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. Last Updated: 07/27/2016

Legal Tangles Put Bailiffs at Governors' Mercy




Like the courts that ostensibly give them their marching orders, Russia's bailiffs are caught in a web of conflicting legislation. Disputes drag on for years and different courts ruling on competing suits filed under different sections of the law can have bailiffs literally chasing their own tails.


The battle for control of the Achinsk Alumina Factory in the Krasnoyarsk region is a classic example - with the bailiffs receiving 10 different court orders, some of which directly contradict each other, according to Sergei Ruban, the head of the Federal Bailiffs Department, a section of the Justice Ministry.


"There are [separate] orders to install Nasyrov as Achinsk manager, to install Fetisov, to install Ostrovlyanchikov and others," Ruban said, reeling off the surnames of just a few of the numerous players in this dispute.


"Then we have court orders that ban Nasyrov, Fetisov and Ostrovlyanchikov from holding management posts at the enterprise," he adds.


All three figures mentioned come from one side or the other of the dispute over Achinsk, which pits workers against management.


As well as the Achinsk tangle, bailiffs have been to the fore in recent wrangles over national oil pipeline monopoly Transneft, Far East shipping firm Vostoktransflot and the Vyborg Pulp and Paper Mill.


While the bailiffs service has tended to act most effectively for those with support from the executive branch of government, they claim to be independent-minded functionaries, trying to navigate their way through confusing waters as best they can.


"We are independent in general - well, we believe we are - from federal bodies," said Ruban's deputy, Nikolai Galanin. "We would like to think so," he added, in a subdued mumble.


Pressed on his department's relations with the powers that be, Ruban was also somewhat equivocal.


"We don't want you to have the impression that bailiffs are working hand in hand with administrations. We have an example when, in one Russian region, the chief bailiff fined the governor. There are other examples where money has been recovered from governors on court orders," Ruban said.


However, he declined to give details.


Meanwhile, the more high-profile cases in recent times display a pattern - getting the local governor or the federal government on your side is vital. Without them, the bailiffs are paper tigers.


In June, bailiffs accompanied by 20 armed men in ski masks installed new management at Vostoktransflot - a major Russian refrigerated transport shipping company in the Primorye region on Russia's Pacific coast. The bailiffs were acting on a district court injunction to overturn decisions made at a board meeting two years earlier. Under the new management - which is actually the old management team that had been fired after Moscow-based investors took a large stake in the firm - Vostoktransflot has collapsed.


The losing side in the dispute claims that the bailiffs were acting at the behest of Primorye region Governor Yevgeny Nazdratenko.


"The influence of the governor in the Vostoktransflot story can be clearly seen," former Vostoktransflot executive director Vyacheslav Knyazev said in a telephone interview from Vladivostok earlier this month.


Since June, the Vladivostok State Arbitration Court has issued several court orders to the effect that Knyazev and his fellow managers be reinstated, but the bailiffs have declined to act on them because they had other, more significant orders to fulfill, Knyazev said.


Nazdratenko and Tatyana Loktionova, head of the State Arbitration court in Vladivostok, have clashed repeatedly over the past year.


But "the chief bailiff and his service in Primorye have good relations with the administration," Galanin said.


An even more prominent case was the ouster in September of Transneft president Dmitry Savelyev. Claiming that federal government moves to sack him were illegal - any board or shareholders' meeting to do so should require 45 days' notice, which was not given - Savelyev locked himself in Transneft's Moscow headquarters.


He was ejected from the premises by a squad of armed police who used a chainsaw to cut their way in to enforce a court order for his removal. In stark contrast, when Savelyev later won a fresh court order for his reinstatement, he was accompanied by a solitary bailiff. As a result, Savelyev is still unemployed.


A similar lack of effective enforcement has dogged attempts by American firm East-West Invest to resolve a dispute with their former partners in a joint venture to set up and run a Subway sandwich franchise in St. Petersburg. East-West Invest obtained an order more than two years ago from the Stockholm Arbitration Court awarding damages of $1.2 million plus interest against the Minutka company run by Vadim Bordug. The court - which was specified as an appropriate venue for dispute resolution between the two partners - ruled that Bordug had illegally wrested the sandwich store away from East-West by force in 1995.


Even after the Russian Supreme Court upheld the Stockholm ruling, East-West has been unable to get that order carried out. The U.S. firm's hopes were briefly raised in June 1998, when bailiffs went to the Minutka cafe - which operates on the premises where the Subway cafe was built, using many of the original fittings, including the standard Subway wallpaper.


The bailiffs, after listing and evaluating the property on the premises, were unable to pursue the matter further, because Minutka was by then run by a firm called Submarine, which says it has no legal connection to Minutka.


And, unlike the examples above, no one in the local administration - in this case St. Petersburg's City Hall - has shown much interest in backing either side of the case. Indeed, St. Petersburg Governor Vladimir Yakovlev reacted angrily last year to questions about the Subway case, stating that it was not his role to interfere in the workings of the judicial arm of government.


The result is a stalemate that has left the U.S. partners with practically no chance of retrieving a single cent of their original investment.


"Nothing has happened since [last June]," Alexander Popov, lawyer for East-West Invest said in a telephone interview from St. Petersburg this month.


However, in a bizarre twist to an already tangled tale, Popov turned out to be wrong. Something had happened since last June - the Justice Ministry lost the folder with the case, Popov said.


After a city court refused East-West Invest's request that it be allowed to resubmit the documents in question, the case looks to be stuck in limbo.


"It goes on and on," Popov said. "It will go on for ages. They will complain about our every sneeze, which is allowed by Russia's ugly procedural laws written way back in the 1960s."


The bailiffs themselves are unhappy with the laws under which they labor.


"We have very many loopholes and contradictions in the legislation," said Galanin at the Bailiffs Department. "Often when bailiffs are implementing court decisions they come across problems that they can only resolve through applying to the court again to gain a ruling on how the previous decision should be carried out.


Galinin's boss complained that the service is simply short-handed.


"With the staff we have we can only carry out about 60 percent of all court decisions," Ruban said. With only 11,148 bailiffs in Russia to fulfill more than 18 million court orders a year, each bailiff has some 40 minutes a day to study the documentation and then implement a court decision.


"We need 214,000 bailiffs, but I understood that we would not be given that much, so we applied for at least 33,000 in the budget for next year," Ruban said.