Собственность и правовая стабильность: трансформация понятия собственности, Материалы конференции 5-6.11.2015 г., Тбилиси, Грузия. 2016. С. 258-266 (русс.), С. 267-275 (англ.).

Sergey Skryabin

Doctor of Laws, Lead Researcher of the

Caspian University Institute of Private Law,

Associate Professor,

Almaty / Kazakhstan

Correlation of Vindication and Restitution in the Civil Law of Kazakhstan1

 

1. Introductory Remarks

 

Let me start by referring to our already established tradition of gathering in Tbilisi, Georgia for holding serious scientific events, every three years, and by proposing to keep the tradition and make the meetings regular and perhaps even more frequent.

There are important prerequisites for that. The comparative law nature of two last conferences is obvious. Notably, the format is not quite common: the comparative aspect is majorly related to the German branch of continental law system, and to different issues of civil law transformation in post-Soviet countries. In our opinion, this is a unique and important feature of the meetings in Tbilisi.

My colleagues from Kazakhstan have already mentioned some specifics of the contemporary development of civil law in Kazakhstan. In elaboration of those, I would additionally identify some trends related to the transformation of the concept of ownership.

The first trend is the vector of development of the law system in Kazakhstan, oriented at concepts and institutions of the Anglo-Saxon law. Today it is difficult to say precisely what kind of development it would be and what the outcome would be. However, some concepts of English law have been already declared as certain and specific guidelines for the law policy in our country2 (Republic of Kazakhstan) Notably, many famous civil law scientists in Kazakhstan consistently oppose this approach3

There are also some internal and external factors that may have an influence. In addition to the above, another internal factor is the adoption of new versions of almost all Kazakh codes within a rather short

 

1 This article is based on the author’s presentation at the conference on «Ownership and Legal Stability:

Transformation of Ownership», organiz..led jointly by Ivane Javakhishvili Tbilisi State University and Max Planck

Institute for Foreign and International Criminal Law with GIZ support on November 5-6 2015, in Tbilisi, Georgia.

2See, for example, Article 4 of the Constitutional Law of the Republic of Kazakhstan of 7 December 2015 #438-V «On

‘Astana’ International Financial Center».

Hereinafter references to the Kazakh legislation are given according to the «Yurist» Information System as of 7 Feb

2016.

These ideas were discussed on 30 November 2015 at the International Theoretical and Practical Conference

dedicated to the implementation of separate provisions of precedent law in the national legislation, held by the

Institute of Law and the Ministry of Justice of the Republic of Kazakhstan. See: URL:http://www.iz.adilet.gov.kz

/ru/news/v-ministerstve-yusticii-obsuzhdalis-voprosy-implementacii-otdelnyh-polozheniy-precedentnogo-0

(accessed on 05 January 2016).

3See, for example, Сулейменов М.К. Английское право и правовая система Казахстана (Suleymenov M. K. English

Law and Legal System of Kazakhstan) / URL: http://online.zakon.kz/Document/?doc_id=34332948 (accessed on:

01.02.2016); Карагусов Ф.С. Об «имплементации норм британского права в законодательство Республики

Казахстан» (Karagusov F. S. On Implementation of British Legal Provisions into Legislation of the Republic of

Kazakhstan) / URL: http://online.zakon.kz/Document/?doc_id=33424293 (accessed on: 01.02.2016); also Карагусов

Ф.С. Записка о возможности существования двух правовых систем в рамках одной юрисдикции (в связи с

предполагаемым созданием международного финансового центра в Астане (Karagusov F. S. Note On Possible

Co-Existence of Two Legal System in the Frames of One Jurisdiction (in relation to proposed establishment of an

international financial center in Astana)) / URL: http://online.zakon.kz/ Document/?doc_id=33607423 (accessed on:

01.02.2016).

I do not find these ideas reasonable or justified either, and would suggest discussing the issue in one of the

subsequent publications.

 

 


period of time, including the Criminal Code, the Code of Criminal Procedure, the Code of Civil Procedure, the Code of Administrative Offenses, and the Labor Code. The Entrepreneurial Code recently adopted in the country has no analogues in the post-Soviet space or CIS countries4.

