On 10 March 2005, the Federal Arbitration Court of the Moscow District sustained the resolution of the Ninth Arbitration Appeals Court on case No. 09AP-644/104-GK of 31 January 2005 regarding the exaction of the basic debt and interest on a loan agreement

On 06.12.1999, CJSC “Finansovaya Lizingovaya Kompaniya” (subsequently OJSC “Finans-Lizing”) and CJSC “Zenit-Evropa” executed a loan agreement, the term of which expired on 31.12.2002. In the course of 2000-2002, the sum of the loan plus interest for use of the loan was partially repaid to the Lender. The rights of demand of the remainder of the debt and also all the other rights and demands arising from the loan agreement of 05.12.1999 were ceded by CJSC “Zenit-Evropa” to CJSC “FLK” pursuant to a cession agreement of 28.10.2002, a circumstance of which OJSC “Finans-Lizing” was duly notified.

Obligations regarding the repayment of the outstanding debt and relevant interest were not discharged by the debtor in the course of 2002-2004. In July 2004, CJSC “FLK” filed a claim with the Arbitration Court of the City of Moscow regarding exaction of the basic debt, the interest envisaged by the loan agreement and also interest for the use of another entity’s monetary means from OJSC “Finans-Lizing.”

The decision of 26.10.2004 dismissed the claim. The court of the first instance accepted the arguments of the Respondent, motivating its conclusion by the circumstance that the Claimant did not have demand rights insofar as at the moment of the execution of the cession agreement (28.12.2002) the term of repayment of the loan (31.12.2002) had not expired.

The law firm “YUST”, instructed by CJSC “FLK”, filed an appeals complaint against the decision of the Arbitration Court of the City of Moscow.

In its resolution of 31 January 2005, the Ninth Arbitration Appeals Court revoked the decision of the Arbitration Court of the City of Moscow of 26.10.2004, and granted the Claimant’s demands in full. The court of the appeals instance also noted that “…upon execution of the loan agreement, obligations arise from the moment of the execution of the said agreement and the transfer of money, and not upon the expiry of the repayment term of the agreement. The circumstances that the term of repayment has not expired is not an impediment to cession, as there is an existing obligation between the debtor and the creditor…”

The Respondent filed a cassational complaint against the resolution of the court of the appeals instance. On 10 March 2005, the Federal Arbitration Court of the Moscow District issued a resolution dismissing the cassational complaint of the Respondent. The interests of CJSC “FLK” were again represented by the attorneys of the law firm “YUST.”

Pursuant to the resolution of the Federal Arbitration Court of the Moscow District of 10 March 2005, the Respondent’s cassational complaint was dismissed. The court of the cassational instance sustained the conclusions of the appeals court and the arguments of the Claimant, indicating that “…pursuant to arts. 807, 810 of the Civil Code of the RF, a loan agreement shall be considered concluded from the time of transfer of the money, and not the term of expiry of the repayment period, therefore the fact that the repayment period has not expired does not constitute a legal impediment to the execution of a cession agreement…”