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Decree of Plenum of Supreme Arbitrazh Court of Russian Federation on Certain Questions of Compensation of Losses by Persons Within Composition of Organs of Juridical Person - Russia and the Republics Legal Materials - Second Series
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22320
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Originally from Russia and the Republics Legal Materials - Second Series
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In connection with the arising in judicial practice of questions concerning compensation of losses caused by the actions (or failure to act) of persons entering or who have entered the composition of organs of a juridical person, the Plenum of the Supreme Arbitrazh Court of the Russian Federation on the basis of Article 13 of the Federal Constitutional Law of 28 April 1995, No. 1-ФКЗ, “On Arbitrazh Courts in the Russian Federation”, decrees to give to arbitrazh courts the following explanations.
1. A person entering the composition of organs of a juridical person (or one-person executive organ – director, general director, and so on, temporary one-person executive organ, management organization, or manager of an economic society, executive of a unitary enterprise, chairman of a cooperative, and so on; members of a collegial executive organ (board, directorate) of an economic society, members of the board of a cooperative, and so on; hereinafter – director) is obliged to act in the interests of the juridical person in good faith and reasonably (Article 53(3), Civil Code of the Russian Federation). In the event of a violation of this duty, the director at the demand of a juridical person and/or founders (or participants) thereof who by law has been granted the right to file a respective demand must compensate losses caused to the juridical person by such violation.
Arbitrazh courts should take into account that the negative consequences which ensued for a juridical person during the period of time when the director entered the composition of organs of the juridical person do not in and of themselves testify to lack of good faith and/or unreasonableness of his actions (or failure to act), for the possibility of such consequences arising accompany the risky character of entrepreneurial activity.
William E. Butler, Emeritus Professor of Comparative Law in the University of London, attached to University College London, is the John Edward Fowler Distinguished Professor of Law at the Dickinson School of Law, Pennsylvania State University, and Founder and Director of The Vinogradoff Institute.
An authority on the legal systems of Russia and former Soviet nations, he is the author, co-author, editor or translator of more than 3,500 books and articles on Russian, Soviet, Kazakhstan, Ukrainian, Uzbekistan, and other Commonwealth of Independent States legal systems. He has acted as Counsel to the EBRD, European Union, World Bank, United Nations, and Department for International Development of the United Kingdom on individual law reform projects.
The recipient of numerous honors for his service to Russian and international law, Professor Butler is Academician of the National Academy of Sciences of Ukraine and the Russian Academy of Natural Sciences, Associate of the International Academy of Comparative Law, and Member of the Russian Academy of Legal Sciences. He has been elected to his fourth term as a member of the Russian International Court of Commercial Arbitration. In 2003 Professor Butler was awarded the G. I. Tunkin Medal by the Russian International Law Association.
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