Investment Activity Agreement. Investment contract in construction. Investment participation agreement. Investment partnership agreement.
Many contractual constructions provided for by law allow participants in commercial relations to conclude transactions convenient for them, including those of a mixed nature. However, the parties to the transaction do not always correctly evaluate the contractual design and the consequences that may occur if it is destroyed. In the case of investments, the courts of various instances had different approaches to the issue of qualifying the transaction concluded by the parties to the dispute. The point in this matter was raised by the Supreme Court of the Russian Federation.
The plot of the case:
Almiks LLC (hereinafter referred to as the Company), being a tenant of a land plot under an agreement with the administration of the city district, entered into an investment agreement for the construction of residential buildings on this land plot. The company invested the right to lease the site in exchange for a share in real estate objects that will be built later. The partners of the Company were Vladstroyzakazchik and LLC Partners, whose responsibilities included the implementation of construction. The company transferred to Vladstroyzakazchik the right to lease a land plot with the consent of the owner, thereby fulfilling its obligation stipulated by the investment agreement.
The company fell into bankruptcy proceedings. The bankruptcy trustee challenged the agreement on the transfer of the site, demanded the recovery of funds in the bankruptcy estate of the debtor with Vladstroyzakazchik.
The courts of all instances were on the side of the applicant. The Supreme Court of the Russian Federation considered the findings of the courts to be incorrect, but concluded that the final decision of the courts was correct: invalidate the agreement.
Judicial act: determination of the Supreme Court of the Russian Federation of 12.07.2019 No. 303-ES18-18778 in case No. A51-7622 / 2016
Court findings:
1. The courts qualified the investment activity agreement as a simple partnership agreement and declared the agreement terminated due to bankruptcy of the Company and Partners LLC.
2. The courts pointed out that the right to lease was part of the common property of the partners, as well as the fact that the land was used on the basis of a plurality of persons on the tenant's side, the courts recognized the demand for the return of the land as unfounded.
3. The courts indicated that an agreement on the transfer of rights and obligations was concluded less than a year before the initiation of bankruptcy proceedings. The courts recognized the agreement on assignment as an agreement on re-leasing and indicated that it could not be concluded without charging any fee to Vladstroyzakazchik. And the agreement did not provide for counter-provision.
4. The panel of judges considered that it is impossible to regard the investment agreement as a simple partnership agreement. At least, the Society and Vladstroyzakazchik cannot be recognized as comrades. The Company did not undertake obligations to perform certain specific actions together with other parties in order to profit or create real estate.
5. The society was vested only with the powers characteristic of the acquirer of a future thing. The company concluded an agreement with the partnership participants, under which it granted the right to lease a land plot, the norms on barter are subject to such an agreement.
6. From the moment of termination of the simple partnership agreement, its participants shall be jointly and severally liable, including to the Company.
7. The company has not received a counter grant for the transferred plot, therefore, it has the right to compensation for losses.
8. The courts' qualification of a lease agreement as an invalid suspicious transaction is erroneous, but did not lead to an incorrect decision, the judicial panel upheld the appealed judicial acts.
Comments:
1) The legislation of the Russian Federation gives the concept of “investment activity agreement” in the prism of the construction, re-equipment of existing enterprises. The Law on Investment Activities dated 02.25.1999 No. 39-ФЗ regulates investment activities carried out in the form of investments of funds and other property for the implementation of an investment project.
The specified law provides that in return for the land transferred for the implementation of the investment project, part of the premises in the created facility may be provided. Thus, the design provided for by the current legislation corresponds to the model chosen by the parties to the dispute.
2) At the same time, the courts qualified the contract concluded between the parties to the dispute as a simple partnership agreement. The contribution of a partner can also be money or other property. The significant difference between the investment agreement and the partnership is that the partners are united to carry out joint activities, that is, it is assumed that each of them works in order to achieve the declared goal.
An investment contract involves making investments, and the law regulates just that, there is no emphasis on the mandatory implementation of joint activities. The investment agreement as a separate structure is not provided for by the Civil Code of the Russian Federation, therefore the rules on certain types of agreements apply to it. In addition, an investment contract can be designed as a partnership agreement or joint venture agreement.
3) The Supreme Court noted that even if a single document is signed between the three parties, it does not have to be equally qualified for the three parties. Parties that have agreed on joint construction and have defined their contributions as actions preceding the construction, and the construction itself, are partners. A third party may engage in a transaction with them, but it is not necessary to be another partner.
Thus, the parties entered into a mixed agreement with signs of partnership and barter. Applying the rules of regulation of the exchange agreement, the court recognized that the transaction concluded on the eve of bankruptcy, in which the debtor did not receive a counterparty, violates the interests of the debtor's creditors.
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