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The Russian Constitutional Court has confirmed that Zapolyarneft's lawyers and Pepeliaev Group have taken the correct position in terms of whether environmental charges are proportional

On 2 June 2015, the Russian Constitutional Court announced its resolution concerning the claim of OOO Zapolyarneft stating that environmental charges imposed on this company were disproportionate. One of the rules of the Russian Forestry Code and the Russian Government's resolution based on it were recognised as inconsistent with the Constitution.

The claimant, an oil producer, promptly performed clean up work, which to a significant extent removed the adverse consequences of an oil spillage resulting from a technology breakdown.

The legislative rules that were challenged were uncertain, and this gave rise to contradictions in court and administrative decisions. As a result, the amount charged to the claimant was of the same order as the fee that would have been imposed on it if it failed to clean up the spillage. When applied this way, the challenged rules discouraged companies from performing a clean up, because a company would lose out by doing this, incurring greater costs, when the amounts charged to it are factored in, than if it had refused to clean up. The Federal Supervisory Natural Resources Management Service and the courts that supported it took the stance that neither the level of pollution, nor the outcome of the clean up work is relevant, and that a fixed fee is to be paid for the violation that the company has committed.

'From the legal viewpoint the Constitutional Court handed down a profoundly justified and well-balanced decision. Both the oil company, as the claimant in the lawsuit, and we as its representatives adhered to a common position that it is not only the property interest which matters in this case. It is far more important that the law should promote the restoration of the forest's ecological system. However, what happened was precisely the opposite. Moreover, the general legal principle of proportionate liability should be observed in all the spheres, including environmental violations,' Pepeliaev Group's managing partner Sergey Pepeliaev noted.

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