On April 6, 2012 the Instruction on Registration of Administrative Offences by the State Service for Financial Monitoring of Ukraine, approved by Order of the Ministry of Finance of Ukraine No. 324 dd. 05.03.2012, entered into force.

The Instruction stipulates the procedure for execution of protocols about administrative offences specified in articles 166-9 (breach of requirements in relation to the identification and study of a person's financial activity) and 188-34 (failure to meet the lawful requirements of officials of state financial monitoring authorities) of the Code of Administrative Offences.

Recommendations and Clarifications on Loan Disputes

The Plenum of the Highest Special Court of Ukraine for Civil and Criminal Cases issued the Resolution No. 5 dd. March 30, 2012 "On practice of law application by courts in resolving disputes arising from loan relations". The Plenum explained the procedural aspects of court proceedings in such cases, e.g. the determination of jurisdiction, levying the court fee and the application of rules of civil and commercial procedural legislation if a dispute involves both private individuals and legal entities.

The Plenum emphasized that prohibition of the defendant's departure from Ukraine as a court injunction contradicts the Constitution and should be allowed only during the fulfillment of a court decision.

Considerable attention is given to the use of foreign currency in loan credit relations. Providing and receiving loans in foreign currency as well as payment of interest on such loans do not require individual licenses for the use of a foreign currency in Ukraine. The provision of consumer loans in foreign currency in Ukraine is forbidden, and such loan agreements may be invalidated by a court.

According to the Plenum's Resolution, termination of loan agreements based on the global financial crisis or other significant circumstances is possible. However, such termination shall be subject to simultaneous meeting of four requirements specified in article 652 of the Civil Code.

Also, the Plenum has pointed out that inflation rate charged on the debt amount for a debtor's breach of a monetary obligation in national currency along with three percent per annum on the overdue amount shall be deemed as compensation for the lender's material losses and shall be charged regardless of the debtor's payment of a penalty (fine) for failure to perform or improper performance of its obligation.

Although the laws do not require a borrower's consent for entering into a surety agreement, such an agreement may be invalidated upon the borrower's claim if it is proven that the agreement reduces its rights or expands its liabilities.

Regarding the unilateral increase of the interest rate on the loan by the bank the Plenum explained that the rules of law which prohibit such a change took effect on 10 January 2009, so all decisions made by banks prior to that date are lawful. When deciding on the legality of the interest rate increase by a bank it is necessary to distinguish between the terms of the loan agreement allowing the unilateral change of the interest rate and the terms of agreement establishing the procedure for changing the amount of the interest rate by the borrower's accepting the lender's proposal to change the terms of agreement. Thus, change of the amount of a fixed interest rate depending on the changed credit risk circumstances (failure to conclude an insurance contract, termination of a pledge / mortgage agreement, etc.) shall not be deemed a unilateral change of the amount of the interest rate, provided that the loan agreement specifies the circumstances in which another amount of the fixed interest rate shall be applied, as well as the respective amount.

In addition the Plenum mentioned that in the case of judicial foreclosure on mortgaged property, the forcible eviction shall be performed based on the court's decision, provided that the respective persons have not vacated the premises voluntary within one month following the date of receipt of the respective written demand.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.