Court Translates Interests on Currency Deposits into Hryvnia
Ukrainian Business Resource October 26
Currency Market Regulator and Ministry of Justice should react to the unprecedented case that, in fact, the court invalidated a loan agreement as it appeared to be a foreign currency agreement.
According to lawyers, otherwise banks will be able to appeal against validity of foreign currency deposit agreements on the same grounds, as well as to pay interest on currency use in hryvnias. Currently, the issue of usage of dollars and EURO in settlements of loan agreements is governed by governmental Decree on Currency Control. According to it, banks having General License may perform currency transactions related to transfer of title to currency values.
Shall such court decision stay valid, petitioner will be obliged to disburse a loan in full, as well as bank to pay received interest. And it becomes and interesting precedent as the petitioner will have used the loan of several million dollars free of interest. Such practice may attract many borrowers.
Lesya Kovtun, attorney at law of Volkov Koziakov and Partners, commented upon for UBR: "In this case, both court decision and the law stipulates no procedure for fulfillment of measures connected to the invalidity of the agreement, i.e. under what terms and conditions parties should repay the amount received under the agreement. It is well known that if a borrower is a legal entity, it may take a loan in US dollars and buy currency in the interbank market на. Otherwise, in case the agreement was invalidated, such entity just would have no legal basis to buy currency in the market ".