I, KARINA KRASNOVA, being duly sworn, depose and say:
1. I am an attorney duly licensed to practice law in the Russian Federation. My registration number is 78/857. My specialty is matrimonial and family law in the Russian Federation.
I have been licensed by the Appellate Division, 2nd Judicial Department of the Supreme Court of the State of New York as a legal consultant from Russia pursuant to Section 53(6) of the Judiciary Law of the State of New York, as limited by Part 521 of the Rules of the Court of Appeals, and in accordance with the rules of the Court. I am often called to testify in the United States courts as an expert on Russian laws.
2. My clients consist of individuals of all nations who need expertise in Russian law. I specialize in Family and International Private Law and my area of expertise is complex multi-jurisdictional family and matrimonial cases.
3. I have been briefed on the Husband and Wife case and asked to provide an expert opinion on this case.
4. The parties were married since 2000.
5. According to page 33 part 1 of the Family Law of the Russian Federation, the regiment utilized under the Russian law is common property regiment. Common property regiment is used as a default regiment and property is equally divided between the parties in a divorce unless prenuptial agreement states otherwise.
6. When marital property of the parties is distributed in a divorce, the parties’ shares are viewed as equal, unless the parties agreed otherwise in a separate document.
7. Here, Husband and Wife never signed a prenuptial agreement.
8. During the marriage the parties acquired shares of various companies in the name of the Husband. The parties each own 50% of that company.
Pursuant to Art.34 of part 2 of the Family Law of the Russian Federation, property acquired by the parties during marriage (common property), includes compensation each party may receive as the result of her labor during marriage, entrepreneurial activity performed during marriage, and intellectual labor performed during marriage, including pension, retirement, assistance, and other payments received during marriage, that have no other purpose to the society.
The parties joint property also includes real and personal or tangible and intangible property acquired in lieu of the parties’ joint indebtedness, stocks, investments, commissions, capital shares, in any commercial or non-commercial organizations, and other property acquired by the parties during marriage, regardless of how title is held by the parties to that property and regardless in whose name the funds were initially invested/deposited in.
9. Husband has all documents and proofs of property acquired during the marriage by the parties in his possession.
Husband stalls disclosure of financial information regarding the family, misleads the court about the parties’ family finances, and refuses to reveal information that would be relevant to the distribution of marital property.
Pursuant to Art. 57 of the Civil Procedure of the Russian Federation, regarding proofs submitted by the parties, in cases where litigants have difficulty obtaining information relevant to prove their case, they may petition to the Court to assist them in obtaining such proofs.
In such petition, the party must define the evidence he or she needs to have, explain why such evidence is necessary and what it will prove or disprove in his or her case, and what stands on the way of obtaining such evidence and the location where such evidence could be obtained.
10. If the parties or either of the parties cannot obtain evidence necessary to prove or disprove her case, the Court is obligated upon such party’s petition to seek on behalf of the Court such evidence and documents to assist in resolving the matter fairly.
Therefore, absence of the necessary documents is not the ground to deny or satisfy the demands of the parties in a civil case – to the contrary, the Court is obligated to assist the parties in obtaining the evidences and proofs which would help the Court decide the case.
Pursuant to Art. 330 part 1 p.2, of the Civil Procedure Act of the Russian Federation, if the Court is unable to establish the facts of the matter for failure to obtain documentary support or other relevant information, this can serve as the ground to reverse the Court’s findings.
12. In conclusion, all shares of a company, all proceeds of labor and entrepreneurial activity accomplished during the marriage, are common property of the married parties. Each party’s share is 1/2 of the total property of the parties according to the Laws of the Russian Federation. According to the Russian Law, a corporation may not be the property of only one of the parties because:
12.1. Company stocks were acquired during the parties’ marriage (Art 34 of Family Law of the Russian Federation).
12.2. The value of the property was enhanced during the marriage as the result of the investments made with use of property that belonged to one of the parties or to both parties, or as the result of labor of one of the parties or both (Art 37 of Family Law of the Russian Federation).
