Early return of a subordinated deposit: court practice

The article “Law-application aspects of early return of a subordinated deposit” was published in the issue No. 1/2013 of the “Legal Work in a Credit Organization” magazine.

Advocate Alexander Yevdokimov, Head of the Arbitration Practice of the Law Firm "YUST", shared his view regarding the court practice problem:

The problem essentially goes beyond the matters connected to the early return of subordinated deposits and touches upon the general problem of interpretation by court of legal provisions on possible limitations of the legal entity depositors’ right to early return of their bank deposits. Clause 2 of Article 837 of the Civil Code of Russia fixes the general rule obliging the bank to return the deposit amount to the depositor on demand, independently from the type of the deposit, “with the exception of the deposits made by legal entities on other conditions stipulated by the agreement”. As we can see, this norm may be interpreted formally and narrowly, in the sense that the agreement should directly stipulate the absence of the bank’s obligation to return the deposit on the depositor’s first demand – such is the requirement for the bank’s refusal to early return the legal entity’s deposit. However, such approach does not seem correct. In my opinion, “other conditions of return” of the deposit should be interpreted as any conditions of the agreement, which directly or indirectly limit the depositor’s rights to early claim the deposit in full or in part.

Obviously, with such approach, there will be no problems with defining the correlation between the considered provisions of Article 837 of the CCRF and the norms of Article 50.39 of the Federal Law No. 40-FZ “On insolvency (bankruptcy) of credit organizations” dated 25.01.1999. Said provisions stipulate, among the indications of a subordinated deposit, such actual limitations on the early repayment of the deposit as the impossibility of the early return of the deposit or a part of it and (or) early termination of the deposit agreement without approval by the Bank of Russia.

It also should be noted that the courts in most cases have no problem classifying the deposits by legal entities, which correspond to the legislative definition of subordinated deposits, as deposits, which cannot be early claimed by the depositor.