Westside Advisors secured victory against Deposit Insurance Agency in Supreme Court

Initially Khoroshevskiy district court allowed the agency’s claim, ordering to collect a debt under credit contract in the amount of 318 855 412,37 roubles from joint sureties, of whom one was represented by litigation lawyers from Westside Advisors.

The ruling was sustained in Moscow City Court in both the appellate and the cassation instances.

Disagreeing with these court rulings, Westside Advisors went on to challenge them in the Supreme Court of the Russian Federation.

Having heard the appeal by Westside Advisors, the civil law judicial chamber of the Supreme Court of the Russian Federation chaired by the Presiding Judge Astashov S. v. , holding court together with judge Getman E. S. and judge Romanovskiy S. v. , deemed the appeal well-founded, overturned the previous rulings on the case and returned the case back to the Court of Appeal to hear the case anew under the first instance procedure.

The Supreme Court of the Russian Federation concluded that a suretyship must, in accordance with Article 367 clause 4 of the Civil Code of the Russian Federation, cease upon expiry of the suretyship term as determined in the contract of suretyship. Be there no provision on the agreed suretyship term in the contract, such suretyship ceases in a year’s time after the main obligation has matured, unless the creditor acts to collect from the surety within that year.

Contrary to the inferior courts’ stand on this matter, the Supreme Court ruled that if the credit contract requires that the debt should be repaid by installments as scheduled, the term of validity of suretyship is reckoned from the date of the debtor’s default on payment of the specific installment due, and the amount in which the debt is secured by the suretyship should be calculated separately for each count of the outstanding payment of each installment.

Thus, upon hearing the case anew the Court will dismiss the part of the initial claim worth almost 100 000 000 roubles.