All the codification efforts have one thing in common; they were drafted surprisingly fast. For example, the new Labor Code5 was drafted within two summer months (!), which is actually record-breaking, a dubious record, though.The only code that remains the same is the Civil Code, though it is also edited and amended too often. Editorial amendments to the Civil Code are appearing with fearful periodicity. Thus, in 2015, the general part of the Code was amended by ten (!) new laws. Continuous changes in the Civil Code are rarely intended to improve its provisions but are rather conditioned by the adoption of new laws.

One more external factor that might potentially influence the civil legislation in Kazakhstan is the significant changes and amendments that were made to the Russian Civil Code during 2012-2015 as well as substantial changes to the Chapter related to property rights and other rights on things (veshchnoe pravo)6 that are currently being discussed.

Thus it is also possible that the Kazakh Civil Code would be amended ‘urgently» (new edition) would be adopted. The political will, declared orientation towards the Anglo-Saxon law, lack of competent representation of civil jurisprudence in the government may have an adverse impact on the content of the civil legislation in general and ownership relations in particular.

 

2. On the Transient Nature of Current Provisions of the Kazakh Civil Law On Ownership

 

Previously, we have already implemented a comparison of civil ownership laws in the Soviet Union and its republics, of the model Civil Code and some codes in post-Soviet states. In our works, we mentioned cases of succession and innovations made during the codification in 1990s7. I would identify only some of these for the purposes of this article.

Firstly, this is the existing structure of state ownership, which, in our opinion, reflects the concept of separate property. The model was developed and proposed by the academician A. V. Venediktov. It proved to be very viable and is still present in many post-Soviet countries. The dichotomy of proprietary relations (between the state and a state-run enterprise (economic management or operational control)) not only persists but also to a certain extent demonstrates an upward trend. The unanswered question that arises is why participation of the state in civil relationships cannot be ensured by application of traditional (conventional) organizational legal forms of commercial and noncommercial legal entities. For some reason, state-owned legal entities are believed to have a special legal status.

Another issue is land ownership. There is a still remaining ex-Soviet concept of state ownership, and the presumption of state ownership for undistributed lands, forests, water, flora and fauna. It has been always an amusing legislative decision that fish in the river belonged to the state, and became yours once you caught it, and belonged to the state again once you let it go. It is strange that only few realize the absurdity of this and other similar situations.

 

4See the Entrepreneurial Code of the Republic of Kazakhstan of 29 November 2015, no. 375-V. It is worth mentioning

the Code was already amended on 14 January 2016.

5Labor Code of the Republic of Kazakhstan of 23 November 2015 no. 414-V.

6«Right in things» (veshchnoe pravo) term has no analogue in English law. Approximately similar legal phenomenon is

being considered as ownership and its varieties. For more details, please see Суханов Е.А. Сравнительное

исследование владения и собственности в английском и в германском праве // Вестник гражданского права.

2012. № 6. С. 302-316 (Sukhanov E.A. Comparative research of possession and ownership in English and German

law. Civil Law Reporter. 2012 No. 6. Pages 302-316).

7See, for example, Скрябин С.В. Право собственности в проекте изменений ГК РФ: преемственность и новеллы

(Skryabin S. V. Right of Ownership in Draft Amendments to the RF Civil Code: Succession and Innovations) //

Журнал «Вестник Пермского университета» (Российская Федерация). 2012. Issue 4 (18). pp. 110-126.

 

 


Finally, there is a gap in the ownership of land parcels and ownership of buildings, facilities and other objects that are situated on the land. Under the Kazakh Civil legislation, these are separate objects frequently with specific legal regime, which causes many problems. For instance, there is a sore problem of shared construction projects that has seen no reasonable solution in terms of legislation or enforcement.

A lot can be said about the details of modern understanding of ownership right in post-Soviet countries. In the context of correlation between vindication and restitution, which is the topic of this article, comparison of these concepts suggests the following: Modern concept of restitution is a typical product of the Soviet and post-Soviet development of civil law in Kazakhstan that seriously affects and even prevents adequate protection of ownership right, which competes with vindication.

