The Commercial Cassation Court Within the Supreme Court Departed from the Conclusion on the Monetary Claims of the Bank to the Debtor on the Accrued Remuneration for the Use of the Loan

In the bankruptcy case of Mykhailo Hrushevskyi Society for Education, LLC, the Commercial Court of the Dnipropetrovsk Region ruled to partially recognize the additional competitive monetary claims of JSC CB Privatbank.

With regard to the rejection of monetary claims for accrued remuneration under loan agreements, the ruling of the local commercial court is reasoned, inter alia, by the fact that the remuneration for the use of loan under the formula, contained in loan agreements and dependent on the UAH to US dollar exchange rate, does not meet the requirements of the variable interest rate. The remuneration calculation formula also does not determine the maximum amount of the interest rate increase, which contradicts part 6 of Article 1056-1 of the Civil Code of Ukraine. In addition, the amount of the specified remuneration is significant and the agreement does not specify which services of the bank it is established for, since the loan agreement provides that the debtor already pays annual interest for the use of the loan.

According to the decision of the Central Commercial Court of Appeal, the ruling of the court of first instance was changed and additional monetary claims regarding debts on remuneration under loan agreements were recognized, since loan agreements and additional agreements thereto are valid and have not been invalidated in the manner prescribed by law, including those of their provisions by which the borrower pays the bank a fee for using the loan according to the established formula. At the same time, the court of appeal took into account the legal position of the joint chamber of the Commercial Cassation Court within the Supreme Court, set out in the decision of March 19, 2021 in case No. 904/2073/19.

The Judicial Chamber on Bankruptcy Cases of the Commercial Cassation Court within the Supreme Court upheld the said decision in view of the following.

The parties to loan agreements (the bank and the borrower) agreed on their terms for the payment of remuneration and established the corresponding obligations, taking into account the general principles of civil law.

The disagreement of the borrower with the terms of the agreement on the accrual and payment of remuneration at the stage of execution, in the absence of comments on the content and terms of the agreement when concluding it and signing additional agreements to the agreement, is not grounds for determining the terms of the agreement as not subject to execution when resolving a dispute on the collection of debt on the agreement, including when considering applications for monetary claims against the debtor, since they contradict the principles of civil law (a similar legal position is set out in the decision of the joint chamber of the Commercial Cassation Court within the Supreme Court of March 19, 2021 in case No. 904/2073/19).

When resolving the issue of the legal nature of the remuneration for using the loan according to the formula agreed upon by the borrower and the bank in the contract, the Commercial Cassation Court within the Supreme Court, in a resolution dated May 20, 2021 in case No. 904/5748/18, concluded that the bank’s remuneration for the services provided is compensatory in nature and its purpose is to cover the bank's expenses incurred by it in connection with the provision of the loan. This is, of course, the bank's income from its banking activities, and the concept of bank remuneration is absent in contractual legislation, as a result of which the legal nature of such remuneration depends on the individual legal regulation of each bank.

At the same time, both in case No. 904/2073/19 and in case No. 904/5748/18, the Commercial Cassation Court within the Supreme Court reached similar conclusions that the remuneration for using the loan provided for in the loan agreement cannot be equated with the variable interest rate defined in Art. 1056-1 of the Civil Code of Ukraine.

The Civil Code of Ukraine does not imperatively recognize the impugned transaction as invalid, but only allows the possibility that it could be declared invalid by the courts. The impugned transaction may be declared invalid by the court at the request of one of the parties or another interested person (if the violated right of such person is proved) if in resolving the dispute in question it is proved that there are legal grounds for invalidity of the transaction.

Thus, the Judicial Chamber on Bankruptcy Cases of the Commercial Cassation Court within the Supreme Court departed from the legal opinion set out in the resolution of the Commercial Cassation Court within the Supreme Court of July 21, 2021 in case No. 910/14918/20.

The text of the Resolution of the Commercial Cassation Court within the Supreme Court of  May 25, 2022, in case No. 904/5314/20 can be found at the following link - https://reyestr.court.gov.ua/Review/105034151.

This and other legal positions of the Supreme Court can be found in the Database of Legal Positions of the Supreme Court - lpd.court.gov.ua/login.