Plenum of the Russian Supreme Court Clarifies the Procedure for Applying Restrictive Measures in the Form of Pretrial Detention of Individuals Suspected or Accused of Economic Crimes

Pepeliaev Group hereby informs that the Plenum of the Russian Supreme Court adopted on 10 June 2010 Resolution No. 15 “On Amendments to Resolution No. 22 of the Plenum of the Russian Supreme Court dated 29 October 2009 ‘On the Judicial Practice of Applying Restrictive Measures in the Form of Pretrial Detention, Bail and House Arrest’”.

In the adopted Resolution, the Russian Supreme Court clarified the procedure for applying part 1.1, article 108 of the Russian Criminal Procedure Code. This provision establishes restrictions on the application of restrictive measures in the form of pretrial detention of individuals suspected or accused of economic crimes. According to part 1.1, article 108 of the Russian Criminal Procedure Code, these include crimes stipulated by articles 159 (fraud), 160 (misappropriation or embezzlement) and 165 (property damage through fraud or abuse of confidence) of the Russian Criminal Code, if these crimes were committed in the area of entrepreneurial activity.
According to the Russian Supreme Court, if crimes stipulated by articles 159, 160 and 165 of the Russian Criminal Code comply with the two criteria listed below, it should be held that they were committed in the area of entrepreneurial activity.

The first such criterion stipulates that the crimes should have been committed by individuals conducting entrepreneurial activity or participating in entrepreneurial activity.

The second essential criterion stipulates that there should be a direct link between the committed crimes and entrepreneurial activity.

Moreover, the Russian Supreme Court clarifies in the Resolution that the definition of entrepreneurial activity provided in clause 1, article 2 of the Russian Civil Code should serve as guidance when deciding whether the individuals guilty of committing crimes were engaging in entrepreneurial activity. According to this provision, entrepreneurial activity constitutes independent activity conducted by individuals registered in this capacity pursuant to the procedure established by legislation at their own risk to generate profit fr om the use of property, sale of goods, performance of work or provision of services on a regular basis.

In respect of the first criterion, we would like to point out that the criteria for “conducting entrepreneurial activity” and “participating in entrepreneurial activity” specified in the Resolution do not make it possible to clearly identify the specific individuals covered by this criterion.

We assume that the first category includes business owners managing their businesses. The category of individuals participating in entrepreneurial activity may include employees of entrepreneurs, who perform management functions.

The reference in the second criterion to the direct link between the crimes committed and entrepreneurial activity also allows for the broadest possible interpretation of legal practitioners.

As this Resolution does not contain clear criteria for classifying a crime as one committed in the area of entrepreneurial activity, we conclude that the main goal of the Resolution is to recommend that courts select other restrictive measures than pretrial detention for individuals prosecuted for committing crimes in the area of entrepreneurial activity.

However, please note that the Resolution dated 10 June 2010 does not offer a recipe for ruling out the risk that a court may declare that the entrepreneurial activity of the suspected or accused individual merely constituted a way of implementing criminal plans and on this basis impose restrictive measures on the individual in the form of pretrial detention in accordance with the standard procedure, notwithstanding the lim itations stipulated by part 1.1, article 108 of the Russian Criminal Procedure Code.

For further information, please contact:

in Moscow – Maxim Koshkin, Head of Practice for Criminal Defence for Business, at: (495) 967-0007 or by m.koshkin@pgplaw.ru; Alexander Kurilov, Associate, at: (495) 967-0007 or by a.kurilov@pgplaw.ru

in St Petersburg - Sergey Spasennov, Partner, Head of St. Petersburg office, at (812) 333-07-17 or by s.spasennov@pgplaw.ru