There is perhaps a simple explanation of the competition between restitution and vindication, in addition to the habitual behavior of parties in civil relationships8. The procedure of restitution, including invalidation of transactions, is rather simple. In addition to potential compensation of damages, which exists in both situations of restitution and vindication (Article 157 (7) and Article 263 of the Republic of Kazakhstan (hereafter «RK») Civil Law, respectively), restitution does not require proof of title, or proof of good or bad faith of the acquirer, or other conditions for property acquisition (with or without compensation). The whole process of restitution requires only the proof of presence or absence of any grounds for invalidation of transactions, as stipulated by the Civil Code and several legislative acts. Thus, availability of general grounds for the invalidation of transactions (in case its content contradicts provisions of law - Article 158 of the RK Civil Code) actually makes any transaction potentially vulnerable. In other words, the procedure of restitution that is related to the invalidation of transactions is much simpler than vindication; and, people like simplicity. To a certain extent, so called possessory protection could compete with restitution, but there is no such concept in the Kazakh Civil Code, and it is not even planned to be included, in contrast to Russia9. The only Article 240 in the Civil Code on usucaption (illegal possession and its protection may be an element of usucaption) cannot substitute neither adequate civil law institution of possession in the nor possessory protection.

 

3. On Restitution and Other Effects of Invalidated Transactions; Legal Nature of Restitution

 

Let us first discuss some general provisions regulating the consequences of invalidation of transactions in the Civil Code of Kazakhstan.

Article 157 (3) of the Civil Code has been seriously amended10, and is now closer to provisions on consequences of invalid transactions that are set out in Article 167 (2) of the Code, and also in Article 166 (2) of the Model Civil Code for CIS countries (hereinafter CIS Civil Code).

At present, the civil legislation of Kazakhstan envisages two types of invalid transactions:

1) invalid transaсtions that do not have any negative consequences for the parties. These include cases of so-called «curing» of transactions11, also conversion of one transaction into another in case the transaction

 

8See: Скрябин С.В. Последствия признания сделки недействительной: некоторые вопросы теории и практики применения гражданского законодательства (Skryabin S. V. Consequences of Invalid Transactions: Some Issues of the Theory and Practice of Civil Law) // Журнал «Зангер». № 10. 2013. pp. 46-47.

9See pp. 209-220 of the Draft Amendments to Section II of the RF Civil Code / URL: http://www. Privlaw.-ru/index.php?section_id=100 (accessed on 15.02.2011).

10See: Law of the Republic of Kazakhstan of 25 March 2011, no. 421-IV «On Amendments and Addenda to Some Legal Acts of the Republic of Kazakhstan on Improvement of the Civil Legislation».

11E. g. where a transaction which requires notarization is actually fulfilled by the parties or by one of the parties, and by its contents does not contradict legislation and does not violate the rights of third persons (Article 154(2) of the Civil Code), the court upon the application of the interested party shall have the right to recognize the transaction as valid, and no subsequent notarization shall be required. Curing (recognition as valid) applies to certain transactions made by minors under the age of fourteen and recognized as legally incapable because of a mental illness or dementia (Article 159 (12) of the Civil Code), etc.

 


is recognized fictitious (Article 160(2) of the Civil Code)12. The court invalidating a transaction may also restrict itself at the prohibition of further execution of the transaction (Article 157 (9) of the Civil Code), refraining from the application of other consequences related to its invalidation; and

2) invalid transactions that have special consequences in the form of:

(a)redelivery of received under the transaction, to each party (mutual restitution, Article 157 (3) of the Civil Code),

(b)confiscation of received by both parties under the transaction (non-admission of restitution, Article 157 (4) of the Civil Code), or

(c)confiscation of received by one party under the transaction (unilateral restitution, Article 157 (5) of the Civil Code).

Special consequences of invalid transactions may be called «restitution consequences». At the same time, cases of confiscation (the second and third consequences), i.e., seizure for the benefit of the state, may not be considered as a civil legal consequence of of invalid transactions 13.

Along with the consequences of invalid transactions described above, the law allows for a possibility of claiming compensation of damages.

