Certain typical consumer loan agreement provisions recognised as illegal by the Supreme Arbitration Court of the Russian Federation.
Legal update No. 139.
Goltsblat BLP advises that Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation No. 7171/09 dated 2 March 2010 regarding the legitimacy of administrative liability being imposed on KB Russkiy Bank Razvitiya by the Moscow Department of Rospotrebnadzor clarifies that the following loan agreement provisions are unlawful:
unilateral increase in loan interest rates;
jurisdiction at the bank’s location for consideration of disputes between the bank and the borrower;
a fee charged on the borrower for opening and maintaining a loan account.
The interpretation of the rules of law contained in the resolution is binding for application by arbitration courts in such cases.
So banks that include the above provisions in a contract are generally expected to face administrative liability by decision of relevant authorities, as provided for in part 2, article 14.8 of the Administrative Offences Code, and such a decision will be upheld by the courts.
Furthermore, if judicial disputes arise with consumers, banks will not be able to refer to the provisions of the loan agreement listed in the resolution because general jurisdiction courts are likely to follow the above resolution as well.
In view of the above, it is advisable for banks to revise the listed provisions of loan agreements.
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