Russian Federation: Russian Customs Authorities To Reimburse Expenses To Importers For Unjustified Retention Of Goods In Temporary Storage Warehouses

Russian customs law provides that if the customs authorities suspect a violation of import regulations, they are entitled to impound the goods and place them in a temporary storage warehouse.¹ The storage is maintained at the importer's expense at the cost (tariff) in force for the period of storage as set out in the public offer made by the warehouse owner or stated in the contract for storage of goods made between the representative of the customs authorities and the warehouse owner.

Attributing the storage costs to the importer seems fair if the importer's violation is proven during the customs inspection or by subsequent court proceedings. However, if no violation is found, until now the importer has only been entitled to claim the reimbursement of its expenses for this storage by separate litigation against the customs authorities. This litigation and further enforcement procedures are time-consuming and expensive.²

In order to simplify the reimbursement procedure, on August 19, 2011, the Government of the Russian Federation issued Decree No. 704, by which it approved the Provision on customs authorities' reimbursement of expenses (hereinafter, the "Provision"). Subject to Clause 2 of the Provision, reimbursement of an importer's storage costs must be paid in full from the federal budget if the customs inspection of these goods finds no violation of the laws of the Customs Union³ and/or the customs law of the Russian Federation.

The reimbursement must be made on a non-judicial basis in response to the importer's application. Should the customs authorities find the application reasonable, the importer will receive reimbursement through a bank transfer within 45 days from the date of submitting the application.

The Decree came into force on September 26, 2011.

Footnotes

1. Subject to Article 168 of Federal Law No. 311-FZ, dated November 27, 2010 "On Customs Regulation in the Russian Federation."

2. Russian courts routinely deny compensation of legal fees exceeding $2000 - $3000.

3. The Customs Union ("CU") is contracted between Russia, Kazakhstan and Belarus on the basis of the trilateral Treaty of October 6, 2007. CU means a single customs territory, unified customs rules, flat duty rates, no control within borders, etc.

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