1. When a participant’s share* in the charter capital of the company is attached under the writ of execution of the criminal court, the state executor can foreclose on the property of the company of the same value which can be given to condemned participant in kind for leaving the company. At the same time, the right to separate from such property the shares of other participants of the company is retained. Such foreclosure of the company’s property in kind for the debts of the convicted participant is not in itself sufficient to evidence a violation of the procedures of public sale (Art. 381 I CC). The title of the buyer to such property acquired from the public sale is protected under Art. 229 II CC and Nr. 2 (4) RP-5197.

The fact of the case

The criminal court ordered the debtor (convicted person) to pay the money** to her creditors and directed its sentencing decision for forced execution. After the passing of the sentencing decision, another participant appeared in the company where the convicted person had been the sole participant. The state executor seized the company’s immovable property*** with its accompanying equipment (the “property“). Then the convicted person ceased to be a participant and the second participant became the sole participant. The state executor sold the property to the buyer through an online [public] auction.

The company asked to the court to annul the results of an online [public] auction and rule on the illegality of the sale of the company’s property, the shares in which had been [fully] transferred [from the convicted person] to another person.

The court of first instance dismissed the claim. The court of appeal instance upheld the decision.

The Supreme Court’s position

The fact that the dispute arose between the economic entities, and that the property was seized based on a writ of execution issued under a sentencing decision [of the criminal court], cannot be the basis for exclusion of jurisdiction of the economic court (Art. 25 Nr. 1, Art. 26 I Nr. 9, II EPC, Article 34 of Law No. 258-II). The state enforcer’s attachment on the property can be removed by a claim of a participant of this company (Nr. 88 (2), (3) Rules MoJ Reg. No. 1091), but not by the company itself. In this case the claim was filed by the improper claimant.

It shall be prohibited to cancel or change the protocol of the auction results for non-compliance with the procedures except for the rules of organization and conduct of the electronic online auction (Nr. 2 (4) PD-5197). If the property is sold in accordance with the procedure established for the execution of court decisions, it is not allowed to vindicate the property on the grounds specified in part one of this article [from a good faith owner of such property] (Art. 229 II CC)****. The rules of the Regulation on online auctions for the [public] sale in execution of judicial acts (PD-3149) are not violated. In this case, the courts rightly dismissed the claim, because the claimant did not prove the violation of the provisions of the law on holding the auction (Art. 381 I CC).

The Supreme Court upholds the decisions of the lower courts.

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*) This word does not mean ‘aksiya’/«акция» which is translated as a ‘stock’, not as the share (‘ulush’/«доля»). On legislative consequences of inaccurate confusion of these terms: Sukhanov Ye.A. Sravnitel’noye korporativnoye pravo [Comparative Corporate Law]. — Moskva: Statut, 2015. P. 124 et seq. 

**) It is unknown whether a civil action was initiated within a criminal proceeding (Art. 56 CrPC) without which the criminal court could not have ruled on a recovery of (civil) damages (Art. 283 I CrPC). Cf. Art. 53 CO which provides for the procedural rule on independence of the judge on civil cases from criminal law and criminal jurisdiction. Art.53 II CO obliges the judge on civil cases to decide freely at least on the question of existence or absence of fault, its degree, intention or negligence and the assessment of compensation (la fixation de l’indemnité), without feeling bound by a previous criminal judgment. This paragraph particularly concerns the condemnation judgement of the criminal court See: CR CO I-Werro/Perritaz, art. 53 N 1-3; para. 5 b et seq. in the Tribunal fédéral’s decision ATF 107 II 157. 

***) Within the meaning of Art. 290 CrPC the property of a suspect or defendant in the possession of third parties may be seized if sufficient grounds to believe that the property de facto belongs to the suspect or defendant are obtained in the course of the proceedings. (Nr. 5 (2) of RPL dd 27 December 2016 No. 26). This abstract ergo omnes interpretation of the Plenum of the Supreme Court demonstrates that distinct personality of the legal entity can be disregarded within the criminal proceedings.

****) Such provision on the limits of vindication does not exist in Model Civil Code (Part I). It apparently migrated from the Art. 152 RSFSR Civil Code. On its limits and doctrine behind it see: Novoselova L. A. Istrebovaniye iz chuzhogo nezakonnogo vladeniya imushchestva, prodannogo v poryadke ispolneniya sudebnogo akta // Vestnik grazhdanskogo prava. – 2006. №. 1. P. 47 et seq.; Cf. l’art. 2277, al. 1er (anc. art. 2280) C. civ. and Art. 934 II CO.