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The Topical Issues of Securing the Property Responsibility of the Members of the Self-Regulated Organizations in the Gas Industry

Nikolay Vladimirovich Smirnov, chairman of Arbitration court at the Non-commercial partnership “Energostroy”, teacher of the department of energy law of Moscow state law university named after O.E. Kutafi n (MSLA)

In this article the author examines the problem aspects of the development of the institute of self-regulation, issues connected with the coverage of the property responsibility of the members of self-regulated organizations in the sphere of gas industry, conducts the legal analysis of legislation regulated activity of the self-regulated organizations in the sphere of construction of the power engineering objects in the gas industry.

The gas industry is one of the most important components of the fuel and energy complex of the Russian Federation, which determines its national and energy security. The share of gas in the energy resource of Russia makes up about 50%. The gas transportation enterprises of the Russian Federation are currently conducting works on the construction and reconstruction of the gas distribution networks and gas pipelines. However, the new social-economic status of the regions of Russia, which is nowadays characterized by the high integral risk of technical accidents, natural disasters and terrorist acts, is significantly complicating the task of securing the quality of construction, reconstruction and overhaul of the gas distribution systems and gas pipelines, securing the high level of protection of the crucial interests of the person and society against the accidents at the dangerous enterprises, among them the objects of the capital construction of gas distribution networks and gas pipelines, as well as the consequences of the above-mentioned accidents.

In accordance with p. 1 Art. 1079 of the Civil Code, construction and other related activities, including the construction of gas distribution systems and gas pipeline, belongs to the activity subjecting the environment to heightened levels of danger.

The main factors of harming the environment in case of accidents at the gas distribution networks and gas pipelines are: the area of fragment dispersion during the accident at the gas pipeline, the air wave of compression at the inflammation of the gas-and-air mixture in the open space, the impact of the air wave of compression on the human beings.

The gas distribution systems and gas pipelines constitute an integrated technical system, including the vessels of high pressure, the system of purification, drying and heating of gas, technological pipelines and, according to Federal Law No. 116-ФЗ “On the Industrial Security of the Dangerous Objects” of 21 July 1997[1] and the Town Planning Code of the Russian Federation[2], belong to the objects of special danger and technical complexity.

At the stage of the construction of the gas distribution systems and gas pipelines, the following factors contribute to incurring harm as a result of the deficiency in the works, which impact the safety of the objects of the capital construction and accidents: the poor supply of materials, units, constructions and equipment; the insufficiently effective system of construction control, breaching the requirements of the technical regulation “On the Safety of Constructions and Buildings”[3], Federal Law “On the Industrial Safety of the Dangerous Industrial Objects”, the construction norms and rules.

The acting legislation does not limit the possibility of participation of the subjects of entrepreneurial activity working in the gas industry, in several self-regulated organizations (SRO). In this area, only the issue of matching in various certificates on the right of access to a certain type of works is being regulated, as it is forbidden to possess certificates on the right of access to the same type of works issued by different SROs. Thus, a situation has arisen when SROs specializing in the objects of the gas industry comprise members, which are incompatible both by the number of works and their content, and are thus not uniform in the level of potential risk, related to the fulfillment of such works. Such an approach unfortunately leads to the breaking of the principle of industrial uniformity within the SRO and creates a whole range of complicated problems touching upon the crucial spheres of the functioning of SROs and their fulfillment of the most important requirements of the legislation.

The most important requirement of the legislation for the institute of self-regulation in the gas industry is undoubtedly the requirement of the provision of the SROs acting in the gas branch, with necessary property responsibility of their members. Special attention is given to the quality of works at the objects of the gas industry and hedging the heightened risks during their implementation. Considering the financial scale of the activity in implementing the projects of all-state importance, the level of responsibility and potential risk, the corresponding provision on top of the obligatory formation of the compensation fund can only be achieved via the creation of a reliable system of insurance of civic responsibility, in accordance with the rules of self-regulation.

The amendments into Art. 60 of the Town Planning Code of the Russian Federation, coming into force on 1 June 2013[4], have seriously altered the system of the reparation of damages to the third parties and accordingly the mechanism of the insurance of the responsibility of SRO members. The new requirements have caused a number of contradictions, which are evident even to the law-makers themselves.

