Courts Will be Able to Terminate and Modify Contracts Retroactively

The Government of the Russian Federation has submitted to the Parliament bill providing for amendments to paragraph 3 of Article 453 of the Civil Code. The relevant draft law is posted on the legal information portal and is currently undergoing public discussions.

According to the current wording of paragraph 3 of Article 453 of the Civil Code, in the case of a change or termination of the contract by court, the obligations are considered changed or terminated from the moment the court decision on the change or termination of the contract enters into force.

The bill is supposed to supplement the norm with the words ", unless otherwise established by a court decision."

After making changes to the Civil Code – and considering the fact that the bill was introduced by the Government, there is no doubt about it – the court, when making a decision on changing or terminating the contract, sets the date of such termination or modification.

At the same time, according to the updated text of the law, the court will have the right to terminate or amend the contract both retroactively and to set a date for such termination or amendment of the contract in the future. In addition, it will not be excluded to change or terminate the contract under the condition of the occurrence or non-occurrence of any events (facts) – the literal interpretation allows such a possibility.

It seems that the appearance of the bill is due to the "sanctions war" and is "aimed" primarily at contractual relations with counterparties from "unfriendly" states.

At the same time, the novel is unlikely to contribute to greater certainty in civil turnover.