The SCA complicates the sureties’ life

The SCA of Russia considered a case, the essence of which is a good illustration of how important it is to produce a resolution on surety-related disputes. The courts took the opinion that the surety’s obligation to conform to the currency legislation and change of the governing law is an unfavorable consequence, which terminates the surety obligation. The supervision judges did not agree with this.

Background

In the years 2007-2008, a series of surety agreements was executed between “Bank “Severnaya Kazna”” OJSC (the consolidated accounts of “Alfa-Bank” banking group mentions it as a separate legal entity member of the group, and “Alfa-Bank” is mentioned as the head organization) and “Yekaterinburg-Vtormet”. The agreements regard the credits totaling 200 million roubles, issued by the “Severnaya Kazna” to the “Horse breeding Farm “White Horse”” company.

The credit was not duly serviced, and in 2010 “Severnaya Kazna” ceded the right to claim (including under surety) to the Cypriote company Strelliako Limited, which, in its turn, ceded it to yet another company – Business Prof Invest Limited. After that, “Yekaterinburg-Vtormet” filed with the Court of Arbitration of the Sverdlovsk Region a claim (case A60-45699/2010) requesting to invalidate its surety.

The court took the opinion that the cession agreement, entered into by the bank, brought “unfavorable conditions” to the claimant. Such opinion was based on the claimant’s allegation that when a foreign entity becomes the creditor, it imposes on the surety certain additional obligations – for example, he becomes obliged to draw up the transaction’s passport when making the payment. Besides, the court noted that the change of the creditor under subclause 8 of clause 3 of Article 1211 of the CCRF caused application of Cypriot law to the parties’ relations, which the surety did not agree to. As a result, the requests by “Yekaterinburg-Vtormet” were upheld.

The bank also failed to obtain a decision in its favor in the instance of appeal, despite arguing that “Yekaterinburg-Vtormet” made its request with the sole objective to avoid fulfilling its obligations. The 17th Arbitration Court of Appeal believed that the change of the governing law without clear consent by the surety resulted in the change of the basic obligation, which, in its turn, results in its termination. The judges of the Federal Court of Arbitration of the Urals District left the ruling of the first instance court and the appeal decision unchanged. A notable fact: it happened despite the U-turn in the claimant’s viewpoint (at that time “Yekaterinburg-Vtormet” entered the trustee management stage), and that the claimant agreed with the arguments of cassation requests by Business Prof Invest Limited and “Alfa-Bank”.

Consideration of the case by the SCA of Russia

Business Prof Invest Limited as well as Eduard Chu, the trustee manager of “Yekaterinburg-Vtormet” filed to the SCA of Russia the requests to reconsider the case. And the SCA discovered motives to submit it to the Board. Natalia Kharchikova, Irina Maramyshkina and Marina Pronina, Judges of the supervision, believed that the acts issued by the courts had been based on an incorrect construction of the law. In their resolution, the Judges expressed the opinion that surety terminates, if the basic obligation changes and this change brings consequences, which are unfavourable for the surety, and that the necessity to follow the currency legislation is not one of those and cannot by itself provoke any losses. Besides, Judge Kharchikova called the Board’s attention to the fact that the obligation to draw up passports of transactions is only imposed on the resident borrower, and the resident surety is free from it.

Advocate Yury Tarabanchik (Sverdlovsk Region advocates’ bureau “Advokatskoe Biuro 35”), attorney of the “Yekaterinburg-Vtormet” trustee, focused on another curious matter: the decision by the Leninsky district court of Yekaterinburg on joint exaction from the horse breeding farm, “Yekaterinburg-Vtormet” and personally Putilin of 220 million roubles under the credit. The decision was taken two months prior to the filing of the claim to the court of arbitration. Tarabanchik believes that this evidences only the claimant’s wish to prevent the entry into force of the decision made by the general jurisdiction court. He added that the lower instances courts had not considered the correlation of the two facts, thus “encouraging the abuses”.

The attorneys of Business Prof Invest Limited and the “White Horse”, who spoke afterwards, in general supported the position expressed by the three supervision judges. And the Board of the SCA of Russia revoked all court acts issued earlier and dismissed “Yekaterinburg-Vtormet”’s request to invalidate its surety.

Vasiliy Raudin, Lawyer at the Firm, believes that the obligation to follow the laws, even the laws of currency regulation and control, can bi itself hardly be acknowledged an unfavorable consequence for a participant of the civil turnover. The courts were charged with the question, whether the surety’s consent was required for the transfer of the rights under the surety agreement. V.Raudin is of the opinion that the provision of clause 2 of Article 382 of the CCRF may answer that question. According to this provision, and as a general rule, no consent of the debtor, including the surety as a joint or subsidiary debtor, is required for the transfer of the creditor’s rights to another entity.

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