including lawyers (for example, as a “success fee”). Experts note that the issue is at the contradictory intersection of civil and administrative law, which creates serious discrepancies in interpretations.
The Supreme Court will consider a dispute about the possibility of its right to return a previously paid fine from the budget. In January 2021, the State Road Safety Inspectorate of the Main Directorate of the Ministry of Internal Affairs of Russia for the Volgograd Region fined Deltrans LLC 350 thousand rubles. for violating traffic rules with his car. Deltrans paid 175 thousand rubles. (within 20 days from the date the fine was imposed, only half of the amount can be paid), and then he challenged his administrative liability. The district court recognized the absence of an offense, and the company had the right to demand the return of the amount paid.
In July 2021, Deltrans assigned the right of claim to Loraline LLC. The latter asked to return the paid fine. The application was forwarded to the regional department of the Federal Treasury (UFK), which rejected Loraline due to a discrepancy between the payer of the fine and the recipient of the application. Then Loraline decided to collect 175 thousand rubles. as losses from the regional UFC, Volgograd and federal Ministry of Internal Affairs. In September 2022, the Arbitration Court of the Volgograd Region upheld the claim, recognizing the Ministry of Internal Affairs of the Russian Federation as the defendant. According to the court, the funds paid for the canceled administrative violation “refer to losses in the form of real damage.” In addition, the decision states, “the agreement for the assignment of the right of claim was not declared invalid.” The appeal and cassation agreed with this.
The Ministry of Internal Affairs and the Main Directorate of the Ministry of Internal Affairs complained to the Supreme Court, considering the decisions to be unfounded. The applicants explained that the return of the overpayment is not in court, but through “the Federal Treasury’s accounting of revenues to the budget system of the Russian Federation and their further distribution.” In addition, Order No. 66n of the Ministry of Finance dated April 13, 2020 allows funds to be returned only to the payer. The Ministry of Internal Affairs also insists that it took all measures and denied the applicant the FCC. According to the authorities, the cause of the problems was precisely the assignment: “The payer of the fine could have independently received the funds, but voluntarily transferred the rights of claim.” The Supreme Court referred the case to the Economic Collegium, the hearing is scheduled for October 11.
According to the Judicial Department under the Supreme Court, in 2022, 19 thousand applications (48.7%) were satisfied in 39 thousand cases considered by the courts challenging the bringing of companies and individual entrepreneurs to administrative liability.
Zoya Galeeva, managing partner of the Center for Troubled Assets, says that “the assignment of rights itself is a fairly common mechanism used by businesses.” Artem Makarov, a lawyer in the dispute resolution practice of Kosenkov and Suvorov, clarifies that the assignment of rights of claim specifically to government authorities also occurs in practice, since “the state is a solvent debtor.”
According to Mr. Makarov, “sometimes it is profitable to sell the debt at a small discount in order to avoid legal costs, and sometimes the buyer is interested in buying out the claim in order to set off with the government agency.” Also, the assignment of the right to claim the budget can be “an optimization measure to save time or redistribute funds within one economic group,” adds Vladislav Shtrem, senior lawyer at Sudohod. It can also be used as a kind of “success fee” for lawyers who have achieved a court decision to recover damages from a government agency, believes Forward Legal lawyer Oleg Sheikin.
At the same time, the question itself, whether it is possible to assign monetary claims to an authority, “is at the intersection of civil and administrative law and is controversial,” admits Mr. Sheikin.
Civil legislation prohibits only “the assignment of rights inextricably linked with the personality of the creditor” (including claims for alimony and compensation for harm to human life or health); there are no other restrictions, Zoya Galeeva emphasizes. Mr. Shtrom agrees with this, believing that business “has the right to assign rights of claim to the authorities.”
But from the point of view of administrative regulation, the situation looks different, Oleg Sheikin clarifies: “The provisions of budget legislation apply to the return of erroneously paid fines, according to which only the payer can submit claims in a separate administrative procedure.” In practice, there is a “not indisputable approach” that public monetary claims “are not subject to the private law regime,” admits Mr. Makarov. However, he himself does not agree with this, believing that it does not matter to whose account the funds are transferred if the demand is legal.
Mr. Sheikin believes that the Supreme Court will support the position of the government on the priority of budget legislation over civil law. Zoya Galeeva admits that the Supreme Court may also point to the replacement of the defendant from the Ministry of Internal Affairs to the UFK, which, in fact, rejected the application for return.
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