Finally, the Civil Code of the Republic of Kazakhstan contains special provisions for cases when it is not possible to recover what has been received or due under the transaction. The law stipulates three situations when the received thing is (1) the usage of property; (2) performed work; and (3) provided service (Article 157 (3) of the RK Civil Code). «Including» phrase points out an inexhaustible list of such potential situations. Apparently, this includes cases when the property transferred under the transaction is destructed or lost prior to the invalidation of the transaction. In this case, the party shall compensate for the cost of the recoverable property, the monetary cost of the property usage, and the performed work or provided services. As indicated previously, this is a new approach for Kazakhstan. Therefore, in case of invalidation of contracts which subject is (are) work performed, services provided, or property no longer existing in kind, courts should apply compensational restitution in the amount proportionate to implemented under the transaction/contract. Such situations should be viewed as cases of objective impossibility of restitution. In this case claims of parties in relations of restitution are counter-claims of the same kind and may be presented for offsetting (Article 370 of the Civil Code), which would entail their termination.

Thus, amendments to Article 157 of the Civil Code are very important in terms of adjusting the existing judicial practice of invalidation of transactions. Especially important is the amendment of para 3, Article 157 that actually allows to transform the judicial practice, adjust to the record of realistic enforcement and the possibility of collection of everything that is due under the transaction depending on its subject.

Yet the Civil Code does not clarify the correlation between restitution and vindication.

 

4. General Provisions on Vindication in the Civil Legislation of Kazakhstan

 

Let us first discuss several general judgement about legal regulation of vindication in the civil legislation of Kazakhstan. In general, provisions in the Kazakh law are closely similar to respective prescriptions of the CIS Civil Code (Articles 302-304) and the RF Civil Code (Articles 301-303). Therefore, the discussion below concerns only three aspects of vindication that are specific for Kazakhstan.

The first specific aspect follows from provision 261 (3) of the Kazakh Civil Code: «3. Claiming assets on the grounds indicated in paragraph 1 of this Article shall not be allowed, provided the property was sold in accordance with the procedure established for the execution of court decisions.»14

This provision corresponds to Article 248 of the same Code:

«If a person, in accordance

12См. ранее.

13See our evaluation of these effects in: Скрябин С. Последствия признания сделки недействительной (Skryabin S.

Consequences of Invalid Transactions), pp. 51-52.

14Respective requirements are stipulated by provisions of Chapter 8 of the Law of the Republic of Kazakhstan of 2

April 2010, no. 261-IV «On Executive Procedure and Status of Law Enforcement Officers».

 

 


with the procedure and under the conditions stipulated in legislative acts, acquired property confiscated from the owner on a legitimate basis, the person shall acquire the right to own the property.»

Actually, here we have another case of limitation of vindication that is used together with the traditional limitation (acquisition of the object of vindication for a fee, in good faith, with withdrawal of the property from the possession of the owner underits will).

There is a practical example of how this rule may be applied: «The property of the ‘Irtysh-Berezina’ Holding was claimed for the enforcement of a court decision. An apartment in the town of Ust-Kamenogorsk was sold through the tender to Mr. Orlov who presented it to Ms. Gavrikova as a gift. In the interests of Mr. Martynenko and his family members, Mr. Makrushin approached the Department of Justice of the Eastern Kazakhstan region and claimed voidance of the tender sales and withdrawal of the apartment from another’s unlawful possession, as the apartment was owned by Mr. Martynenko and his family members and had never belonged to the ‘Irtysh-Berezina’ holding. The Ulbinsky District Court ruled to satisfy the claim partially by voiding the tender in which the apartment had been sold. However, the court refused the withdrawal of the apartment from Ms. Gavrikova’s possession, as under Article 261 of the RK Civil Code the assets of a bona fide acquirer may not be withdrawn. The cost of damage suffered by the owners (the cost of the apartment of 550000 tenge) was claimed from the Department of Justice, as the court enforcement officer who held the auction was found guilty of causing the damage. In this case, the court decision incorrectly stated the impossibility of vindication (emphasis added by author). Under Article 261 (1) of the Civil Code, the assets could be claimed from the bona fide buyer if they have been withdrawn from the owner’s possession against the latter’s will. Yet under para 3 of the same Article, ‘claiming assets on the grounds indicated in para 1 of this Article shall not be allowed, provided the assets were sold in accordance with the procedure established for the execution of court decisions’. Yet in this case the court did not mention this as a basis for its ruling.»15

