Expanded Application of Public Land Lease Tenders.


Legal Update No. 188

Goltsblat BLP advises that, on 14 September 2010, the Presidium of the Supreme Arbitration Court of the Russian Federation passed Resolution 4224/10 defining its position when several persons lay claim to a land plot to be allocated according to the procedure for obtaining prior consent to location of a facility. The Presidium’s view is that, in these circumstances, the lease agreement for the land plot should be awarded by tender.

On the basis of the Russian Land Code, the court draws the following conclusions:

  • “public information procedures aim to protect the interests not only of the public in general but also of specific persons, including potential claimants to a land plot. At this stage, the public has an opportunity to object to the siting of a facility, while any interested parties may submit documents seeking to obtain the same land plot for developing similar or other purpose facilities”;
  • consequently, the “interested parties are given an opportunity to apply for allocation of the same land plot even if they are aware of other claimants. Moreover, the Code does not limit this right to the time when the first interested party applies to a local authority or prescribe any priority or selection criteria when there are more than one claimant”;
  • the court further concludes that “in these circumstances, the right to enter into the land lease agreement must be put out to tender as prescribed by clause 4, article 30 of the Code”.

The company that initiates the procedure for obtaining prior consent to location of a facility cannot, therefore, be sure to receive the selected land plot. Furthermore, unlike allocation of a land plot subject to prior consent to location of the relevant facility, tender procedures presuppose that the starting rental payable for the land plot will be determined by an independent appraiser.

It is not yet clear who will be in charge of preparing the land plot for the tender (forming the land plot, obtaining the technical conditions, etc.), who will bear the relevant costs or what time frame will apply to such preparatory steps and tender procedures.

It is obvious, however, that Resolution 4224/10 of 14 September 2010 adopted by the Presidium of the Supreme Arbitration Court of the Russian Federation will require development of new approaches to acquiring land plots in state and municipal ownership.

For additional information, please contact:

Vitaly Mozharowski, Partner, Real Estate and Construction,Goltsblat BLP;
T: +7 (495) 287 44 44,
E: info@gblplaw.com

Elena Barinova, Partner, Real Estate Investment and Finance,Goltsblat BLP;
T: +7 (495) 287 44 44,
E: info@gblplaw.com

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