i Legal framework
Professionals can be brought to different types of liability, including disciplinary, civil (material), administrative and criminal liability.
Bringing to disciplinary liability means that employer may apply disciplinary measures to an employee for non-performance or improper performance of his or her duties resulted from his or her guilty wrongful conduct.
The Criminal Code of the Russian Federation contains provisions that describe the grounds of criminal liability of professionals. However, most of them relate to violations of safety rules and technical regulations by personnel responsible for their compliance. Separately, criminal liability is established for substantial harm caused to persons by professionals when rendering respective services (including medical services).
The Code of Administrative Offences provides a range of negligence acts, which constitute administrative offences of medical professionals, IT specialists and construction professionals. An act is deemed to be perpetrated through negligence if (1) the person has foreseen the possibility of socially dangerous consequences of his or her actions (omission), but expected without valid reasons that these consequences would be prevented; or (2) the person has not foreseen the possibility of the onset of socially dangerous consequences of his or her actions (omission), although he or she could and should have foreseen these consequences.
Guilt is a necessary condition for professional liability (excluding civil liability).
For instance, according to Article 28 of the Criminal Code of the Russian Federation, if the person did not realise the harm and public danger of his or her actions (omission) or did not foresee the possibility of socially dangerous consequences and should not or could not foresee them due to the circumstances of the case, this act shall be deemed as committed innocently.
Also, an act is considered innocent if the person who committed it could not prevent its negative consequences because of inconsistency between his or her psychophysiological qualities and requirements of extreme conditions or neuropsychic overwork.
Civil liability may of be the following types:
- contractual liability: when the professional renders his or her services under the civil (not labour) contract, he or she can be held liable for breach of this contract. In this case, consequences of violation of the contract are provided in the contract itself and in the Civil Code of the Russian Federation. At the same time, if the professional works under a labour contract (not a civil contract) then he or she could be brought to material liability, which constitutes compensation for the loss, inflicted by the party to a labour contract, as a result of his or her guilty unlawful behaviour (action or omission).2 This is specific form of liability with specific limitations; and
- non-contractual liability, which includes (1) liability for unjust enrichment; and (2) liability for the damage (tortious liability).
The general rules of tortious liability are specified in Article 1064 of the Civil Code of the Russian Federation, according to which the person who caused the damage to a person or property of a citizen (regardless of his or her professional affiliation) shall reimburse it in full. In some cases, the obligation to compensate for harm may be imposed on a person who did not cause the damage.
In any case, the person shall compensate losses resulting from unlawful behaviour. According to Russian law,3 the losses include the real damage that is an actual value of the losses incurred or as expenses for recovery and the lost profit.
A difference in legal consequences of professional negligence can be clearly seen in cases of unintentional medical mistakes: these mistakes could not be considered as a ground for criminal liability, but injured patients could obtain compensation through a civil case.
The harm caused to the life or health of citizens by activities that create an increased danger to others (a source of increased danger) is compensated by the owner of the source of increased danger regardless of fault.
If the harm is caused by an employee of a legal entity in the performance of its labour (service, official) duties on the basis of an employment contract (service contract), civil responsibility could be put upon this legal entity.
ii Limitation and prescription
For civil claims, the limitation period is established in the Civil Code of the Russian Federation. According to Articles 196 and 200 of the Civil Code of the Russian Federation, the general term within which claims must be commenced is three years from the date when the person knew or should have known about violation of his or her rights and about the person who should be a proper defendant for the violation unless otherwise is established by law.
Meanwhile, the maximum term within which claims should be commenced in any case should not exceed 10 years from the date of violation of rights.
There are some exceptions to this rule specified in the Federal Law on the Securities Market for the following professionals (certain cases set out in the Federal Law):
- brokers (the limitation period is one year); and
- professional participants of the securities market carrying out management of securities (the limitation period is one year).
Another exception is indicated in the Labour Code. An employer may file a claim for compensation of damage caused by the employee within one year.