13. There are exceptions to the above rules:
13.1. Premarital property of each party or property belonging to either party before marriage, gifts and inheritance received by either party during marriage. Art. 37 of the Family Law of Russian Federation, any substantial increase in value of such separate property during marriage that was caused by investment of labor or property or other investments made by either party or both parties towards such property, may result in a finding that the entire separate property became marital property (i.e., capital renovation, reconstruction, redesigning, etc.).
13.2. Personal things (clothes, shoes, etc.), except for jewelry and other luxury items, are deemed the property of the party who used them.
13.3. The party producing Intellectual property has exclusive rights to the benefits from such property.
13.4. A court may find that property acquired during the time the parties did not share residence as husband and wife separate property.
13.5. Things acquired for minors’ needs (clothes, shoes, sports equipment, school supplies, music instruments, children books, etc.), are not subject to distribution in a divorce and such property will be passed on to the custodial parent.
13.6. The Court may digress from the principles of equal distribution of common property to protect the interests of minor children or to protect one of the parties in cases, for example, where one of the parties refused to work without a good reason or wastefully dissipated common property.
Here, Husband wastefully dissipated the parties’ property by borrowing funds to deplete the marital property in anticipation of divorce. This circumstance can be the reason for the Court of the Russian Federation to reduce the guilty party’s share of distribution of property in a divorce or increase the innocent party’s share of distributed property.
14. Having reviewed the entirety of the circumstances of the parties in light of Art. 67 of Civil Procedure of the RF, I can conclude that none of the exceptions to equal distribution of property under the Russian Laws apply in this case.
15. Argument that husband’s labor cannot be viewed as joint investment is wrong because it contradicts Art 37 of the Family Law of RF, which states that labor of either party during marriage, converts separate property into joint, marital property, provided such labor investment substantially enhances the value of the property.
16. Based on the laws of RF, Art. 34 of the Family Law of RF, any property acquired by the parties during marriage is marital property. Marital income, any income derived from labor or entrepreneurial activity by either party is marital property of the parties, including pension, public assistance, other monetary payments, that have no other context in the society. Real and personal property are marital property, including stocks, commissions, investments and capital shares, and other deposits made into commercial and non-commercial organizations during the marriage, regardless of who made those deposits or investments and whose name was the deposit made or transferred from or to. The fact that the husband had a number of corporations registered in his name in the past does not take away from the wife’s right to the common marital property, because the appreciation in value of those companies during marriage was the result of purchase of stocks in the companies, financial investments into the husband’s business, and not the result of merely passive appreciation.
17. It is hard to agree with expert XXXXXXXXXXXXX. As I explained above, according to Art. 37 of the Family Laws of RF, labor of either one of the parties is deemed to be joint investment. Pursuant to Art. 34 part 3 of the Family Laws of RF, the party who took care of domestic duties during marriage, such as child care and other chores, has the right to share in the common property. Such party may not have had separate income for a good reason. It makes no difference who actually worked for the company subject to division in the divorce. Besides, the parties were not developing capital in the premarital companies. They used joint funds to acquire new companies (stocks, corporations, capital shares), which are all subject to division in a divorce as per Art 38 of the Family laws of RF.
18. Furthermore, under Art. 55 of the Civil Procedure of RF, the Court must review proofs and documents or absence of proofs or documents that are relevant to the position of each party. Any factual data that can be validated by presence or absence of supporting circumstances can serve as evidence of a party’s position. Here, the husband failed to show evidence or lack of any evidence to undermine wife’s position or to support his position to the Court.
19. Furthermore, it seems to me that Russian Law should not apply to this case. According to Art. 28 of Civil Procedure of RF, the law of the place of plaintiff’s residence should apply to dispute over marital property. If one sues a corporation that person has to sue that corporation according to place of registration of such corporation. If this lawsuit were to take place in the RF, a Russian Judge would have applied Art. 135 of the Civil Procedure Code of RF to this dispute. According to this law, if the Court cannot hear a dispute, it must reject the filing and return to the plaintiff the summons.
This case is subject to jurisdiction of New York. In my expert opinion, Laws of New York should apply to this case, not Russian laws. Here, the husband and wife are also citizens of United States. The parties do not pay taxes as Russian residents and are not registered as residents of the Russian Federation.
20. In my professional opinion, if this Court is going to apply Russian Federation laws, as the Court did herein, the husband and wife should equally divide their assets, including the corporation at issue.