The Moscow Arbitrazh Court held that the decision of the Russian Central Bank to employ a floating exchange rate regime and the subsequent devaluation of the ruble shall be considered grounds for reviewing contractual terms if the contract price is established in a foreign currency. This decision may potentially affect all lease agreements where the rent is established in EUR or USD.

The Moscow court came to this conclusion in the case No. А40-83845/15. Vimpelkom (a mobile network operator), referring to Article 451 of the Russian Civil Code, asked the court to terminate the contract made with its counterparty Tizpribor, or, alternatively, change its terms due to a fundamental change of circumstances. Vimpelkom sought to recalculate the rent, which was established in USD.

According to Vimpelkom’s representative, the company could not predict the change of the Central Bank’s policy back in 2009, when it was negotiating contractual terms. It alleged that the decision of the Russian Central Bank to employ a floating exchange rate regime in 2014, and the subsequent devaluation of the ruble, should be considered a fundamental change of circumstances, and therefore could be seen as a ground for the alteration or termination of the contract.

The court refused to terminate the contract, but satisfied Vimpelkom’s claim regarding the alteration of the contractual terms. In the operative part of its decision (which has been published) the court fixed the foreign currency exchange rate within a certain range so as to protect both, the lessee and the lessor, from currency fluctuations. Thus, on the facts, the court rectified the contract amending the rent calculation formula. According to the decision, the rent shall be calculated at the exchange rate of 30 USD/RUB even if the exchange rate is below 30 rubles to the US dollar. On the other hand, if the exchange rate exceeds 42 USD/RUB, the rent will still be calculated at the exchange rate of 42 USD/RUB.

It is yet to be seen how the higher courts will tackle the ruble devaluation issue, should the decision be appealed. The full range of consequences can be assessed only after the court’s decision will be made public in full. What is clear, however, is that the decision can have an impact on lease agreements where the rent is established in a foreign currency.