As for criminal cases, time limits are established in the Criminal Code of the Russian Federation and depend on gravity of the crime. The Criminal Code provides the following categories of negligent crimes depending on the nature and degree of social danger:
- crimes of little gravity (minor crimes), which are those negligent crimes for committing of which the maximum term of imprisonment does not exceed three years – for these crimes, professionals may be held liable within two years of the date of commission of the crime; and
- medium-gravity crimes, which are negligent crimes for which the maximum term of imprisonment exceeds three years. Professionals may be held liable within six years of the date of commission of the crime.
iii Dispute fora and resolution
The civil litigation procedure in relation to professional liability claims is governed by the Civil Procedure Code of the Russian Federation (the CPC RF). Prosecution of criminal claims is governed by the Criminal Procedure Code of the Russian Federation.
Generally, professional liability claims are brought in the courts of general jurisdiction. According to the Federal Law on Courts of General Jurisdiction, respective courts consider all criminal cases and all civil and administrative cases on protection of violated or disputed rights, freedoms and lawful interests, except for cases considered by other courts.
Certain professional liability claims may be brought to the justice of the peace. According to the Federal Law on Justices of the Peace, the following cases are considered by justices of the peace:
- criminal cases, for which maximum punishment does not exceed three years of deprivation of freedom;
- property disputes, except intellectual property disputes, if the amount of the claim does not exceed 50,000 roubles; and
- administrative offence cases if these cases are brought to the justice of the peace according to the Code of Administrative Offences.
Pursuant to Article 28 of the CPC RF, the claim shall be brought to the court located in the place where a company defendant has its registered office or an individual defendant is registered (domiciled). In some cases, as provided in Article 29 of the CPC RF, the claimant may file the claim to the other court, for example, to the court located in the claimant's place of domicile if the case concerns recovery of the damage, or to the court located in the place of performance of the labour contract if the claim is based on violation of labour contract.
The criminal case shall be considered by the court located in the place where the crime was committed.4
Civil claims may be resolved amicably (by way of negotiations) and through judicial proceedings. Even if the claim has been filed to the court and judicial proceedings have started, the parties may conclude an amicable agreement that terminates the court proceedings. An amicable agreement concluded after the start of the court proceedings shall be approved by the court.
Criminal claims shall be considered by the court. Only criminal cases for crimes of little and medium gravity may be resolved and terminated by reconciliation with the victim in the event the accused person compensates the damage.5 Reconciliation with the victim is possible only until the court departs to the retiring room for passing the sentence in courts of first instance or until the court departs to the retiring room for passing the judgment in the court of appeals.
iv Remedies and loss
In accordance with Article 15 of the Civil Code of the Russian Federation, the losses include the real damage (which is an actual value of the losses incurred or expenses to the recovery of losses) and the lost profit.
The most common remedy is filing the claim on collection of damages. The burden of proof of the claimant includes the fact of damage, the negative consequences, the cause and effect relation between the damage and consequences and the guilt of the violator (with certain exceptions).
According to clarifications of the court practice made by the Supreme Court of the Russian Federation, the court shall not dismiss a damages claim only on the basis of the impossibility of calculating the amount of damages. The court should define the amount of damages based on the case circumstances, according to the principles of justice and proportionality of the violation.
There is no distinct formula to calculate a value of such a compensation, which is totally subjective and depends on a judge's discretion. The most common method of assessing is a specialist opinion obtained in an out-of-court procedure or results of the court-appointed expert examination.
The injured person may also demand compensation for moral damage. The amount of moral damage for suffering can be established by an agreement between parties or by a court. The average amount of moral harm compensation in practice varies from 30,000 roubles to 1 million roubles in the most serious cases.
The main problem of collection of damages in Russia is that Russian courts traditionally are rather reluctant to collect the damages because of the formalistic approach to evidencing the cause and effect relationship. Even in the event of collection, the amount of damages collected could be rather small, especially for moral harm. The situation has changed slightly and positively, but still successful cases are far from ordinary.
II SPECIFIC PROFESSIONS
Russian law provides for dualism in the legal profession. On the one hand, the law generally allows any person who has not passed any qualifying exams or who does not have a law degree to practice law and provide legal services; on the other hand, some specific legal services (e.g., defence in criminal cases) can be rendered only by attorneys at law who have passed regional qualification exams and have obtained the special status of advocate.
Respectively, non-advocate practitioners do not bear any professional liability. Their actions are not regulated by any professional standards or specific bodies. They could be held liable for non-performance or improper performance of their services rendered under the contract as it is established in the contract and in the Civil Code of the Russian Federation.
