Goltsblat BLP advises that Federal Law No. 360-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” dated 3 July 2016 has been adopted, amending, among other acts, the Law on Notaries Public (the “Amendments”):
1. Pursuant to the Amendments, credit institutions (other than microfinance institutions) may recover debts under loan agreements on the basis of a notary’s endorsement without going to court (the “Out-of-Court Procedure”).
The Out-of-Court Procedure may be applied to recover debts owed by both individuals and legal entities.
For the Out-of-Court Procedure to be available for a credit institution, the following conditions must be met simultaneously:
the loan agreement must contain a clause providing for debt recovery through a notary’s endorsement (although there is no need to have such an agreement notarised);
it must follow from the loan agreement that the creditor’s claims against the debtor are incontestable, i.e., the agreement constitutes sufficient and relevant evidence of the creditor’s claims;
the obligation must be no more than two years overdue; and
all conditions and terms for the obligation to become effective must be fulfilled.
The creditor is also required to notify the debtor of the indebtedness at least fourteen days before applying for a notary’s endorsement.
The Out-of-Court Procedure is also available under existing loan agreements provided that a relevant clause on out-of-court enforcement is added to the agreement (by entering into an amendment agreement).
The Out-of-Court Procedure may be used to recover the principal and interest under a loan agreement, as well as the creditor’s expenses on effecting the endorsement. Even so, the Amendments state that the Out-of-Court Procedure may not be applied to recover penalties under loan agreements with credit institutions.
2. The Amendments also allow for persons other than credit institutions to use the Out-of-Court Procedure to recover debts. Any person who has a monetary claim or a claim for transfer of property under a notarised agreement (e.g., under notarised loan agreements, share purchase agreements, etc.) may recover their debts through a notary’s endorsement.
The procedure and conditions for debt recovery under notarised agreements are the same as under loan agreements with credit institutions, except that there is no requirement for a relevant clause to be included in the agreement, since the agreement is itself subject to notarisation.
3. Under Russian law, a notary’s endorsement is recognised as an enforcement document alongside a court judgement. Consequently, the notary’s endorsement may be submitted directly to a court bailiff and is in itself sufficient to initiate enforcement proceedings and foreclose on the debtor’s assets.
The Amendments are in effect since 15 July 2016.
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