In accordance with the new edition of Art. 60 of the Town Planning Code of the Russian Federation, the compensation of damages and the payment of indemnity in excess of the compensation of damages is the obligation of the developer. The developer is a priori legally bound to “compensate for the damages in accordance with the civic legislation and pay the indemnity in excess of the compensation of damages”. The contractor is released of the responsibility to compensate the damages directly to the victim, which is replaced with the obligation to compensate for such damage in the order of regression to the developer.

Several legal collisions and unsolved legal issues are present in the legislation, which could in future lead to the appearance of legal disputes and the ambiguous law enforcement practice.

For example, the norms on the inclusion of the regressive requirements of the owner, concessioner, developer, technical client to a member of an SRO in the insurance of the civic responsibility of such members within the system of self-regulation are absent. In this respect, a question arises: to what type of insurance does the insurance of the regression risk claim to a member of an SRO from the owner, concessioner, developer, technical client belong – to the insurance of the civic responsibility or the insurance of financial risks?

Art. 4 of Federal Law “On the Organization of the Insurance Business in the Russian Federation”[5] (in the edition of Federal Law No. 234-ФЗ “On Introducing Changes into the Law of the Russian Federation “On the Organization of the Insurance Business in the Russian Federation”, which came into force on 21 January 2014” of 23 July 2013[6]) exacts that:

-          the objects of the insurance of civic responsibility can be the proprietary interests related to the approach of the responsibility for incurring damage to life, health and property of the citizens, the property of the legal persons, municipal bodies, the Russian Federation constituent entities and the Russian Federation;

-          the objects of the insurance of the financial risks in the property insurance can be the property interests of the insured (the holder of the insurance), related to the risk of the non-receipt of income, the appearance of the unforeseen costs of the physical and legal persons and not related to the activity of the insured (the holder of the insurance) (the insurance of the financial risks).

Considering the fact that the damage incurred as a result of the wrongdoing by a member of an SRO is related to the entrepreneurial activity of such members, and their risks fall under the object of the insurance of civic responsibility, the insurance of civic responsibility should be applied in this case, even during the initial compensation of such damage by the other persons in the order established by the law.

In accordance with the norms of Art. 929 of the Civil Code of the Russian Federation, the entrepreneurial risk is defined as the risk resulting from the breaking of the contract by the counteragent of the entrepreneur or the alteration of the conditions of conducting business activity based on the circumstances not dependent on the entrepreneur. The given grounds allow us to make the conclusion that the risk of laying down regressive requirements by the owners, concessioners, developers or technical clients to a member of an SRO in the construction business cannot be qualified as entrepreneurial risk. That means that if the risks of the members of the self-regulated organizations can be insured as part of the financial risks, they cannot be qualified as entrepreneurial risks.

Regrettably, we are witnessing the absence of clear regulation of assigning responsibility to the person conducting the works on the organization of construction and the person, who conducted the construction oversight, who both fulfill a number of functions in the construction business, which secure the quality of the construction works and the safety of the construction works in the gas industry. The amendments to the Town Planning Code of the Russian Federation foresee the solidary responsibility for the damage incurred in the process of construction, by the SRO and the person, who conducted the works, in consequence of the poor results of which such damage was incurred. However, the Russian private law determines the principle of full damage compensation by the person causing the damage. The cases of exceptions from this principle, contained in Art. 1064 of the Civil Code of the Russian Federation, can be fixed in laws, but such exceptions should be well-grounded. However, in contrast to the actually guilty persons, who have allowed flaws while conducting the works, and the persons who did not secure proper control over these works, within the current legislation SROs have no real authority to control the works conducted by its member. Within the existing legal system, SROs play the functions which do not foresee responsibility based on the results of the activity of its members at the same level as of the SRO itself.

Apart from the persons implementing the works, whose faults have caused the damage, the responsibility should be borne by the persons conducting the works on organizing the preparation of the project documentation and the organization of construction.

In order to properly secure the quality of the works in the construction sphere, the acting legislation provides for a multi-stage control mechanism. Participating in this control scheme is among other, the person having direct access to the works on conducting construction control. This results in the fact that together with the person conducting the works on the organization of the construction, in accordance with the Arts. 707 and 1080 of the Civil Code of the Russian Federation, the person conducting the control, whose direct responsibility is to inform the customer and contractor on the deficiencies in the works and prevent damage, should bear the responsibility for the damages.