Meanwhile, an advocate's activity is regulated by the Federal Law dated 31 May 2002 No. 63-FZ on Advocate Activity and Advocacy (the Advocate Law) and the Code of Professional Ethics of Advocates, adopted by the First All-Russian Attorneys' Conference.
The Advocate Law provides some special requirements for persons who would like to become advocates, such as obtaining a university law education, having working experience in law and absence of criminal records.
The Code of Professional Ethics of Advocates contains a wide range of prescriptions that are binding for an advocate. Violation of any of the mentioned legal prescriptions may lead to deprivation of the advocate's status. Qualification commissions of regional exams may make such decisions upon the complaints and recommendations of governing bodies.
In addition, unlike other attorneys, each advocate should insure against the risk of professional liability for violation of the terms of the legal assistance agreement concluded with the principal.6
In practice, lawyers can be brought to criminal liability for legal help when its purpose was facilitation of committing a crime. In such a case, his or her advice can constitute an accessory to a crime.
ii Medical practitioners
Under the Federal Law dated 21 November 2011 No. 323-FZ on the Basics of Public Health of the Russian Federation (the Health Law), medical aid has to be rendered according to the rules of medical help, on the basis of clinical recommendations and taking into account standards of medical help. Named acts are adopted by the Ministry of Public Health of the Russian Federation. Medical practitioners are obliged to follow those regulations.
Criminal liability for medical practitioners whose negligent actions lead to a death of a patient, subject to Article 109 of the Criminal Code of the Russian Federation – 'Causing death by negligence', is punished by up to three years' imprisonment with disqualification. Similar actions, leading to grievous bodily harm, are subjected to Article 118 of the Criminal Code – 'Grievous bodily harm by negligence', which is punished by up to one year's imprisonment with or without disqualification.
A person can be held liable for committing the above-mentioned crimes when three following conditions coincide: defect of medical aid, death of the patient (grievous bodily harm) and a cause-effect link between them.
Defects of medical care are mainly established during the examination, which determines the causes of negative health consequences, as well as a compliance with the rules of medical help, clinical recommendations and standards.
Liability of medical practitioners for less dangerous violations of law is established in the Code of Administrative offences (e.g., violations of rules in the sphere of medical products' circulation; and violation of the requirements of the legislation in the field of health care during abortion procedures).
Medical practitioners may insure the risks of their professional liability.7
iii Banking and finance professionals
Banking and financial activities are governed by the Federal Law dated 2 December 1990 No. 395-1 on Banks and Banking Activity, the Federal Law dated 22 April 1996 No. 39-ФЗ on the Securities Market, the Federal Law dated 07 February 2011 No. 7-ФЗ on Clearing, Clearing Activity and the Central Counterparty and the Federal Law dated 29 November 2001 No. 156-ФЗ on Investment Funds.
The specific consequences of violation of law by banking and finance professionals may be the following:
- administrative liability according to Articles 15.24.1 'Illegal issue or conversion of documents certifying monetary and other obligations' and 15.29 'Violation of legislation related to activity of professional participants of the security market, repository, clearing organisations, persons carrying out functions of the central counterparty, joint stock investment funds, non-state pension fund, management companies of joint stock investment funds, share investment funds or non-state pension funds, specialist depositary of joint stock investment funds, share investment funds or non-state pension funds' of the Code of administrative offences;
- criminal liability according to Articles 172.1 'Falsification of financial documents and accounting documents of financial organisation', 172.3 'Failure to insert information on money placed by individuals and individual entrepreneurs to financial documents and accounting documents of credit organisation' and 312 'Illegal actions in relation of property which is subject to description, arrest or confiscation' of the Criminal Code; and
- civil liability for violation of the contract or for damage not related to the contract.8
Laws establish certain requirements for some banking professions. For example, the chief of a credit organisation or chief of the branch of a credit organisation shall obtain higher education and there should not be criminal records. Credit organisations, including banks and joint-stock investment funds, shall obtain a licence from the Central Bank of the Russian Federation. Financial consultants (brokers, dealers) shall have a licence to carry out broker or dealer activities as well. Numerous violations of the banking laws could be considered as the grounds for termination of the licence.
iv Computer and information technology professionals
The liability of computer and information technology professionals can be either contractual or tortious as provided above, depending on the specific case.
