On 10 August 2012, the Supreme Commercial Court of the Russian Federation (the “SCC”) published a decree clarifying disputes relating to suretyships (the “Decree”). The Decree has not been significantly amended since the draft was published in February 2012 and analysed in the March edition of the Legal Digest.
We would like to note several important positions included in the SCC’s Decree:
- a suretyship agreement may be entered into without the consent or notification of a debtor;
- a suretyship agreement may contain reference only to an underlying agreement rather than describe in detail the terms and conditions of the underlying obligation;
- the term of the suretyship agreement is deemed to be specified if the suretyship agreement sets out that the agreement is effective until the underlying obligation is discharged in full;
- unless otherwise provided for in the suretyship agreement, the suretyship is terminated if the creditor of a debtor has not filed a claim against the surety within one year of the day on which the underlying obligation becomes due; and
- starting a bankruptcy monitoring procedure (“protsedura nabludeniya”) in respect of a surety, or declaring a surety bankrupt, entitles a creditor to demand the pre-payment of a loan amount.
Once the SCC has adopted the Decree, it will be possible to eliminate specific loopholes in the current legislation which allow unscrupulous sureties to avoid fulfilling their respective obligations by disputing the validity of a signed suretyship agreement.
[Decree No. 42 of the Plenum of the Supreme Commercial Court of the Russian Federation “On several issues of resolving disputes relating to suretyships”, dated 12 July 2012]