Limitation does not protect against anti-corruption claims

The essence of the case, and the position of the Constitutional Court:

The Court held that the general rules on limitation (three years for claims, and ten years for demands) must not be applied to anti-corruption claims.

This is because corruption offences often remain concealed for a long time, which makes it harder to discover them in time and to file a claim. Applying limitation could encourage corruption, by allowing those responsible to escape liability through the expiry of the time limits.

The Constitutional Court stressed that the fight against corruption is the protection of the interests of society and of the state. Setting periods of limitation must not stand in the way of the taking of property acquired unlawfully, even where that property had been concealed.

The decision of the Constitutional Court may have adverse consequences for private owners of real estate. Market participants, including buyers in good faith, may face the loss of the property if it ever belonged to a person accused of corruption, regardless of how much time has passed since it was acquired. Removing the limitation period may lead investors to fear that an investment in real estate carries a high degree of legal uncertainty. That may reduce the volume of transactions and the capital drawn into the sector. Market participants will have to commit further resources to legal due diligence and to an analysis of the history of title, which will increase the cost of buying real estate and will slow transactions down.

Even a buyer in good faith may suffer a taking of the property if the lawfulness of every previous acquisition cannot be proved. Sergei Pivovarchik, managing partner of Consul Group, comments.

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