Interest Rate Swap Agreements: Draft Information Letter of the Russian Supreme Commercial Court

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This alert discusses the recently published Draft Information Letter of the Presidium of the Russian Federation Supreme Commercial Court (the “SCC”) entitled “Dispute Resolution Issues Arising out of Interest Rate Swap Agreements” (the “Draft”). The proposed recommendations of the SCC relate to such aspects as the formation, amending and termination of interest rate swap agreements, conformity of their performance to the purpose of their conclusion, pre-contractual disclosure concerning the nature and intended effects of such type of agreements.

Current interest in these matters is explained by the outcome of two recent cases considered by the Russian courts (the Agroterminal and Hermitage Development cases) in which the unilateral termination of interest rate swap agreements without any payment or compensation by the terminating party to the other party was found to be lawful. In addition, the interest is due to the numerous foreign court decisions related to the principle of protection of non-professionals’ rights in the financial market.

Please see full alert below for more information.

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