OREANDA-NEWS. July 21, 2008. No. 108-FL Federal Law of 30th June 2008 "On Introducing Amendments to the Federal Law "On Concession Agreements" and Some Legislative Acts of the Russian Federation" added Article 17.1 to Chapter IV of the Federal Law "On Protection of Competition", reported the press-centre of FAS Russia.

The new Article institutes the pattern for concluding the contracts related to the state and municipal property.

Under Article 17.1, starting from 2nd July 2008 leasing contracts, contracts for gratuitous use, property trust, and other contracts that cover passing of the right of ownership and (or) use of state or municipal property can be concluded only through tenders or auctions for the right to enter into such contracts, regardless of the fact whether the property is allocated to state or municipal unitary enterprises, state or municipal budget-funded organizations on the basis of economic control rights or operating management (provided these entities can administer the property only upon an owner's consent) or is not allocated (further on referred to as property transfer contracts); except when the above property rights are granted on the basis of:

1) The acts of the President of the Russian Federation, or decisions of the Government of the Russian Federation;

2) A valid court ruling;

3) The federal law instituting other forms of property administration.

The above procedures for concluding contracts do not cover the property managed under the Land Code of the Russian Federation, the Water Code of the Russian Federation, the Forestry Code of the Russian Federation, and the legislation on Subsurface Resources of the Russian Federation.

The Government of the Russian Federation shall established the tender and auction procedures for concluding the contracts that allow passing of the rights of ownership and (or) use of state or municipal property, and the list of cases when the above contracts should be concluded by competitive bidding.

Until the Government of the Russian Federation adopt relevant Decrees, tenders for the right to conclude property transfer contracts shall be arranged according to the Federal Law "On Concession Agreements", and the auctions for such contracts - in accordance with the procedures established by the Federal Law "On Privatization of Sate and Municipal Property", under Part 3 Article 53 of the Federal Law "On Protection of Competition".

Applying Article 17.1 of the Federal Law "On Protection of Competition", the antimonopoly body acts on the basis that until the Government of the Russian Federation adopts the relevant procedures, the auctions for concluding the property transfer contracts must be organized in accordance with Article 18 the Federal Law "On Privatization of Sate and Municipal Property" for auction selling of state or municipal property.

Taking into consideration the above mentioned, as well as that under Clause 3 Article 425 of the Civil Code of the Russian Federation, the contract is valid until the date when performance of contract obligations by the parties is terminated as specified in the contract.

After 2 July 2008, entering into the property transfer contracts without a tender or an auction, as well as prolonging the existing contracts after the above date, or making additional contracts which expand the scope of the contract, violate Article 17.1 and Chapter V of the Federal Law "On Protection of Competition". Article 21 of the Federal Law "On Protection of Competition" determines the consequences of the above violations - returning the property, the rights for which have been transferred without competitive bidding.