Case No 19-1507/31407, SC (Comm) Obzor [2018] 9.2.6.

1. Irrevocable and unconditional obligation of a surety to pay on the first demand of a creditor does not conflict with the accessory character of the suretyship.

The Supreme Court’s position

Although the court of first instance came to the correct conclusion about levying of execution on the hypothecated property of the Agricultural Firm and the F Farm, it was incorrect by collecting monies from the Agricultural Firm, the Family Enterprise, the F Farm and the B Farm solidarily, that is in excess of the main obligation secured by the suretyship contracts.

[The collegium has cited Arts 292 I and 293 II CC.] Clause 1 of the suretyship contract states that the surety is irrevocably and unconditionally undertakes upon the first demand of the creditor [to be responsible] for the principal debt, intermediary fees, interest and other financial payments of the debtor under the loan agreement, but the total suretyship amount was limited under the suretyship contract. In this case, the court of the first instance should have ordered the B Farm and the Family Enterprise to pay the Bank based on the limitation of the surety’s obligations specified in the suretyship contract. Considering aforementioned the Collegium diminished the payment due.

Case No 16-1603/3560, SC (Comm) Obzor [2018] 9.2.7.

1. A claim to invalidate a legal transaction is not a negatory claim.

2. In relation to claims to invalidate a legal transaction the prescription period, if it was not suspended and interrupted, starts running from the date of execution (conclusion) of the legal transaction.

The Supreme Court’s position

The court of first instance erred in accepting the claimant’s prayer to apply prescription period. The respondent asked to the court of first instance to apply the prescription period and thus dismiss the claim. The court incorrectly applied Art 163 CC [which states the prescription period does not apply to the ‘negatory claims’ that is claims of an owner or other possessor for elimination of any kind of violation of his right, even if these violations were not connected with the deprivation of possession] in refusing the application of the prescription period. This legal norm cannot be applied, since a claim to invalidate a contract, that is a legal transaction, is not a negatory one.

[The Collegium has cited Nr 31 RPL dd 28 November 2014 No 269 on the general term of the prescription period applicable to the claim to invalidate the legal transaction.] The claim to invalidate the stock purchase contract between A who is a stockholder of a joint-stock company and B was filed 8 years after its conclusion. No cases of suspension or interruption of the prescription period exist. Thus, such period started to run from the date of conclusion of the contract. However the claimant and the respondent, with their signatures, in accordance with their intentions and will, approved the registered contract and the claimant signed on the back of the contract, confirming receipt of the funds stipulated in the contract.

[The Collegium has cited Arts 150 and 153 CC]. According to the mentioned legal norms, the court of first instance had to satisfy the respondent’s prayer to apply the prescription period, since the three-year prescription period had passed.

Case No 10-1310/7342, SC (Comm) Obzor [2018] 9.2.8.

1. The proper fulfilment of an obligation of result, depending on its nature, can be proven with an audit report and an evaluation of appraisal organization.

The Supreme Court’s position

The private enterprise (the claimant) asked to invalidate the order of the local antimonopoly authority [on termination of the stock purchase contract].

As per the Resolution of the Cabinet of Ministers dated 5 May 2004 No 209 and the minutes of the regional tender commission 98,05% of the state package of stocks in the closed JSC [the ‘company’] was sold to the claimant at zero redemption value in consideration for [monetary and other] investments in 12 months after the conclusion of the stock purchase contract.

The buyer’s [the claimant’s] obligations included the launch of the service sector, along with the timely and proper fulfilment of investment [monetary] obligations in accordance with the business plan (clause 3.6 of the contract). From the moment of its execution, that is, within the first 6 months of investment, [the contract] established that the claimant must cover the company’s debt to the State budget and other debts, at its own expense, as well as set up a production line, supply equipment and materials to fix technological equipment and perform other actions in accordance with the schedule, which is an integral part of the contract (clause 4.1 of the contract).

With the participation of representatives of the local administration, a deed was drawn up on the result of studying the object and the circumstances of the fulfilment of investment obligations to be injected into the company. It stated that the terms of the contract are not fully met. Accordingly, based on the findings that the investment obligation was not fulfilled within the specified period, that is, the vehicles were not transferred to the patrimony of the company, the construction and repair works were not finished, the stock purchase contract was terminated with an Order of the administration.

However, all investment obligations of the investor [the claimant] in the contract are fully fulfilled, and this circumstance is confirmed by the audit report and the evaluation of the appraisal organization. In addition, cases of non-transfer of properties by the claimant on the balance sheet of the JSC were also eliminated, thus all equipment were indeed accepted on the balance sheet of JSC. This situation is also reflected in the Annual Report of JSC.

The collegium found that the court of first instance carrying out the on-site inspection of the disputed object and giving an on-site legal assessment of the circumstances identified, was correct to satisfy the claim.

Case No 10-1704/17133, SC (Comm) Obzor [2018] 9.2.9.

1. Lack of an acceptable mechanism for implementing a by-law which is cured by subsequent by-laws of lower level is not an inconsistency between the by-laws.