In other words, the activity of computer specialists does not have special regulation. They bear general liability according to the Labour Code of the Russian Federation if they are hired, or according to the Civil Code of the Russian Federation if they render services based on civil contracts or cause damage.
However, the Criminal Code of the Russian Federation prohibits some particular computer crimes, such as unlawful access to computer information protected by law,9 violation rules on use, storage and processing of computer information10 and unlawful influence on the critical information infrastructure of the Russian Federation.11
v Real property surveyors
In Russia, real property surveyors are named as cadastral engineers. Their activity is governed by the Federal Law dated 24 July 2007 No. 221-ФЗ on Cadastral Activity (the Cadastral law).
The Federal Service for State Registration, Cadastre and Cartography supervises cadastral activity.
The cadastral engineer shall be a member of a self-regulated organisation of cadastral engineers.
The cadastral engineer shall enter into insurance contract on insurance of his or her civil liability for damage caused to clients or third parties when performing cadastral activity violating the law. It is a mandatory requirement of the Cadastral Law.12
The cadastral engineer could be brought to civil liability on compensation of damage as described above.
The self-regulated organisation may also apply disciplinary measures in respect of the cadastral engineers, which could include termination of membership.
vi Construction professionals
Criminal liability for the negligence of a construction professional is established in the rules of law of the Chapter titled 'Crimes against Public Safety' of the Criminal Code.
According to Article 216 of the Criminal Code, violation of the safety rules in the construction or other works, if it resulted in causing grievous bodily harm or major damage, is punished by imprisonment up to three years with or without disqualification. The same actions leading to death of two or more people is punished by imprisonment of up to seven years with or without disqualification.
A person can be charged with committing such a crime only when both the fact of violation of special rules and causal relationship between this violation and the consequences are established and sound.
General conditions of liability for a violation of labour protection requirements (regardless of the sphere of operation) are established in Article 143 of the Criminal Code. The subjects of this crime may be the heads of organisations, their deputies, chief specialists, heads of structural subdivisions of organisations, specialists of the labour protection service and other persons who are charged with ensuring compliance with labour protection requirements.
Liability for less dangerous violations of law is established in Chapter 9 of the Code of Administrative offences titled 'Administrative Offences in Industry, Construction and Energy'.
vii Accountants and auditors
The professional activity of accountants is regulated by the Federal Law dated 6 December 2011 No. 402-FZ on Accounting (the Accounting Law) and the professional standards introduced by the Ministry of Labour and Social Protection of the Russian Federation. Article 7 of the Accounting Law establishes requirements for accountants who perform accounting activity in public joint-stock companies, insurance companies, investments and non-budgetary funds, which are: a university education; no less than three previous years from the latest five of experience in accounting or audit; and the absence of a criminal record for economic crimes. Some other requirements are applied to accountants performing activities in specific spheres (like leasing, banking and other activities) and established in respective laws.
Liability of accountants is provided by the Labour Code of the Russian Federation and Civil Code of the Russian Federation is as stated above.
However, according to the Federal Law dated 26 October 2002 No. 127-FZ on Insolvency (Bankruptcy) (the Bankruptcy Law), accountants could also be brought to subsidiary liability in the event of bankruptcy of an organisation where they performed activity. Article 61.11 Part 2 Paragraph 2 of the Bankruptcy Law stipulates that the accountant could be held liable for absence or accounting documents or absence of necessary information in accounting documents if this fact led to obstacles in the bankruptcy case and, therefore, impossibility of settling creditors' claims. The liability of accountants in this case is presumed unless they proved otherwise.
Professional activity of an auditor is governed by the Federal Law dated 30 December 2008 No. 307-FZ on Audit Activity (the Audit Law), Rules on independency of auditors and auditor organisations (approved by the Counsel on Audit Activity as of 20 September 2012, Protocol No. 6) and the Code of Auditors' Professional Ethics (approved by the Counsel on Audit Activity as of 22 March 2012, Protocol No. 4). Pursuant to Article 4 of the Audit Law, the auditor shall obtain the qualification certificate, be a member of one of the self-regulatory organisations and be included in the register of auditors.
Insurance is not binding for an auditor. However, according to Article 13 Part 1 Paragraph 4.1 of the Audit Law the auditor may insure liability for violation of the contract or for damage caused during performance of the audit activity.
