The RF Constitutional Court (the "Constitutional Court") recently ruled in favor of public communications network operators in a case initiated by the Koryaksky Autonomous District Duma.
The Constitutional Court declared unconstitutional Articles 59 (2), 59(3) and 60 of RF Law No. 126-FZ "On Communication," dated July 7, 2003 (the "Telecoms Law") for its failure to establish clear procedures to carry out the requirements of such law. The Telecoms Law introduced a new category of "universal communications services," which are services related to (i) public pay phones; and (ii) data transmission and access to the Internet through the use of shared sites. The Telecoms Law provided that any losses incurred by the operators of such services would be recoverable from a special reserve fund which would be funded by all public communications network operators through the payment of mandatory fees1 The purpose of the fund is to encourage the development of a telecommunications network in Russia. The Telecoms Law failed to set out specific procedures for the payment of such fees to the reserve fund, leaving it to the RF Government to adopt an appropriate mechanism in the future. In accordance therewith, on April 21, 2005, the RF Government issued Decree No. 243 on "the Procedures for the Creation and Expenditure of Universal Services Reserve Funds," establishing the base, period, rates, and procedures for calculating and paying the mandatory fees to the reserve fund, which the Constitutional Court ruled unconstitutional. This ruling is consistent with prior decisions of the Constitutional Court on similar matters. For example, the Constitutional Court had previously ruled that taxes and fees must be explicitly established by law and that such law must also provide for a mechanism for the payment of such taxes or fees (e.g. , Decree No. 9-P, dated April 4, 1996; Decree No. 16-P, dated November 11, 1987).
In order to avoid impacting the federal budget for the year 2006, the Constitutional Court ruled that Articles 59(2), 59(3) and 60 of the Telecoms Law may be enforced until January 1, 2007, at which time the Telecoms Law must comply with the Constitutional Court ruling. If the Telecoms Law is not brought into compliance with the Constitutional Court ruling by such date, public communications network operators would not be required to pay fees to the reserve fund unless the necessary changes to the law are made. /A. Kelina
1 For a review of the Telecoms Law, please see A. Kelina. "New Telecommunications Law is Finally Adopted." CIS and Central Europe Legal Newswire . September 4, 2003.
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