The card block is legitimate

Russian courts were not unanimous in their decisions concerning the legality of the actions of international payment systems (IPS) blocking the cards of certain banks affected by the sanctions. After such actions were ruled illegal upon a claim by the Central Bank, the court ruled to the contrary upon a claim of one of the victims – a client of SMP Bank. This decreases the chances of others wishing to sue the IPS for sanctions, though doesn’t eliminate them.

The preamble of the ruling by the Meschansky District Court of Moscow on the claim by a client of SMP Bank, who sought to recover the damages from the blocked card, shows that the court suddenly supported MasterCard, which cut the sanctioned banks’ cards servicing this spring. According to the full text of the ruling (Kommersant has a copy), the court dismissed the claimant’s request for formal reasons (the claimant could not sue the payment system directly), as Kommersant informed earlier, but the court disagreed with the claimant also on the essence of the matter. The court did not support the bank’s client’s argument that MasterCard had abused its right by blocking the operations on the cards in the light of American sanctions.

The first attempt to impose the responsibility for the sanctioned blocking of the cards of several Russian banks by the IPS failed. The claim moved by a client of SMP Bank against MasterCard was dismissed in October.

The court followed the following logic: MasterCard has been registered by the Central Bank as an operator of payment systems and acts on the basis of its own rules approved by the same regulator. One of said rules says that, in order to participate in the system, the bank must, inter alia, have a valid license to use the trademark of the American system MasterCard International Inc. The court ruling says that the banks under sanctions had their licenses suspended “on the basis of the requirements of the US legislation, namely – the Decree by the President of the USA dated March 20 (on imposition of sanctions)”. Consequently, the court points out, there was no abuse of rights by the respondents, and MasterCard is ruled innocent.

Interestingly, a justice of peace reached the exactly opposite conclusion upon a claim by the Central Bank two months prior. The Justice of Peace issued on August 18 two fine resolutions at once: against MasterCard LLC for 100 000 roubles and against its General Director Ilya Ryaboy for 30 000 roubles. This is according to the texts of the resolutions published at the portal of the Unified Information Space of the Justices of Peace of Moscow. Thus the payment system was punished for not restoring the servicing of the banks affected by the sanctions, even though MasterCard’s arguments were essentially the same. Besides, the IPS also claimed that it was unable to begin servicing the banks, because some of its payment infrastructure was located abroad. However, as the court opined in the Resolution, pursuant to the Law “On national payment infrastructure”, MasterCard must control how all infrastructural components, including the operations and clearing center, perform its rules and render their services.

Alexander Bolomatov, Partner of the Law Firm "YUST", says: "The court, on the basis of the same circumstances, concluded on the need to bring the IPS to administrative liability, but saw no reasons for bringing to civil liability".