The second special aspect of regulating vindication in Kazakhstan is special calculation rules for return of assets from illegal possession. According to Article 263 (1) of the Kazakh Civil Code, «A bona fide holder in his turn shall have the right to claim from the owner reimbursement of the necessary costs incurred in relation to the property from the time when income from the property became due to the owner. A mala fide holder shall have the right to obtain such reimbursement entirely or in part only in the cases in which the claim of the owner is recognized by the court as substantial.» (Emphasis added by author).

In our opinion, such assumption by court would be unjustified, and wording of Article 303 (3) of the RF Civil Code (part 2, Article 304 of the CIS Civil Code) would be more fair and adequate. The reason is simple: If the illegal mala fide holder shall not incur such costs, this could entail loss, damage or destruction of the claimed property, which contradicts first of all interests of the owner himself. Finally, the third specific aspect of vindication is related to the wide use of claims for a person’s recognition as a bona fide acquirer. It should be emphasized that such claims were raised as independent claims to the court. Such claims could be major or cross-motion.

The Supreme Court of Kazakhstan makes certain efforts to counter such practices.

For example, in the «Summary of Judicial Practice of Disputes on Contract Validity/Invalidity, On Claiming Porpperty from Another’s Illegal Possession,»16 (hereinafter ‘Summary of the Supreme Court) it was noted that «Mr. G’s initial claim on her recognition as a bona fide acquirer could not constitute a separate

15See, for example, Article 4 of the Constitutional Law of the Republic of Kazakhstan of 7 December 2015 #438-V «On ‘Astana’ International Financial Center».

Hereinafter references to the Kazakh legislation are given according to the «Yurist» Information System as of 7 Feb 2016.

These ideas were discussed on 30 November 2015 at the International Theoretical and Practical Conference dedicated to the implementation of separate provisions of precedent law in the national legislation, held by the Institute of Law and the Ministry of Justice of the Republic of Kazakhstan. See: URL:http://www.iz. Adi-let.gov.kz/ru/news/v-ministerstve-yusticii-obsuzhdalis-voprosy-implementacii-otdelnyh-polozheniy-precedentnogo-0 (accessed on 05 January 2016).

16See: Bulletin of the Supreme Court of the Republic of Kazakhstan, No. 4. 2013. pp. 64-87.

 


claim. Under Article 261 of the Civil Code, the acquirer’s bona fides may be determined only if there are legal relations in place that are regulated by this provision of the Civil Code.»17 Previously a similar assumption had been made in relation to so-called housing disputes.18

I would now say a couple of words about the disputable provisions of the existing vindication mechanism that supposedly could be overcome by the interpretation of the following three existing provisions of the RK Civil Code.

1)Provisions on objects of vindication.

In other words, what may be claimed? In all the provisions of Chapter 15 of the Civil Code, the word «property» is used.

Formally, following from para 2, Article 115 of the Code, assets that may be claimed include: «Things, money, including foreign currency, securities, work, services, and the objectified results of creative and intellectual activities, commercial names, trademarks and any other means of individualization of products, property rights and any other property.» Supposedly, objects of vindication are primarily things; or money only in case of their individualization, and securities only if documentary (which is not the case in Kazakhstan).

2)Provisions of Article 240 of the RK Civil Code on acquisitive prescription

and vindication

The existing wording of Article 240 of the Code offers two possibilities to illegal holders: а) to acquire the right to own the assets provided there are conditions in place that are specified in para. 1 of this article; and b) to protect their ownership against third persons who are not the owners of the property (para. 2). While the latter may not potentially be claimed from the owner, the former requirement is widely used (see above). Supposedly, para 1, Article 240 of the Code is the case of respondent’s rejoinder in the process of vindication, based on the new right of ownership for the thing that the person acquires by operation of law. 3) vindicatory claim and statute of limitation of action

Literal interpretation of provisions set out in Article 187 of the RK Civil Code on the statute of limitations suggests that the vindicatory claim may be subject to the statute of limitation of action, because vindication is not included in the list of claims to which the statute of limitations does not apply.

