The team of Pepeliaev Group’s St Petersburg office helped a client to protect its right to a preferential lease rate before the Russian Supreme Court

We have protected the interests of Essity LLC, one of Russian leaders in the area of goods for hygiene and healthcare, before the Supreme Court. The latter has quashed the resolution of the Commercial (‘Arbitration’) Court for the North Western Federal Circuit in case No. А56-50173/2022 regarding lease payments for a land plot being reviewed taking account of a preferential lease rate that was applicable in view of the right to permanent indefinite use having been re-issued.

 
Background:

The Client remitted lease payments for a land plot underlying its factory in the form of fixed amounts as had been established by Vyborg District Administration. The land plot used to belong to the client’s predecessor on the right of permanent (indefinite) use. Once the client re-issued this right as the lease right, the annual lease payment had to come to 2% of the cadastral value of the land plot. The client, therefore, applied to the Federal Agency for State Property Management (in Russian, abbreviated to ‘Rosimuschestvo’) for the lease rate to be reviewed and the relevant amendments to be made to the lease agreement. The application having been denied, the client filed a lawsuit with the court seeking to have the lease rate reviewed and unjust enrichment of more than RUB 66,000,000 recovered.
 
The trial court and court of appeal upheld the Client’s claims, but the court of cassation quashed the decisions of the lower-level courts referring to the absence of grounds for calculating the lease payments under a preferential procedure. Specifically, the court pointed out that, as the lease for the land plot had been concluded with the Client’s predecessor before the Introductory Law and the Land Code of the Russian Federation came into force (which make provision for individual situations in which the right of indefinite use is re-issued), there were no grounds for granting the benefit.
 
The Judicial Board for Economic Disputes of the Russian Supreme Court set aside this judgment and held our client’s claims to be valid. At present, we are awaiting the text of the Supreme Court’s ruling to be published. Follow our updates! 
 
The client was represented in this case by Elena Krestyantseva, Head of the St Petersburg Real Estate and Construction Practice, and Aleksandra Grischenkova, Senior Associate