The Supreme Court’s position

The JSC ‘Food Bazaar’ (claimant) claimed 46 million soums of an infrastructure fee from the private enterprise (respondent). The respondent’s department stores of 255 sq. m of area are located on the territory owned by the claimant. This fact is proven with the information provided by the Cadastral State Enterprise. According to the claimant, the respondent’s debt from the use of market infrastructure for the period 2014-2017 was 46 million soums calculated based on the using of the amount of land area of the department stores located in the claimant’s territory.

[The Collegium has cited Nr 4 Presidential Resolution dd 26.04.2010 No PQ-1326, Nr 3 MoJ reg 2185 dd 27.01.2011 specify the mechanism for determining such infrastructure fees]. Due to the lack of an acceptable mechanism for accounting for the use of market infrastructure by individual owner who owns the buildings and structures within the territory of the bazaar, the tariffs are determined based on the occupied land area. Based on this the State Tax Agency and the Ministry of Finance annually established the minimal amount of the infrastructure fee calculated on the amount of occupied land indicated in the cadastral documents. The minimum amounts of these fixed fees are in turn approved by the decisions of the Council of People’s Deputies. The respondent should be charged the minimum amount based on the size of the land area in truth occupied, indicated in the cadastral documents.

The absence of a contract between the claimant and the respondent does not exempt the latter from paying the infrastructure fee, and therefore this fee is calculated based on the minimum rate determined with decisions of the khokimyat. The fees for that period were collected based on the decisions of the khokimyat on setting rates for each year. Considering the above, the Collegium finds to award only 23.1 million soums of the infrastructure fee.

Case No 11-1707/2682, SC (Comm) Obzor [2018] 9.2.10.

1. Possession [egalik*] is only part of the trifecta of prerogatives of title of ownership.

The Supreme Court’s position

The claimant (MChJ) filed a claim against the district administration [khokimyat], requesting that it be obliged to formalize the possession rights to an unauthorized construction.

The court of first instance satisfied the claims and ordered the district administration to establish possession rights to the buildings constructed by the MChJ, and [the state cadastre] to conduct state registration of these buildings after the court’s decision entered into legal force.

The court of cassation granted the MChJ the right of ownership in the buildings and ordered the district administration to register the buildings in the name of the MChJ.

The Collegium annulled the decisions of lower courts and refused to satisfy the claims on the following grounds.

[The Collegium has cited Art 164, Art 212 I, V, VI CC]. The lower courts did not comply with the requirements of these articles, and not provide the legal assessment of the MChJ’s claims. In particular, even though the MCHJ demanded the granting of possession of the buildings [egalik huquqini berishni] and to order formalizing the right of possession [egalik huquqini rasmiylashtirishni] in the buildings, the court of first instance ordered the district municipality to establish the right of ownership in the buildings, and also orders [the state cadastre] to carry out state registration of these buildings. It appears that the courts deviated from the claims requested in the statement of claim and handed down illegal decisions satisfying the claims.

In this case, according to the requirements of Art 164 CC, the ownership right consists of three elements, that is, possession of the property, its use and its disposal, and the courts did not attach importance to the fact that the right of ownership is created only when all of them are present. However, based on the requirements of Art 164 CC, it was necessary to refuse these claims because the claimant asked to grant the right of possession to the unlawful constructions which the MChJ possessed and used without the right to dispose of them, and to impose the obligation to formalize the right of ownership.

————————————

*) In general Uzbek egalik is ownership, and ega is the ‘owner’ [xo’jayin] or ‘master’ [sohib].

Case No 16-1607/3722, SC (Comm) Obzor [2018] 9.2.11.

1. A spousal consent is not required for the sale of securities.

The Supreme Court’s position

The stockholder of the joint-stock company [Aksiyadorlik jamiyati], citizen D (claimant), filed a claim against the respondent – citizen M, co-respondent – Depository MChJ and the Judicial Executors’ Department, asking to the court to invalidate the stocks sale and purchase agreement concluded with the respondent and registered with the Depository.

The claimant stated that the respondent pressured him and fraudulently obtained the conclusion of the agreement, and that payment for the stocks was not made.

The agreement was concluded between the claimant (seller) and the respondent (buyer). This agreement was registered with the depository. According to the agreement, the seller undertook to sell 16 stocks of the company, each with a nominal value of 1,000 soums, worth 16,000 soums, owned by the company, and the buyer undertook pay the purchase price within 5 days.

The court of first instance fully satisfied the claim, and invalidated the contract. The respondent appealed.

[The Collegium has cited Art 123 I CC and Nr 14.1, 14.3 and 30 RPL dd 28 November 2014 No 269]. However, the Collegium found that there was no evidence to prove that the claimant concluded the contract under the influence of fraud or threat.

In addition, the Collegium also disagreed with the claimant’s argument that the respondent had not made payments for the stocks. Because the claimant’s spouse filed a claim with the interdistrict court for civil cases against the respondent and claimant on the grounds that the 16 stock were property acquired during their marriage and that the spousal consent was not obtained for their sale, the court’s decision dismissed the claim on the grounds that the husband’s consent is not required for the sale of securities. This [civil] decision noted the claimant’s statement that he had received 600,000 soums from the respondent in exchange for the stocks. Therefore, the Collegium dismissed the claim.