On 5 May 2011 the Supreme Arbitration Court (the “SAC”) published on its website a draft of a review on the court’s resolution of disputes involving credit agreements (the “Draft Review”).
The Draft Review concludes, among other things, that:
- an agreement may be subject to the Civil Code’s provisions on contracts of affiliation if the borrower was not involved in setting the terms and conditions of the credit agreement and the agreement includes clauses that favour the bank over the borrower;
- the borrower may file a claim for indemnification (recover losses caused by not receiving the loan) if the bank does not advance the loan amount to the borrower; and
- the court can reduce the default interest rate charged by the bank, when the borrower is in default, because the increased interest rate payable upon default is a payment which accrues for breach of obligation, rather than as a fee for the bank.
The provisions of the Draft Review on fees payable for providing the credit are subject to further discussion. There are currently two positions:
- the additional fees described in the credit agreement made between the bank and the borrower, together with the interest rate, must be treated as charges for the loan; or
- the bank may collect the extra fees only in the event that it provides additional and separate financial services.
Adoption of the Draft Review will affect the current court practice as well as the terms and conditions of credit agreements. The SAC’s view, as stated in the Draft Review, should be considered now, especially since the document is near adoption.
[Draft “Review of court practice in resolving disputes relating to the application of the provisions of the Civil Code of the Russian Federation regarding credit agreements” is published in Russian at the official website of the SAC at: www.arbitr.ru/vas/proj/]