However, we assume such interpretation correct only formally. The following is a general argument for the corresponing statement:

Application of statutes of limitations to owner’s claims on vindication of its property significantly limits chances for defense of the rights in things, which denies the absolute character of this defense. Deprivation of the right of defense is actually equal to full termination of the right, which is inadmissible. This makes it impossible to resolve the issue of the thing’s belonging, when the owner is denied vindication because of the expired statute of limitations (three years). Yet there are no grounds for recognizing the bona fide acquirer as owner who is still to possess the property (movable - for two years, and immovable - for four years, according to the amended Article 240 (1) of the RK Civil Code).

In view of the differences between the statutes of limitation of action and of acquisitive prescription, such a provision is inadmissible and needs to be changed. The statutes of limitation of action and of acquisitive prescription have different legal nature; hence, they may not be jointly applied to property relations under civil law. In essence, the fact that the Civil Code includes special rules on statute of limitations of ownership and some other rights in things, including the acquisitive prescription, should exclude application of the statute of limitations to ownership relations. Partially this is stipulated by the new wording

 

17Summary of the Supreme Court, p. 72.

18See also 2) and 3), para. 15 of the Normative Resolution of the Supreme Court of the Republic of Kazakhstan of 16

July 2007, No. 5 «On Some Issues of Resolution of Disputes Related to Protection of Ownership of Accommodation»:

«Respondent’s counter-claim for his recognition as a bona fide acquirer is not required since resolution of this issue

is the responsibility of court in consideration of vindication claims (claims for withdrawal of property from another’s

illegal possession).

In other cases of protection of ownership and other rights in rem, recognition of a person as a bona fide acquirer is

of no importance».

 


of Article 240 (4) of the Code: «4. Running of the time period of the acquisitive prescription shall begin from the moment of owning the subject.»19 Thus, the legislature takes these relations beyond the scope of application of the limitation of action by establishing special rules for calculating the term of acquisitive prescription, which is related not to the awareness of the right holder (owner) about violation of his/her right but to actions of the unlawful possessor.

Yet, the above amendment of provisions of Article 240 (4) of the Civil Code has not influenced the position of the Supreme Court on these issues20, and it was not duly highlighted in some publications made after the law entered into force21.

5. On Correlation of Restitution and Vindication

 

It should be mentioned that Kazakh courts have a quitestrange tradition of application of civil law in practice: invalidation of transactions is the most comfortable and universal method of protecting civil rights22. However, certain efforts are made by Kazakh academia and practitioners to counter this tradition.

Restitution and vindication as methods of civil rights protection have certain common features, yet more interesting are the differences, both formal and substantive.

Formal consideration would be rather easy.

Restitution as an independent method of protection is not specified in the RK Civil Code. This is a doctrine that comes from Latin restituere (meaning to restore, to return, or to restitute23). There are therefore two provisions of the Civil Code that permit a reference to restitution:

(1) Para 1, Article 9 of the Code that contains reference to «restitution of the situation that existed prior to the violation of the right» as a method of protection; and

(2) The provision which says, «When a transaction is recognized as invalid, each party shall be obliged to return to another party everything that was received in the transaction;» used in para 3, Article 157 of the RK Civil Code. In this case, as mentioned before, restitution is one of the possible consequences of invalid transactions and thus a particular case of exercising this method of civil rights protection. Formal and literal interpretation of the above provisions of the Code suggests the identity of these two concepts. In our opinion, this formal identity precisely led to the wide use of this method of protection in the judicial practice.

Substantive approach of restitution permits different identification of its legal nature. Restitution of the initial situation may exist not only as one of potential consequences of invalid transactions, but also as part of other methods of civil rights protection; the vindicatory claim and the unjust enrichment claim (Articles 260-263, Article 953 of the RK Civil Code, respectively).

Taking into consideration the topic of our article, let us consider the first example.

Provisions of Article 263 of the Civil Code apparently envisage restitution of the initial situation. This is exercised by means of special calculations that should be properly made to achieve the desired results.

