The rules for calculating the interest for breach of monetary obligations under Articles 317.1 and 395 of the Civil Code of the Russian Federation (the “Civil Code”) will change again on 1 August 2016. These amendments stem from Federal Law No. 315-FZ (here in Russian) which was adopted on 3 July 2016.
The new rules have limited the accrual of “statutory interest” under Article 317.1 of the Civil Code to cases expressly provided for by a statute or an agreement. Thus, “statutory interest” will no longer automatically accrue (i.e. even in the absence of any delay), as it was stipulated in the previous wording of Article 317.1 of the Civil Code adopted in June 2015.
The amount of interest under the new rules will be determined by the key rate of the Bank of Russia (the “CBR”) that was in effect during the corresponding period of the delay (unless otherwise provided for by statute or contract). As a reminder, the CBR’s key rate has been fixed at 10.5% per annum since 14 June 2016.
When calculating the amount of interest, recent clarifications of the Plenum of the Supreme Court of the Russian Federation, contained in Resolution No. 7 “On the Application by the Courts of Certain Provisions of the Civil Code of the Russian Federation on Liability for Breach of Obligations” dated 24 March 2016 (here in Russian) should be taken into consideration.
This Resolution contains a number of clarifications regarding the application of Article 395 of the Civil Code. Specifically, it establishes that interest under this article is generally not recoverable, if a contract specifies a penalty for breaching a monetary obligation (i.e. when losses are being recovered in the part not covered by the penalty and when neither a statute nor a contract provides otherwise).
It can be expected that the application of the key rate – the main indicator of the monetary policy of the CBR – will guarantee a more objective and economically justified interest calculation for breaching monetary obligations. Also, it is more convenient to calculate the amount of interest, using the key rate instead of the average bank interest rates for deposits by individuals (which differ from federal district to federal district), as is currently the case.
After 1 August 2016, these changes will have to be taken into account when filing claims for the recovery of interest for late payment.