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The Supreme Court of the Russian Federation outlined new clarifications of the rules on pledge

3 июля 2023

The new Resolution was adopted to replace the Resolution of the Plenum of the Supreme Arbitrazh Court dated 17 February 2011 No. 10 “On Certain Issues of Application of Legislation on Pledge”.

The main provisions of the Resolution:

1. One thing or several things can be pledged;

2. Pledge can secure both monetary and non-monetary obligations;

3. Identification of the subject of pledge:

Things that the pledgor will create or acquire in the future should be identified (any characteristics and properties of the thing, even described with reference to the agreement on the acquisition of the subject of pledge).

If the subject of the pledge is future real estate, then it can be determined in the contract using, for example, the construction address and the estimated area of the future building or premises and other characteristics from the project documentation.

To individualize the existing real estate pledged, its name and exact location or cadastral number are indicated

4. In case of reconstruction of the subject of pledge, its processing or other change, the pledge shall be retained, unless the parties have agreed otherwise. It is not required to make changes to the pledge agreement regarding the description of the subject of pledge.

5. If the subject of pledge is lost or damaged, the pledgor may, within a reasonable time, restore it or replace it with other property of equal value. If he fails to do so, the pledgee has the right to demand early execution.

6. The pledge secures the claim in the amount at the time of satisfaction - including the amount of the principal debt, penalties and interest for the use of funds.

7. If the parties have extended the term for the performance of the secured obligation without the consent of the pledgor, the creditor may not levy execution on the subject of pledge before the expiration of the term. In this case, the pledgor may agree in advance to answer to the creditor on the amended terms of the main contract.

8. After the termination of the main contract, the pledge itself continues to ensure the fulfillment of those obligations that have not ceased or have arisen in connection with the termination of the main contract.

9. In the event of the sale of the pledged thing without the consent of the pledgee, the pledgee shall have the right both to demand performance under the principal obligation and to present a claim for compensation of losses to the pledger. In addition, the pledgee has the right to apply to the new owner of the disputed thing with a demand for its recovery. At the same time, for bona fide purchasers of the pledged property, the obligation is terminated.

10. Foreclosure on the subject of pledge is not allowed if the violation of payment turned out to be insignificant and the amount of the pledgee's claims is clearly disproportionate to the value of the pledged thing.

11. The parties have the right to agree on extrajudicial collection - both in the main pledge agreement, and at any other time in an additional agreement.

12. It is possible to present claims against the pledger - a third party as part of the process to recover the principal debt, as well as file a separate claim against the pledger, then he can be brought to consider the claim as a third party.

13. If the pledgee has decided to keep the pledged thing for himself, then he does not need to conclude a separate contract of sale with the pledger.

See: Resolution of 27 June 2023 No. 23 “On the application by the courts of the rules on the pledge of things”.

Nadmitov, Ivanov & Partners Law Firm advises on collateral and the choice of collateral for transactions, and also provides services to clients in litigation, including foreclosure of pledged property.

Email: info@nplaw.ru
Tel.: 7 (495) 649-87-12

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