 

19 Please compare with previous wording: «4. Running of the time period of the acquisitive prescription for property

held by a person from whose possession it might be withdrawn under Articles 260-263, 265 of this Code, shall start

no earlier than upon expiry of the term for limitation of action for respective claims».

20 See, for example, para. 11 of the Normative Resolution of the Supreme Court of the Republic of Kazakhstan of 20

April 2006, No. 3 «On the Practice of Judicial Consideration of Disputes over Right to Housing Left by the Owner».

21 See, for example, Секербеков Б. Вопросы права собственности на жилище в судебной практике (Sekerbekov B,

‘Issues of Ownership for Housing in the Judicial Practice’)/ Гражданское законодательство. Статьи. Комментарии.

Практика. Выпуск 44. Под редакцией доктора юридических наук К.А. Мами, доктора юридических наук А.Г.

Диденко. Алматы, 2015. Документ цитируется по ИС Юрист.

22The Summary of the Supreme Court also mentions this tendency by noting that Kazakhstan annually sees a growth

in the number of such category of claims considered by courts. In most cases, the claims are redressed (Summary of

the Supreme Court, p. 65).

23See Bartoshek M. Roman Law (Concepts, Terms, Definitions), translated from Czech. М.: Legal Literature., 1989. -

448 с. p. 278 (Бартошек М. Римское право: (Понятия, термины, определения): Пер. с чешск.— М.: Юрид. лит.,

1989. - 448 с. С. 278).

According to D. Tuzov, this term was first used in academic literature as a consequence of invalid transactions by D.

M. Genkin. See details in: Тузов Д.О. Теория недействительности сделок (Tuzov D. O. Theory of Invalidity of

Transactions), p. 418 and on.

 

 


The above suggests the following: (1) the existing Code does not recognize restitution as an independent method of civil rights protection; and (2) restitution of the initial situation of parties is part of the vindicatory method of protecting some subjective civil rights (the right of ownership and some rights in things).

This viewpoint is not new and it is widely presented in civil law literature24.

The above permits the following conclusions.

Firstly, wide exercise of invalidation of transactions and the restitutional consequences of the invalidation have no adequate normative or doctrinal justification. The only potential reason (except for ordinary incompetency) is adherence to already established traditions (habits) in the field of civil rights protection that have a significant influence on civil cases and on how well the civil rights are protected in general.

Secondly, restitution of the initial situation of parties as a general method of civil rights protection (para. 1, Article 9 of the Civil Code) is part of the vindicatory method or unfair enrichment claim method of protecting civil rights. Thus, these methods would be applied accordingly - only vindication should be used for return of a thing in kind, and provisions related to unfair enrichment should be used in case it is impossible to recover assets, other benefits or rights resulting from invalid transactions.

Thirdly, and most importantly for the purpose of justice, application of vindication in cases of invalid transactions would ensure protection of property interests of acquirers, hence, stability of the civil law transactions.

Thus, in case of vindication, a bona fide acquirer compliant with Article 262 (1) of the Civil Code shall be protected from both vindication as well as from restitution of property. Moreover, he/she may file a counter claim for the recognition of his/her ownership right for the same property. The main precondition for the satisfaction of the counter claim would be proof of the bona fides of the acquisition. This is a so-called limitation of vindication known in the civil law since times of ancient Rome.

Furthermore, vindication implies a mechanism for the compensation of property losses (expenses) incurred by the illegal holder (acquirer) in relation to the maintenance and storage of the property (Article 263 of the Civil Code). This is not on the list of consequences of invalid transactions! Partially, lack of such provisions is compensated (but not substituted!) by para 7, Article 157 of the same Code. Yet, damage compensation claims understood in civil law science as a general measure of civil liability, require proof of offense, which almost does not appear either in vindication claims or in unfair enrichment claims. In addition, vindication has clear time limitations that are similar to the legal nature of the subjective civil rights that it protects. For vindication, this time limitation is the term of acquisitive prescription (Article 240 of the Civil Code)25.

