Russian Supreme Court Confirms: Receiving an Advance Payment Does Not Eliminate Contractor Liability
The Supreme Court of the Russian Federation has reaffirmed an important principle for project owners and clients:
Receiving an advance payment is not enough. If a contractor cannot demonstrate that the advance was used to perform the contracted work, the court may order the contractor to repay the advance, either in whole or in part.
This position is set out in the Ruling of the Supreme Court of the Russian Federation No. 305-ЭС26-4768 of 28 May 2026 in Case No. А40-263665/2024.
What happened?
A general contractor paid an advance to a subcontractor and supplied owner-furnished materials for the execution of the works.
During the project, it became apparent that part of the advance payment could not be substantiated by completed work. In addition, unused materials had not been returned, and the project completion deadline had been missed.
The client initiated legal proceedings.
The contractor argued that it had fulfilled its contractual obligations but was unable to provide sufficient documentary evidence to support that claim.
What did the Court decide?
All levels of the judiciary, including the Supreme Court, reached the same conclusion:
If a contractor cannot prove that the advance payment was used to perform the contracted work, and cannot demonstrate that owner-furnished materials were either used for their intended purpose or returned to the client, the contractor will be required to reimburse the corresponding amounts.
Why does this matter for engineering surveys?
Most engineering survey projects begin with an advance payment.
This court ruling serves as another reminder of a fundamental principle: it is not enough to perform engineering surveys to a high standard—every stage of the work must also be properly documented.
Acceptance certificates, technical reports, as-built documentation, and material records become the key pieces of evidence in the event of a dispute.
Our approach
We are confident enough in the quality of our engineering survey services that we are prepared to undertake selected projects without an advance payment, with payment made upon completion of the agreed scope of work.
Our confidence is based not only on the quality of our engineering solutions but also on our ability to substantiate every completed project with comprehensive technical documentation.
