Sergei Bakeshin has analysed a dispute on the seizure of property owned by spouses

The Commercial Court of the Moscow District upheld the decision of the Arbitration Court of Appeal, which denied the use of interim measures to seize money from the spouse of a debtor who had incurred subsidiary liability, and refused to ban the registration of real estate and vehicles in the name of the spouse. The refusal was motivated by the fact that as part of the consideration of the application for interim measures, the court should not establish all circumstances relevant to the case, in particular the status of the jointly acquired property. Initially, the Arbitration Court granted interim measures in respect of the property of the defendant’s wife, but the appeal overturn the decision and refused to satisfy the application in this part, and the appeal court upheld this position.

At the request of the Arbitration Court of the Moscow District, the Head of the Dispute Resolution and Insolvency Practice at Maxima Legal, Sergei Bakeshin, analysed the case and commented it:

The conclusions reached by the courts of appeal, appear to be legal and reasonable. Interim measures are urgent and temporary. An application for interim measures should be considered by the commercial court no later than the next day after admission to the court. Since interim measures are an accelerated and preliminary remedy, their application does not require the submission of evidence to the extent necessary to substantiate the claims on the merits of the dispute. Just as the reduced standards of proof apply to the applicant, the circle of circumstances to be clarified is narrowed for the court. The courts that considered the application for interim measures really did not have to find out the regime of the spouse’s property, the composition of the property that is individually, shared or jointly-owned, the size of the shares in the right of ownership and so on.

At the same time, interim measures in the form of seizures can be applied only in relation to property belonging to the respondent. The seizure of property belonging to third parties is unacceptable, even if such a third party is the spouse of the respondent. Therefore, the refusal to take interim measures in the form of a seizure of assets and a ban on the registration of property belonging not to the respondent, but to his wife, is legal.

Furthermore a person applying to court with an application for interim measures is not required to indicate a specific list of property or bank account numbers of the respondent. The applicant could ask the court to seize the property, including cash, with a total value equal to the amount of subsidiary liability. In this case, the specific composition of the property to be seized would be determined by the bailiff. Unlike the court that examined the application for interim measures, the bailiff would have been able to find out the property regime of the spouse. The fact that the applicant did not take this opportunity is most likely explained by his distrust of the level of professionalism, speed and quality of work of bailiffs.

The chronology of the consideration of the case deserves attention. The court of first instance decided to issue interim measures at the hearing, and the full text was prepared after more than a month, which contradicts the very idea of urgency and acceleration. The operative part of the ruling on the adoption of interim measures was announced more than a month after the ruling on the merits of the dispute – on the respondent incurring subsidiary liability.

The appeal court reversed the ruling of the trial court and refused to take interim measures in respect of the property of the respondent’s wife after upholding the ruling on the merits of the dispute. In other words, the applicant (the financial manager of the debtor) could already begin to recover the property, not limited to his preliminary arrest, so there was no need to enforce the court decision.

Subsequently the appeal court suspended the ruling on subsidiary liability, but by that time it had considered the issue of interim measures, the dispute on subsidiary liability was also examined on the merits. The issue of ensuring the enforcement of a court decision at this point had finally lost its relevance, remaining only academic.