Oda Russian Commercial Law 2007-1

342 TORT (OBLIGATIONS ARISING FROM CAUSING OF HARM) AND UNJUST ENRICHMENT

The effect of this provision is that the juridical persons and physical persons whose activities involve increased danger to the surroundings are liable, unless they prove that the damage has occurred as the result of an insurmountable force or an intentional act of the victim. Insurmountable force is understood as “extraordinary and unpreventable circumstances under the given conditions” (Art.401, para.3).

This provision is an exception to the general rule of tort liability based upon fault but it has been fairly extensively applied since the time of socialism.Asimilar provision had existed in the socialist civil codes whereby the listed activities included those of industrial enterprises and installations, transport organisations, and car possessors. There have been cases where the provision was applied to the keeping of animals in a zoo and a circus, as well as the dumping of toxic waste above the permissible level in the environment.6 Damage caused by traf c accidents was covered by this provision, not by the general tort provision. Thus, in cases of traf c accidents, the tortfeasor bore non-fault liability. This is still the case in the current Code.

The above provision in the current Code merely lists examples of activities associated with an increased danger to the surroundings. Whether the activity involves increased danger depends on the “large scale of destructive power which cannot be controlled in the light of the given state of safety technology”. The resolution of the Plenum of the Supreme Court of the Russian Federation of 1994, which was published before the enactment of the Civil Code, but is still applicable, suggests that such activities are those whose implementation creates an increased probability of the occurrence of damage caused by the impossibility of people fully controlling them, as well as activities involving the use, transportation, and storage of objects, substances etc. of a production and commercial nature which have the same characteristics as above.7 In a recent case, the owner of a tanker was held liable for the environmental damage resulting from the spillage of oil.8

The person (juridical or physical) who is in possession of the sources of increased danger on the basis of ownership, right of economic management, right of operational administration, lease, trust (trast) etc. is liable for damages in such cases. This person is exempted from liability, if he proves that the source of increased danger left his possession by an unlawful act. It is important to note

6S.N.Bratus and O.N.Sadikov eds., Kommentarii k grazhdanskomu kodekusu RSFSR, Moscow

1982, p.533.

7Item 17, Decision No.3 of the Plenum of the Supreme Court, April 28, 1994.

8Decision of the Presidium of the Supreme Commercial Court of July 20, 1999, Case 7431/98.

344 TORT (OBLIGATIONS ARISING FROM CAUSING OF HARM) AND UNJUST ENRICHMENT

in a manner which contributed to the occurrence or increase of damage, the amount of compensation is to be reduced accordingly. If the victim was grossly negligent and the liability of the tortfeasor was on a non-fault basis, the amount of compensation may be reduced or the compensation may be denied altogether. On the other hand, in cases of the death of the breadwinner, the fault of the victim is not counted (Art.1083, para.2).

An airline company, Vnukovskie avialinii, brought an action against an open joint stock company, Aeroport Vnukovo claiming 93,541,500 roubles in compensation for the damage caused on a container as a result of the collision with an aircraft- pushing vehicle. The judgment of the rst instance acknowledged the claim, but ordered the defendant to pay half of the claimed amount on the ground that gross negligence on the part of the plaintiff had contributed to the damage. The appellate court ruled that the liability rested with the possessor of the source of increased danger but the level of compensation depended on the level of fault of both parties and upheld this judgment. The court of cassation also upheld this judgment.

Upon protest, the Supreme Commercial Court ruled that there was gross negligence on the part of the plaintiff in that the container was not located in the right place and that there was no control by the company of the driver of the container carrier. Therefore, the lower court judgment was right in reducing the amount of compensation to half.11

One of the unique features of Soviet/Russian Law is that the court is entitled to reduce the amount of compensation by considering the nancial state of the individual, unless the act was intentional (Art.1083, para.3).

E, who was driving a car, collided with another car driven by K. E was convicted of a breach of traf c rules and of causing bodily harm to K and was also ordered to pay 3 million roubles (before denomination) as compensation for moral damage by the district court. The presidium of the provincial court quashed this judgment on the ground that the district court failed to take into account the actual nancial state of E, who was a pensioner, married and with two children (minors). The amount was reduced to 500 thousand roubles.12

Injunctions are available under the current Civil Code. The Code provides that the danger of causing damage in the future is a ground for an action to prevent activities which create such a danger (Art.1065, para.1). In addition, if the dam-

11Decision of the Presidium of the Supreme Commercial Court, September 10, 1996, Case 471/96.

12BVS RF, 1995 No.4, p.15.

age which has already occurred was a result of the utilisation of enterprises, installations, or production activities which continue to cause damage and threaten further damage, the court may oblige the defendant to suspend or terminate such activities. However, the court may dismiss the claim for suspension or termination, if it considers this to be against social interests (ibid., para.2).