Finally, return of what was gained from an invalid transaction may occur only between parties in the transaction before exclusion and/or amendment of the civil law in this field and changes in the existing judiciary practice. In all cases of property return from third parties, rules of restitution should not be applied, and courts should be guided by the provisions of the Civil Code in relation to vindication or unfair enrichment26.

 

 

24 See for example: 1) Алимбеков М.Т., Тумабеков Д.А. О некоторых вопросах недействительности сделок, об истребовании имущества из чужого незаконного владения (Alimbekov М.Т., Tumabekov D.А. On Some Issues of Transaction Invalidity and Withdrawal of Property from Anothers Unlawful Possession) / Гражданское законодательство. Статьи. Комментарии. Практика. Вып. 41. Под ред. А.Г. Диденко. - Алматы: Раритет, 2013. - 344 с. С. 38 и сл.; 2) Шрамм Ханс-Йоахим Практические вопросы применения предписаний о сделках // Предмет, метод и система гражданского права: Материалы междунар. науч.-практ. конф., в рамках ежегод. цивилистических чтений, посвящ. году «Германия в Казахстане 2010» (Schramm Hans-Joachim, Practical Issues of Applying Orders on Transactions // Subject, Method and System of Civil Law: Materials of International Theoretical and Practical Conference in the frames of Annual Civil Law Readings dedicated to the Year of «Germany in Kazakhstan 2010»), Алматы, 13-14 мая 2010 г. / Отв. ред. М.К. Сулейменов. - Алматы: НИИ частного права КазГЮУ, ГЦТ, 2010. С. 550-551; 3) Гутников О.В. Недействительные сделки в гражданском праве (Gutnikov О.V. Invalid Transactions in Civil Law), p. 206; 3) Тузов Д.О. Теория недействительности сделок (Tuzov D. О. Theory of Invalidity of Transactions). pp. 405-415, 435.

25 See above.

 


26 A similar position was formulated by the Supervisory Judiciary College for Civil and Administrative Cases of the Supreme Court of the Republic of Kazakhstan that indicated in the Summary of the Supreme Court that «in case the claimant chooses invalidation of transaction as a method of protection of the violated right pursuant to Article 9 of the Civil Code, the Court shall apply the consequences of the invalidation by operation of law, regardless of the claimant’s position, because application of consequences of invalid transactions should not necessarily be filed as a separate claim». Also: «restitution shall be applied as an effect only to the first transaction if invalidated, as a transaction between the property owner and the property acquirer. To subsequent transactions (second, third, etc.) restitution may not be applied because these are transactions between unauthorized alienators and new acquirers. In this case, effects shall be in the form of withdrawal from another’s unlawful possession (Article 260 of the Civil Code), withdrawal of property of a bona fide acquirer (provided there are conditions in place that are envisaged by Article 261 of the Civil Code), eviction, etc.»

It is only necessary to specify the claims and respondents, supposedly, in the Normative Resolution of the Supreme Court «On Invalidity of Transactions».

 

 

6. Conclusions and Recommendations

Application of effects of invalid transactions should be detailed better in the existing legislation of the Republic of Kazakhstan as well as in the enforcement practice of courts. Whereas amendment of the legislation is rather a far perspective, the enforcement practice may be amended in relatively short time with the adoption of a respective Normative Resolution of the Supreme Court.

When applying effects of invalid transactions, courts should be guided by the principles of reasonableness, good faith and fairness that are reflected in the Civil Code but are not supported by detailed laws. This is actually justified because such definitions should be detailed not by laws but by the field of civil law and by judicial practice. In each case, the court should compare actions of parties to respective basic categories and interpret them specifically following from the circumstances of a case.

Restitution as an independent method of civil rights protection may be applied only when claiming withdrawal of property from parties in the transaction. In case the property was transferred under another transaction, its return (withdrawal) may be exercised only under provisions on vindication or unfair enrichment.

We assume that these or other formulated proposals would help overcome the habit of invalidating transactions as well as the use of respective consequences of invalidation. That would finally contribute to proper protection of property interests of acquirers and would ensure necessary stability of the civil case process.

Translated from the Russian by Guranda Jachvliani




 

 

9 февраля 2018, 17:49
Источник, интернет-ресурс: Скрябин С.В.

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