The Supreme Court has already noted: COVID-19 restrictions are far from always constituting a reason for exemption from contract liability.
However, some encouraging court practice is already starting to appear. Recently, the Arbitration Court of the Republic of Tatarstan ruled to reduce the penalty under Art. 333 of the Civil Code, given, inter alia, the financial straits of the defendant, which have arisen due to the COVID-19 restrictions.
Previously in 2016, the Plenum of the Supreme Court indicated that the argument about difficult financial situation cannot alone serve as sufficient basis for reducing the penalty.
Now, however, it may turn that the argument about grave financial condition due to the coronavirus may be more convincing. Still, it should not be regarded as the sole reason, it must be proven that the penalty is clearly disproportionate to the consequences of the obligation breach.
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NAZALI TAX & LEGAL |