The replacement of the Deputy Chairman of the RF Supreme Court, Head of the Judicial Panel for Economic Disputes, has provided participants in economic relations with new opportunities for protecting their interests in the Supreme Court of the Russian Federation.

On 17.02.2021 in case No. А41-46643/2019 there was such a rare phenomenon, as cancellation by the Chairman of the Economic Court I.L. Podnosova of the ruling of the judge of the RF Supreme Court on refusal to transfer the case to the RF Supreme Court, which led to the cancellation of illegal judicial acts of the appeal and cassation of the district.

The subject of the dispute was the foreclosure of property pledged by the defendant to secure obligations of a third party. The main contentious issues of the case were whether the bank missed the deadline for filing a lawsuit against the pledger, which under the general rule is one year from the date of performance of the main obligation, whether the bank's demand for early repayment of the loan reduced the validity of the pledge.

Bank's interests in the Supreme Court and earlier in lower courts were defended by the team of A.T. Legal lawyers: Mikhail Chernyshev, attorneys Nikolay Titov and Pavel Ganin. Since 2017, A.T.Legal has represented interests of Absolut Bank in complex court disputes aimed at forced collection of overdue loan debts from debtors of Podium Market Group and its beneficiary, including the described dispute over land plots of JSC Rublevka, located in one of the most prestigious locations near Moscow. Actions of persons related to the debtors' beneficiary seriously impeded the recovery by A.T. Legal of the debt under the loan previously issued by Absolut Bank. The property included in the bankruptcy estate of the borrower Podium Market LLC, in addition to obligations to credit institutions, is encumbered with obligations to regular suppliers of clothing and accessories of the previously well-known retailer, publicly successful not only in Moscow. The open information shows the past activities of companies working under the Podium and Podium market brands to withdraw their assets from bank foreclosure. This experience of opponents did not prevent the A.T. Legal team from successfully resolving complex tasks of the project in the interests of Absolut Bank.

NEW PRACTICE

Rules for determining the term of a surety (pledge of a third party), determined on the basis of the term of performance of the main obligation have been changed by the legislator through the introduction of paragraph 2 in part 6, Article 367 of the RF Civil Code. Earlier these terms were "tied" to each other: if the term of fulfillment of the main obligation was reduced, the term of surety (pledge) was reduced accordingly. At present, an early claim by a creditor on the principal obligation does not reduce the term of a surety (pledge), determined on the basis of the original term of performance of the principal obligation.

Amendments to the Civil Code came into force in June 2015. However, the old explanations of the expired wording of Article 367 of the RF Civil Code on the fact that the term of the surety (pledge) follows changes in the term of the main obligation, set forth in the Resolution of the Plenum of the RF Supreme Arbitration Court in 2012, were only abolished by the new Plenum of the Supreme Arbitration Court on surety in December 2020. By virtue of Part 1 Article 3 of Federal Constitutional Law of 04.06.2014 No. 8-FKZ, explanations on the judicial practice of law and other regulatory acts application by arbitration courts, given by the Supreme Arbitration Court Plenum, remain valid until the Plenum makes relevant decisions. Bank opponents referred to the fact that explanations of the old Plenum have not been abolished and can be applied by the courts, despite provisions of Articles 4 and 120 of the Constitution, RF Arbitration Procedural Code 13, by virtue of which the law has greater legal force in relation to any other act, therefore, the courts should apply the law, and not explanations of the repealed version of the old law.

Having heard opinions of the parties, the trio of judges headed by Elena Zarubina agreed with the position of Absolut Bank, dismissed defendant's arguments on termination of the mortgage and "silenced" the first instance judgment on foreclosure of the mortgaged property. Thus, the Supreme Court recognized that courts should apply old explanations of the lapsed wording of the law and the current law, according to which the term of the guarantee (pledge) should be read without taking into account the early demand from the date originally specified in the agreement as the last day for returning the principal debt.

RESULTS OF THIS CASE are significant for the new judicial practice in the context of the Plenum Resolution concerning surety cases No. 45 dd. 24.12.2020. We hope this will put an end to the problem of defining terms for filing similar lawsuits on pledge enforcement in future.

You can read the background of the case and the contradictory position of the courts in PRAVO.ru

Here is a link to additional materials, in which Nikolay Titov, Co-Founder of A.T.Legal, representing interests of Absolut Bank in this dispute, previously gave his expert opinion on the precedent case at PRAVO.ru's request: https://pravo.ru/story/230297/?desc_search=