Infocenter

To create uniformity in disputes involving banks against foreign currency mortgage borrowers, the Supreme Court expressed its position in the “Arbitration Practices Review”. It negates the attempts of borrowers to review the terms of contract in court due to a significant a decline in the ruble against the major currencies. Now the foreign currency mortgage borrowers can only negotiate with banks or seek a solution to the problem at the government level.

The Supreme Court published the “Supreme Court Arbitration Practice Review” N1 (2017), wherein, among other things, it considered the issue of the validity of the borrowers’ claims for converting foreign currency mortgage loans into rubles at the rate in effect at the time the loan was provided. “Refund of the loan amount must be made based on the loan currency specified in the contract. The risk of a change in the exchange rate of the debt currency is on the borrower”, concluded the Supreme Court <…>

The conclusions made by the Court virtually deprive the foreign currency borrowers of the opportunity to convert previously received loans into rubles at a preferential rate under the court decision. There were such precedents in past. “The practices reviews approved by the presidium are not binding, but due to the authority of the Supreme Court, they are usually observed by the courts,— says Konstantin Savin, lawyer of Pavlova&Partners lawyer’s counsel.— The aim of the practices review approval is to show the courts some kind of benchmark as to how to resolve a dispute with specific circumstances”. In principle, the Supreme Court’s approach can change. “Decrees of the Presidium of the Supreme Court are mandatory for lower courts, if they are issued in specific cases in the exercise of supervisory powers after the Civil Chamber of the Supreme Court”, he notes. This case has not reached such level.

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