2SPECIAL RULES

There are some provisions which cover speci c rules of tort liability.

1)Liability for Damage Caused by a Minor Below 14 Years of Age

In such cases, the parents are liable, unless they prove that the damage was not caused by their fault (Art.1073).

2)Liability for Damage Caused by a Minor between 14 and 18 Years of Age

As a rule, these minors are liable for damage caused by them under the general rules of tort, but if they do not have income or assets, the parents are liable, unless they prove that the damage was not caused by their fault (Art.1074).

3)Liability for Damage Caused by Persons who are Declared Incapable to Act

The guardian or the organisation which is under an obligation to supervise this person is liable, unless they prove that the damage was not caused by their fault (Art.1076).

4)Liability for Damage Caused by a Person Declared Partly Incapable to Act (Limited Capability)

This denotes those who have alcoholic or narcotic dependency. They are liable for the damage caused (Art.1077).

the cost which became necessary as a result of the harm including medical care, supplementary diet, medicine, arti cial limbs, treatment in sanatoriums, acquisition of special means of transportation, training for another profession etc., is recoverable, provided that they are needed and cannot be obtained without payment (Art.1085, para.1). In determining the lost income, pensions and other payments the person is entitled to receive are not deducted (ibid., para.2). This is a marked difference from the socialist civil codes which deducted pensions and other payments and as a result made the amount of damages meagre.

In cases of a death of the bread-winner, the following persons are entitled to compensation (Art.1088, para.1):

i)dependants who are not capable of working;

ii)children of the deceased who were born after his death;

iii)either parent or spouse or other members of the family who did not work and were dependent on the deceased such as children, grandchildren, brothers and sisters below 14 years of age, or those above 14, but who need care for health reasons;

iv)a person who was dependent on the deceased and who lost his working capability within ve years of his death.

A person who has the right to claim compensation for the death of the breadwinner is entitled to the portion of the wages (income) of the deceased which this person had been receiving or had the right to receive for his subsistence (Art.1089, para.1). The period of compensation for damage depends on the category of these people. For example, minors are paid damages up to the age of 14, while the disabled are paid during the period of disability (ibid., para.2).

As a rule, compensation for the loss of life or health is paid as a monthly payment. The court may order a lump sum payment if there is a reasonable ground to do so, but this cannot exceed three years’ payment (Art.1092, para.1). If the working capability of the victim subsequently decreased, the victim may require an increase in the monthly payment, while in the opposite case, the tortfeasor may require a decrease of the payment (Art.1090). Furthermore, if the price of subsistence increases, the payment must be indexed with the prices. The increase of the minimum wage also affects the payment (Art.1091).

4MORAL DAMAGE

One of the novelties in the post-socialist period is the introduction of compensation for moral damage. The Fundamental Principles of the Civil Legislation of the USSR of 1990 introduced this system for the rst time in the history of

348 TORT (OBLIGATIONS ARISING FROM CAUSING OF HARM) AND UNJUST ENRICHMENT

Russian Law. There were discussions on this matter in the early 20th century and the draft Civil Code in the Tsarist period accommodated a provision on compensation for moral damage, but the Code was never enacted.15

Under the socialist system, compensation for moral damage was denied, since it might result in an unfair windfall pro t for the victim. Compensation was limited to real damage. However, there were proposals to introduce this system, particularly after some Eastern European countries introduced it.

The current Civil Code has a provision on moral damage in the General Part, since it is intended to cover not only tort, but contractual liabilities as well (Art.151). This provision is part of a chapter on “non-material welfare and its protection”. Compensation for moral damage is indeed a novelty in the postsocialist period. It was introduced by the 1990 Fundamental Principles of Civil Legislation of the USSR and inherited by the current Civil Code.

The decision of the Plenum of the Supreme Court of 1994 de nes moral damage as follows:

moral or physical suffering caused by an act (or omission) which harms an immaterial bene t that belongs to an individual by birth or by law (life, health, personal integrity, business reputation, privacy, personal and family secrets etc.), or infringes his personal non-proprietary rights (right to use the name, copyright and other rights in accordance with the laws protecting the rights on the results of intellectual activities) or which infringes the proprietary rights of individuals.16

This includes “psychological experience related to the death of the next of kin, the impossibility of continuing active social life, and the loss of work”.

As a corollary, it is only individuals, not juridical persons, who are entitled to claim compensation for moral damage. “Since juridical persons cannot feel physical or moral pain, it is impossible to cause them moral damage”.17

The Civil Code provides that moral damage is subject to compensation in monetary terms. However, there are no precise criteria as to the determination of the amount of compensation.18 The Code provides that the court should take into account the level of fault of the person who has caused the harm (if fault is required) and other contributing factors. The court must also consider the moral and physical suffering of the victim (Art.151). There is a requirement of reasonableness and fairness as well (Art.1101, para.1).

