Cherkizovo wins its case against Bryansk Customs in the Supreme Court

March 25, 2020

Moscow, Russia – 25 March – A line has been drawn under the judicial dispute between the Bryansk Customs office and Kurinoe Tsarstvo Bryansk (part of Cherkizovo Group) regarding additional payments charged for the supplies of hatching eggs. The Supreme Court of the Russian Federation has rejected the Customs’ claims as unfounded and overruled the decisions of lower courts.

On 18 March, following an appeal by Kurinoe Tsarstvo Bryansk, the Supreme Court overruled the judgements of lower courts that had previously supported the decision of Bryansk Customs to charge an extra RUB 23.8 million from the company. The dispute was related to the procurement of fertile hatching broiler chicken eggs under contracts with German and Spanish suppliers in 2016–2018.

A zero duty applies to such eggs under regulations of the Eurasian Economic Union (EAEU). However, a customs audit visit found that a part of the imported chicken eggs were infertile. Therefore, the Bryansk Customs office imposed extra charges, as a duty of 15% of the customs value applies to infertile eggs in the EAEU.     

Kurinoe Tsarstvo Bryansk tried and failed to challenge the Customs’ resolution in the Arbitration Court of the Bryansk Region, as well as in courts of appeal and cassation.

In overruling the decisions of the three lower courts, the Supreme Court of the Russian Federation proceeded from the fact that those courts had failed to note that the infertile eggs were actually a defective product as they did not correspond with the purpose of the delivery, that is incubation in order to hatch broiler chickens. The Supreme Court noted that the Company had not used the defective eggs but discarded them instead. Kurinoe Tsarstvo Bryansk submitted veterinary certificates and relevant waybills as an evidence of this fact. Finally, the panel of judges stated that the lower courts had found no evidence that Kurinoe Tsarstvo was aware beforehand that the chicken eggs it imported would be unfit for incubation.

“This is a milestone and long-awaited decision for both Cherkizovo Group and poultry farming in general. We are grateful to the Supreme Court of the Russian Federation for its endeavour and willingness to resolve this complicated industry-specific issue,” said Aleksey Getmanov, Head of Litigation, Legal Department at Cherkizovo Group.