Important guidelines from the Supreme Commercial Court

They indicate the limits of the freedom of contract

On the 14th March 2014 the Plenary Session of the Supreme Commercial Court has adopted a decree “On the Freedom of Contract and its Limits”. This decree is expected to become one of the most important documents in the history of the Court: never before the Court issued decrees on such abstract matters related to private law.  

The pivotal topic of the decree is the relation between dispositive and mandatory rules of contract law. There is a deeply rooted attitude in the Russian court practice to consider every rule of civil legislation as a mandatory one, unless the rule itself explicitly says that parties are free to dispose their mutual rights and duties as they like and provide in the contract for a different regulation, thus deviating from the default model envisaged by the law. In other words, Russian court practice is based on the mode of interpretation which implies that “everything, which is not explicitly permitted, shall be prohibited”. The decree of the Supreme Commercial Court purports to substitute this “presumption of mandatory character of civil law rules” with another pattern – the presumption of their dispositive character. This presumption is refutable one: court must interpret an applicable civil law rule in the way showing its purpose (“purposive interpretation”).  If the court comes to the conclusion that the purpose of the rule was, for instance, the protection of a weak party to the contract, the rule may be deemed to be mandatory to the extent necessary for the protection of the weak party; if, on the contrary, there is no ground for such conclusion, the freedom of contract and the dispositive nature of its clauses should be given maximum respect. Only an explicit prohibition against deviations from the legislative model of regulation makes a civil law rule a mandatory one, that is, courts should follow the principle “everything, which is not explicitly prohibited, shall be permitted”. The document gives examples of restrictive interpretation of legislative prohibitions, proceeding from the purpose of rules being construed. 

Furthermore, the decree of the Plenary Session recognises an important principle of interpretation of contracts, which is called contra proferentem: the disputed contractual clause must be interpreted against the interests of the party that offered the clause, and to the benefit of the counterparty.

A number of provisions relates to “unnamed” (or “innominate”)  contracts – that is, those contracts which are not defined in legislation. It is pointed out that:

 

- the qualification of a contract as an unnamed one depends not on its title, but rather on its subject, the contents of parties’ rights and obligations, the distribution of risks, etc.;

- to unnamed contracts, unless they have features of mixed contracts,  the rules of legislation on particular types of named contracts do not apply; however, they may be applied by way of analogy in cases when the respective relations between parties are not settled in the contract itself, and also in those exceptional cases when the provisions of unnamed contract clearly contradict a mandatory rule on an analogous named contract, such rule purporting, for instance, to protect public interests or preclude an obvious misbalance of parties’ interests; in so doing the court must clearly set out its view on the purpose of the rule.  

Additionally, the decree of the Plenary Session gives a number of interpretations on the abuse of legal right by one or both parties to a contract; on contracts of adhesion and the contestation of their unfair terms, and so forth. 
Свобода договора.pdf