However, despite the fact that the above-mentioned persons also act as the persons conducting the works, which influences the safety of the objects of the capital construction, it is currently extremely difficult to distribute the responsibility between him and the person actually conducting the works. The fixation of the norms introducing the responsibility of the general contractors and the persons conducting the construction control will allow counting among the solidary debtors of the persons, who by their action or inaction also facilitated causing the damage.

A significant complication for the understanding of the mechanisms of the implementation of this norm is the fact that the novelties define that the owner, concessioner, developer, technical client provide damage compensation if they are able to prove that the wreckage, damage and irregularities were caused as the result of the action of the third persons despite the fact that the definition of the third persons itself is missing. Thus, the third persons can be among other the persons directly conducting the works. In this relation, there arises a need to introduce clarifications, which exclude from the category of the third persons those against whom one can put forth a recourse, which would allow avoiding a wrong interpretation of the law.

By introducing solidary responsibility, the issue of terminating the responsibility of an SRO simultaneously with the liquidation of a member of such self-regulated organization was also resolved. The subsidiary responsibility is regulated by Art. 399 of the Civil Code of the Russian Federation, in accordance with which the creditor should present the claim to the main debtor before presenting the claim to the person, who bears subsidiary responsibility. In case an SRO acts as a solidary debtor, it becomes the main defendant and the liquidation of a member of such self-regulated organization does not preclude the fulfillment of its obligations.

However, if the Federal Draft Law No. 262137-6 “On Introducing Amendments into the Town Planning Code of the Russian Federation”[7] is passed, (in the part of establishing the subsidiary responsibility of self-regulated organizations) it is necessary to fix in the law the transfer to the SRO of the responsibilities of its former members. These amendments will allow preventing the conditions, under which dishonest SROs would profit from accepting as members phony companies. Such organizations, after conducting certain works in the gas market, have a tendency for liquidation and thus evading responsibility, which in case of the absence of a direct legal norm allows SROs themselves to avoid responsibility.

The obvious presence of the revealed legal gaps will in the near future inevitably cause commercial disputes in the cases of determining damage compensations. The elimination of the gaps will undoubtedly contribute to the improvement of the quality and safety of the works provided in the self-regulation of the gas industry, when all the involved participants of the construction process bear adequate property responsibility for the damage incurred, lowering the risk of causing damage and reaching the main goal of introducing self-regulation into the gas industry, namely securing the safety of construction. At the same time, it is obvious that in order to introduce the conditions of stimulating the quality and safety of the provided works, a separate and detailed examination of many other aspects is required.

In the end, one can arrive at a conclusion that a self-regulated community in the gas industry is ready to actively contribute to improving the legislation, which sets the basic requirements to the activity of self-regulated organizations. The professional community also assumes the orientation for the close cooperation and dialogue with the executive bodies, which are defined as the regulator of the implementation of the new law, including both the utilization of the experience of various public platforms and the activity of specialized expert groups.



[1] RF Federal Law No. 116-ФЗ “On the Industrial Security of the Dangerous Objects” of 21 July 1997. Code of Laws of the Russian Federation, 1997, No. 30, Art. 3588 (in Russian).

[2] Town Planning Code of the Russian Federation No. 190-ФЗ of 29 December 2004. Code of Laws of the Russian Federation, 2005, No. 1 (p. I), Art. 16 (in Russian).

[3] RF Federal Law No. 384-ФЗ “The Technical Regulation on the Safety of Building and Constructions” of 30 December 2009. Code of Laws of the Russian Federation, 2010, No. 1, Art. 5 (in Russian).

[4] RF Federal Law No. 337-ФЗ “On Introducing Amendments to the Town Planning Code of the Russian Federation and Certain Legal Acts of the Russian Federation” of 28 November 2011. Code of Laws of the Russian Federation, 2011, No. 49 (p. I), Art. 7015 (in Russian).

 [5] RF Law No. 4015-1 “On the Organization of the Insurance Business in the Russian Federation” of 27 November 1992. Transcript of the Convention of the People’s Deputies and the Supreme Soviet of the Russian Federation, 1993, No. 2, p. 56 (in Russian).

[6] RF Federal Law No. 234-ФЗ “On Introducing Amendments into the RF Law “On the Organization of the Insurance Business in the Russian Federation”” of 23 July 2013. Code of Laws of the Russian Federation, 2013, No. 30 (p. I), Art. 4067 (in Russian).

 [7] Available at: http://www.duma.gov.ru/systems/law/?number=262137-6&sort=date