Communication Services Settlement Procedure

      The Decree of the Supreme Soviet of RF dated May 19, 1993, No. 4986-1 established that consumers, except for individuals, effect payment for communication services provided by communication agencies of any form of property which are located in the territory of RF, without a payer's acceptance, according to the current tariffs and a meter or other devices readings.

      Pursuant to part 1, Art. 854 of the Civil Code of RF (the CC RF) a bank writes off the funds following a client's order. Part 2 of the Article establishes that the monetary funds placed on a bank account may be written off the account without the client's order only following a respective court ruling, legal rules, or terms of a contract between the bank and the client.

      However, the aforementioned Decree is currently invalid as a result of enactment by the State Duma on 20 January 1995 of the Federal Law On Communication. The Law does not permit writing off monetary funds from a payer's accounts in payment for communication services provided without acceptance. Moreover, Art. 38 of the Law expressly establishes a claim and action procedure "in default on or improper discharge of obligations in provision of communication services or improper performance of work related to communication".

      The Presidium of the High Arbitration Court of RF in its Circular Letter dated 1 October, 1996, No. 8, On Writing Off Monetary Funds from Accounts Without the Clients' Orders pointed out the following : the Federal Law On Enactment of Part Two of the Civil Code of the Russian Federation (Art.4) has established that henceforth and until laws and other legislative acts currently in force in RF are reconciled with Part 2 of the Code, these are enforced insofar as these do not run counter to Part 2 of the Code. Hence, in cases when a procedure of writing off monetary funds without acceptance is established by the above- mentioned normative acts including respective decrees of the Supreme Soviet of RF of a regulatory nature, they are subject to enforcement henceforth, up to enactment of a respective law on this matter.

      Therefore, the Decree of the Supreme Soviet of RF dated May 19, 1993, No. 4968-1 could be applied only until January 20, 1995, i.e. until the Law On Communication became effective. The Decree is currently invalid because of its inconsistency with the Law On Communication and Article 854 of the CC RF.

      The fact that the Law On Communication was enacted earlier than the Law On Enactment of the Part Two of the Civil Code of the Russian Federation in no way affects the legal effect of the former. All regulations in the sphere of communication services adopted before enactment of the Law On Communication and repugnant to it have lost their force. It concerns undoubtedly the Decree of the Supreme Soviet of RF dated May 19, 1993, No. 4986-1.

      Neither the aforementioned legislative acts, nor the Letter of the Presidium of the High Arbitration Court of RF dated 10.10.1996 allow to interpret otherwise. In particular, the above mentioned Letter of the High Arbitration Court of RF expressly and unambiguously states that normative acts establishing a non-acceptance procedure of writing off monetary funds should be applied until a respective law on the matter is enacted. The date of the Letter of the High Arbitration Court RF does not matter at all in this case. It only clarifies the practice of the normative act application, and is no normative act itself, hence, there is no need to give a retroactive effect thereto - this position concerns both the acts adopted after the letter and before it.

      The fact that the Decree of the Supreme Soviet of RF dated 19.05.1995, No.4986/1 has not been repealed is of no legal significance - it has actually lost its force as of enactment of the Law On Communication and cannot be enforced. There is no doubt that in case of arbitration proceedings any arbitration court will take exactly such stand since it is incontrovertible.