15R.A.Beliatskii, Vozmeshchenie moral’nogo vreda, St.Petersburg, 1913, p.52.

16Decision of the Plenum of the Supreme Court, December 20, 1994, No.10.

17Judgment of the Supreme Commercial Court, December 1, 1998, Case 813/98.

18B.D.Zavidov and O.B.Gusev, Grazhdansko-pravovaia otvetstvennost’, Moscow 2000, pp.485486.

The rule is that moral damage to non-proprietary rights is subject to compensation without restriction, while moral damage to proprietary rights is subject to compensation only in cases that are speci cally provided by law (Art.1099, para.2).

In principle, fault is a prerequisite of compensation for moral damage. However, fault is not required in cases where the damage was caused to the life or health of an individual by activities involving increased danger, or was caused to an individual as a result of unlawful conviction, arrest, detention etc. Furthermore, it is not necessary to demonstrate fault where damage was caused by the dissemination of information which has harmed honour, dignity, or business reputation (Art.1100).

Concerning defamation, under the socialist civil codes, the publication of a rebuttal was the only remedy. The 1990 Fundamental Principles of Civil Legislation introduced compensation of moral damage for defamation. The present Code inherited this provision.

Asenior doctor of a hospital, Shorokhov, brought an action against the editor of the newspaper Tribuna and the senior assistant procurator of the City of Syktyvkar for compensation for moral damage caused by the publication of an article in the newspaper. Y was the author of the article which, according to the plaintiff, was untrue and harmed his honour and dignity.

The City Court ruled in favour of the plaintiff and ordered the newspaper to payve million roubles and Y to pay one million roubles. The judgment was upheld by higher courts. The protest brought to the Presidium of the Supreme Court of the Russian Federation was also dismissed.

The newspaper published an article which claimed that the re-registration of a small enterprise Sana into a joint stock company was effected for the purpose of separating Shorokhov from other founders, and that the commercial activity of this enterprise was aimed at reselling bandages at a high price to the hospital where Shorokhov worked. The City Court had earlier ruled in favour of Shorokhov and ordered the newspaper to publish a rebuttal by Shorokhov in another procedure. The Supreme Court ruled that under such circumstances, the City Court had acted lawfully in nding that due to the publication of an article which was untrue and which harmed the honour and dignity of the plaintiff, moral damage, which requires compensation by the editor of the newspaper and the author, had occurred. The City Court was right in determining the amount of compensation for the moral damage by taking into account the nature and the content of the publication, the level of dissemination of the information which harmed his honour and dignity as well as his reputation, and other contributing factors.19

19Decision of the Presidium of the Supreme Court, July 10, 1996, in Spory o zashchite chesti, dostoinstva i delovoi reputatsii; sbornik dokumentov, Moscow 2000, pp.24-27.

It is a constitutional right of the people to claim damages for unlawful acts of the government or government of cials. The Civil Code provides as follows (Art.1069):

damage caused to individuals or juridical persons as a result of unlawful acts (or omissions), including the enactment of acts against the law or other legal acts, by a state agency, agencies of local self-government or their of cials is subject to compensation.

The 1999 Foreign Investment Law also has a provision on the liability of state agencies (Art.5, para.2). They are to be liable in accordance with the Civil Code.

Not only are acts or omissions of these agencies or of cials covered in this provision, but so is the enactment of unlawful normative or non-normative acts. “Of cials” in this context means only the key personnel who perform the function of a representative of power or “organisational-dispositionary, admin- istrative-economic” power, i.e. prerogative power.22 The act should have been effected in the course of duty. Otherwise, the liability is covered by general tort rules.

The above provision does not explicitly require fault on the part of the government or municipal agencies or of cials. However, the Supreme Commercial Court is of the view that when applying this provision, the general requirements of tort, including the existence of fault, should be met:23

An individual entrepreneur P brought an action against the Federal Financial Administration of the Puskov Province for the damage caused by the unlawful con scation and the destruction of goods. The judgment of the district court which had served as a basis for the con scation was quashed by a higher court. The Court ruled that the act of destroying con scated goods was unlawful and acknowledged the causal links between this unlawful act of the government agency and the damage caused to P. This was upheld by higher courts.24

Judge M, who was a deputy president of the City Court of Magadan, was convicted of neglect of duty and of intentionally rendering an unjust judgment. The act of judge M seriously harmed the rights and lawful interests of P. Judge M was

22Sadikov ed., supra, p.673.

23Decision of the Presidium of the Supreme Commercial Court, December 8, 1998, Case 5656/98.

24Decision of the Federal Commercial Court of the North-Western District, April 10, 2000, in A.N.Dolzjenko et al eds., Sudebnaia praktika po grazhdaskim delam, Moscow 2001, pp.922924.