The consequences of violation of the law by auditors are following:
- applying of disciplinary actions;13
- prosecution for abuse of powers;14 and
- civil action for violation of the contract or for damage not related to the contract.15
viii Insurance professionals
Insurance activity is governed by the Law of the Russian Federation dated 27 November 1992 No. 4015-1 on the Organisation of Insurance Activity in the Russian Federation (the Insurance Law).
The Central Bank of the Russian Federation exercises control over the insurance activity.
Insurance activity is performed by (1) insurance companies, (2) reinsurance companies, (3) mutual insurance companies and (4) insurance brokers. All of them shall obtain the respective licence from the Central Bank of the Russian Federation.
The Insurance Law provides special qualification requirements for CEOs, chief accountants of insurance companies and other managers.16
Insurers bear civil lability as provided by the Civil Code of the Russian Federation and described above.
In addition, pursuant to Article 32.5-1 of the Insurance Law, where the insurer violates the law, the Central Bank may issue a regulation with a description of the particular actions the insurer shall comply with and the term for performing the regulation. If the insurer violated the law several times, the supervising authority may restrict or prohibit entering into some transactions and limit or suspend the licence.17
The administrative liability is provided in Chapter 15 of the Code of Administrative Offences of the Russian Federation.
III YEAR IN REVIEW
The legislation related to professional liability slightly changed in 2018.
On 29 November 2018, the Supreme Court of the Russian Federation has adopted the resolution on Court Practice in Criminal Cases on Violations of Labour Protection Requirements, Safety Rules When Conducting Construction or Other Works, or Industrial Safety Requirements of Hazardous Production Facilities. It recognises the possibility of hiring third-party organisations to provide services in the field of labour protection, for which they will be liable in the event of its violation.
IV OUTLOOK AND FUTURE DEVELOPMENTS
It is expected that several draft laws that provide certain amendments to legislation on professional liability may be adopted in the coming year.
The Ministry of Health of the Russian Federation has proposed the draft of amendments to the Code of Administrative Offences (Draft No. 02/04/02-19/00088778) according to which it is expected to decriminalise the liability of medical practitioners for a first violation of rules of traffic in narcotic drugs and psychotropic substances. Medical practitioners may be brought to administrative liability and shall pay fines instead of criminal liability.
According to another draft law (Draft No. 01/05/12-18/00087432), it is proposed to decriminalise the liability of medical practitioners that use high-potent anaesthetic narcotic drugs in their work. It is supposed to establish administrative liability for individuals for violation of rules on trafficking narcotic and psychotropic drugs and rules on storage, realisation, transportation, use, import, export and destruction of plants containing such drugs.
The Ministry of Health has been also suggested preparing a draft law on issues related to compulsory insurance of professional liability of medical practitioners, but there is no concrete draft yet.
Also, the Ministry of Justice has introduced the draft of the Government Resolution titled 'Concept of Regulation of the Professional Legal Market'. It is proposed that new rules will apply after 2023. According to this, it is expected to establish a 'monopoly' of advocates for representation in courts and to eliminate the dualism of the legal profession in this sphere, namely only those attorneys who have an advocate status may represent their clients in Russian courts.
1 Magomed Gasanov is a partner, Alexander Mikhailov is an associate and Anastasia Chagina is an attorney at ALRUD Law Firm.
2 Article 232 of the Labour Code of the Russian Federation.
3 Article 15 of the Civil Code of the Russian Federation.
4 Article 32 of the Criminal Procedural Code of the Russian Federation.
5 Articles 25 and 76 of the Criminal Procedural Code of the Russian Federation.
6 Article 7 of the Advocate Law.
7 Article 72 of the Health Law.
8 Article 1064 of the Civil Code of the Russian Federation.
9 Article 272 of the Criminal Code.
10 Article 274 of the Criminal Code.
11 Article 274.1 of the Criminal Code.
12 Article 29.2.
13 Article 20 of the Audit law, applied by self-regulatory organisations of auditors.
14 Article 202 of the Criminal Code of the Russian Federation: a minor crime, unless it is committed in respect of the underaged when it is a the crime of medium gravity.
15 Article 1064 of the Civil Code of the Russian Federation.
16 Article 32.1 of the Insurance Law.
17 Articles 32.5-1 – 32.7 of the Insurance Law.
18 Article 159.5 of the Criminal Code.
19 Article 172.1 of the Criminal Code.