The State Duma adopted in the third reading Federal Law “On entering amendments into Part I and Part II of the Civil Code of the Russian Federation and certain legislative acts of the Russian Federation.” The said law introduces substantial changes to the financial block of civil law. In particular, the following should be noted:

Assignment of claim rights

• It is provided that after a notification on assignment of claims is received, the debtor must notify the new creditor of the grounds for objections within a reasonable period; otherwise, the debtor is not entitled to refer to such grounds;
• Assignment of a right to non-monetary performance can be recognized invalid if it is proven that the other party of the assignment agreement knew or should have known about a ban on assignment;
• The possibility to restrict the assignor’s liability for invalidity of the claim being assigned is established.

Assignment of a monetary claim under a state contract

• It is established that a ban on assignment of rights and transfer of debt under a supplier’s obligation under a state/municipal contract does not apply to assignment of claims under monetary obligations;
• The draft law is aimed at codifying the positive practice established that, in particular, will allow companies to use the claim right under a contract as an additional instrument for attracting financing.

Loan agreement

• It is established that a loan agreement is a consensual contract and is deemed effective from the time the parties agreed on all material conditions, except cases when the lender is an individual;
• It is established that the lender is entitled to deny a loan if there are circumstances clearly evidencing that the loan will not be returned in due time;
• It is provided that the subject of a loan can be not only money and things determined by generic features, but also securities.

Credit agreement

• It is provided that in the event of receiving a credit for purposes of refinancing obligations under a credit provided earlier by the same creditor, a mechanism of automatic repayment of the previous credit without crediting the amount of the new credit to the debtor’s account can be used. In such event, the credit will be deemed provided at the time of notifying the debtor of repayment (full or partial) of the credit being refinanced;
• It is specified that additional grounds, other than those established by the law, for a creditor’s claim on early repayment of credit can be included in the credit agreement signed with a legal entity or individual entrepreneur.

Factoring agreement

• It is established that the factor is entitled to transfer money to the client on account of the claim rights being assigned in the form of a loan or preliminary/advance payment;
• The possibility of assignment of the claim rights under a future obligation, including from an agreement which is to be concluded in the future, is provided.

Settlement under a letter of credit

• It is established that a letter of credit is deemed irrevocable unless its text provides otherwise;
• An article on a transferable letter of credit is added in the provisions on the letter of credit, where a letter of credit is opened to the benefit of the receiver of funds, though it can, according to the instructions of the receiver of funds, be performed to the benefit of a third party.

Escrow agreement

• The possibility to enter into an escrow agreement not only in relation to monetary funds, but in relation to securities and choses is established;
• It is established that the term of an escrow agreement cannot exceed five years;
• It is provided that an escrow agreement is subject to mandatory notarization, except cases of depositing non-cash money and/or book-entry securities;
• Provisions under which an external administrator or liquidation manager is not entitled to dispose over a debtor’s property transferred under an escrow agreement, and under which recognition of a debtor being the depositor under an escrow agreement as bankrupt does not impede the performance of the escrow agent’s obligation on transferring the deposited property to the beneficiary, are entered into the Federal Law “On insolvency (bankruptcy).”

The provided changes to the legislation take effect on June 1, 2018 and will apply to relations which arose after the law enters into force.

Nikita Popov    Associate   Moscow     Tel.: +7 (495) 970 1090

Irina Dudareva   Associate   St.Petersburg      Tel.: +7 (812) 346 7990

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Nikita Popov or Irina Dudareva, Moscow Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.

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