In July 2012, the Supreme Commercial Court of the Russian Federation (the “SCC”) published on its website the draft Addendum to clarification the Ruling No. 73 of the SCC’s Plenum dated 17 November 2011 “On particular issues arising from the practical application of lease-related provisions of the Russian Civil Code” (the “Draft”)

The main clarifications made in this Draft are the following:

  1. The Russian Civil Code does not restrict the parties’ right to lease part only of a property, as opposed to the property as a whole.

Leases of a part of land, building, structure or premises made for a term of at least one year remain subject to state registration, which places an encumbrance on the whole immovable property. The lease agreement must describe clearly the boundaries of the leased part of immovable property, either as a graphic or written description.

However, it should be noted that the SCC has expressed a reservation on these particular provisions of the Draft and, as a result, such provisions may eventually be excluded from the final version of the amended clarification ruling.

  1. Any individual or legal entity holding rights on an immovable property, other than by virtue of a registered right of ownership, remains entitled to conclude a lease of such property.
  2. The fact that a commissioning permit for a capital construction object remains to be issued at the time the property is handed over to the tenant should not serve as a ground to invalidate a lease agreement.

Therefore, if the SCC adopts its amended clarification ruling in its current version, it will provide some degree of legal certainty in connection to certain business practices, such as leases of parts of buildings, premises and land plots and leases of offices and retail centres under construction. Still, additional clarification may be required, especially with regards to the state registration procedure of long-term leases of premises under construction.

[The draft Addendum to clarification the Ruling No. 73 of the SCC’s Plenum dated 17 November 2011 “On particular issues arising from the practical application of lease-related provisions of the Russian Civil Code” is available in Russian on the official website of the Supreme Commercial Court of the Russian Federation here]