The President of the Russian Federation introduced the lockdown regime from 30 March 2020 until 3 April 2020, which was further extended until 30 April 2020. Business days during this period were declared as non-working days where employers are obliged to keep the salaries of their employees in full. Russian law is not familiar with the concept of non-working days and, therefore, it was unclear how non-working days should be treated in terms of performance of contractual obligations and calculation of limitation period. There have been certain issues in practice where some counterparties refused to comply with their payment obligations referring to the fact that non-working days are non-business days for them.

On 21 April 2020, the Supreme Court of the Russian Federation (the "Supreme Court") issued an overview where it addressed some topical issues related to the lockdown regime introduced in light of the coronavirus pandemic.

Performance of contractual obligations

For the purposes of the Civil Code of the Russian Federation (the "Civil Code"), business days include weekends and public holidays. According to the Supreme Court, non-working days should not be deemed non-business days within the meaning of the Civil Code. Otherwise, this could cause a suspension of all obligations for a long period of time, as well significantly reduce the civil turnover, which is not in line with the general principle of the Civil Code.

The Supreme Court clarified that the introduction of the non-working days regime should not be considered as a ground for deferral of performance of obligations. However, the coronavirus pandemic and the respective measures by the state and municipal authorities may be deemed a force majeure if the certain requirements are met. In particular, such circumstances should be:

• unavoidable (so that it is objectively impossible for any market participant engaged in similar activity to avoid such circumstances or its consequences; and
• extraordinary (that is, the circumstances are exceptional with their occurrence being unusual).

Circumstances whose occurrence depends on the party (e.g. lack of money, breach of obligations by the debtor’s counterparty, unlawful actions by the debtor’s representative) should not be regarded as a force majeure. However, the Supreme Court pointed out that the lack of money may be considered as a force majeure as well if:

• it has been caused by the restrictive measures (e.g. prohibition of certain activities, introduction of self-isolation regime resulting in significant decrease in revenue); and
• a reasonable market participant with due care and diligence could not have avoided adverse financial consequences.

Therefore, the court would decide whether particular circumstances qualify as a force majeure on a case-by-case basis. The court would consider:

• the term for performance of obligations;
• the nature of the obligation in breach,
• the reasonableness and good faith of the debtor;
• the relevant documents (opinions, certificates) issued by the responsible authorities or organisations (e.g. the Chamber of Commerce and Industry of the Russian Federation); and
• whether the relevant circumstances have caused the non-performance of contractual obligations.

A force majeure should not terminate debtor’s obligation itself provided that its performance is feasible once the relevant force majeure no longer exists. The debtor would not be liable for the delayed performance whereas the creditor would be entitled to unilaterally rescind the agreement if it is no longer interested in the performance as a result of the delay. If the creditor chooses to keep the agreement in force, the debtor must fulfil its obligations within a reasonable time upon termination of the force majeure.

If the coronavirus pandemic or adoption of legal acts by the state or municipal authorities have rendered the performance of obligations impossible, in full or in part, which is permanent, the relevant obligations shall be terminated respectively on the basis of Article 416 (Termination of obligation due to actual impossibility of performance) and Article 417 (Termination of obligation due to legal impossibility of performance) of the Civil Code.

An agreement may also be amended or terminated upon material change of circumstances after entering into the agreement based on Article 451 (Modification and rescission of an agreement due to material change of circumstances) of the Civil Code. Such material change should occur in relation to circumstances upon which the parties relied when entering into the agreement. If parties fail to agree the relevant changes to the agreement or its termination, this can be carried out unilaterally through filing the relevant claim with a court.

The Supreme Court suggested that a party may also consider invoking other defences. For example, it may suspend performance or refuse to fulfil its obligations based on Article 328 (Reciprocal performance of obligations) of the Civil Code if

• the other party fails to perform its obligations; or
• the circumstances indicate that the relevant obligations will not be fulfilled within the agreed term.

Limitation period

Under the Civil Code, a limitation period shall be suspended if a force majeure preventing from filing a claim emerged or continued to exist

• during the last six months of the relevant limitation period; or
• if the limitation period is equal to, or less than, six months, during the limitation period.

A court may dismiss a claim if the defendant refers to the termination of the limitation period. In such case, the claimant would have to prove that certain circumstances may qualify as a force majeure which prevented him from filing a claim during the existence of these circumstances. The court would further decide whether such circumstances qualify as a force majeure event on a case-by-case basis. Subject to the abovementioned conditions, the measures by the state and/or municipal authorities in connection with the coronavirus pandemic may be a ground for suspending a limitation period.

In addition, an individual may restore a limitation period if a court holds that the reason for missing the limitation period is good. According to the Supreme Court, such reasons include introduction of the self-isolation regime, impossibility to submit a claim through the Internet or postal services organisation due to the age, health conditions or other circumstances.

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