Courts considered whether the Rules for writing off penalties under Resolution No. 783 dated 04.07.2018 apply if the contract is long-term and has not yet been fully performed

The parties entered into a contract in 2020 with a performance period of 2022-2024.

In 2022, the supplier allowed late delivery of the goods, actually realizing their transfer to the customer only in 2023.

The remaining goods were to be manufactured and delivered in November 2023 and November 2024. Thus, the obligations under the contract had not yet been completed.

The customer filed a claim with the court to recover liquidated damages for late delivery, which was scheduled for 2022. The supplier objected, referring to the existence of grounds for writing off the penalty under Resolution No. 783.

Whose side did the courts take?

The courts of the first and appellate instances satisfied the claim. They saw no legal grounds for the application of the Rules for writing off penalties, since the contract has not been fully performed and the final delivery date has not yet arrived.

The court of cassation instance disagreed with such conclusions.

The penalty is charged by the customer for the delivery of 2022.

According to paragraph 2 of the Rules, the write-off of accrued and unpaid amounts of penalties is carried out for contracts, obligations under which are fulfilled in full, with the exception of cases listed in the regulation.

The fact that the deliveries for 2023-2024 have not been made does not prevent the writing off of penalties for 2022, since the contract provides for stages of performance in each year.

The goods scheduled for delivery in 2022 have in fact been delivered. Consequently, the penalty should be written off for this period.

According to calculations, its size does not exceed 20%, so write-off should be made in the amount of 50% of the accrued amount.

Resolution of the Moscow District Court of Arbitration of 27.05.2024 in Case No. A40-192230/2023

Source: https://fabrikant-media.ru/legislation/sudy-razbiralis-primenyayutsya-li-pravila-spisaniya-neustoek-po-postanovleniyu-ot-04-07-2018-783-esl/