24.12.2020 — Supreme Court Plenum Issued New Clarifications on Suretyship

In the end of 2020, the Supreme Court adopted new clarifications about suretyship. In its Plenum Ruling the Supreme Court confirmed the positions that were established in case law earlier and provided several new clarifications, including about the form of conclusion of suretyship agreement, the issue of suretyship by affiliated persons, time limits for suretyship and the procedure for amendment and termination of suretyship.

The new Ruling of the Plenum of the Russian Supreme Court dated 24 December 2020 No. 45 about suretyship is intended to substitute the previous Ruling of the Plenum of the Supreme Arbitration Court dated 12 July 2012 No. 42 on similar issues. Therefore, many previously expressed legal positions were supported by the Supreme Court and included into the new Ruling.

Regarding novelties, firstly, the Supreme Court clarified that the requirement of the written form of the suretyship agreement shall be considered satisfied if the suretyship agreement is concluded by the exchange of documents, including electronic, or by incorporation of the terms of suretyship into the principal agreement between a creditor and a debtor provided that it is signed by the surety as well.

The Supreme Court also confirmed the possibility to recognize as joint the suretyship from independent agreements, given that the persons which provided suretyship are affiliated.

In relation to the term of suretyship, the Supreme Court emphasized that the suretyship agreement must provide for a deadline allowing to determine a specific date after which the surety terminates. At the same time, linking the calculation of the suretyship validity period to the date of actual performance of the principal obligation by the debtor, cannot be considered a valid condition for establishing a certain term of the suretyship. Therefore, in this case the suretyship will terminate in accordance with the default rules provided by the law (i.e. within one year from the maturity date for the obligation secured by the suretyship or within two years from the date of conclusion of the suretyship agreement, if the term of performance of the principal obligation is not specified or is defined as the demand date).

Regarding the amendment of the suretyship conditions, the Supreme Court clarified that the surety may in advance give his or her consent to be liable to the creditor in case of the amendment of the principal obligation, including in case of the debt transfer. However, such advance consent must be expressed and indicate the limits of the principal obligation amendment (in particular, by specifying the amount of money or the procedure for determining the limits of liability of the surety and by determining the criteria to identify with a high degree of certainty a person or the range of persons, debt transfer to which will not affect the suretyship validity, etc.).

In relation to the grounds for suretyship termination, the Supreme Court emphasized that the debtor liquidation, reorganization or bankruptcy do not terminate the suretyship. Other rules may be provided for in the suretyship agreement.