Russian procedural legislation provides for a mechanism of indexation of monetary sums awarded by a court as of the day of execution of a court judgment. As explained by the Constitutional Court of Russia, this norm serves as a guarantee of protection of the property interests of the claimant against inflationary processes in the period from the moment the court judgment is rendered until its actual execution, when the awarded monetary funds depreciate due to the debtor's untimely execution of the judicial act.
The Arbitration Procedure Code of the Russian Federation, however, does not specify whether indexation may be made in respect of amounts recovered in foreign currency. In its recent ruling, the Supreme Court of Russia answered this question in the negative.
The Court considered that the procedure for calculating indexation is assumed for situations where the amount awarded by the court is denominated in rubles and is directly calculated to determine the inflationary processes occurring precisely with the ruble in conditions of weakening of its purchasing power.
In the case under consideration, the parties agreed on foreign currency as the currency of debt and payment, having realized in advance their right to compensation for inflationary processes occurring with the ruble and having assumed the risk of possible fluctuations of the ruble exchange rate both in one or the other direction during the period of non-execution of the judicial act. Thus, the collection of debt in foreign currency at the exchange rate set by the Russian Central Bank on the date of payment, in itself creates a fair mechanism for the creditor to compensate financial losses for the period of non-execution of the judicial act.
Source: Resolution of the Supreme Court of the Russian Federation of 12.07.2024 No. 308-ES21-27525 in case No. A32-2370/2021
The Arbitration Procedure Code of the Russian Federation, however, does not specify whether indexation may be made in respect of amounts recovered in foreign currency. In its recent ruling, the Supreme Court of Russia answered this question in the negative.
The Court considered that the procedure for calculating indexation is assumed for situations where the amount awarded by the court is denominated in rubles and is directly calculated to determine the inflationary processes occurring precisely with the ruble in conditions of weakening of its purchasing power.
In the case under consideration, the parties agreed on foreign currency as the currency of debt and payment, having realized in advance their right to compensation for inflationary processes occurring with the ruble and having assumed the risk of possible fluctuations of the ruble exchange rate both in one or the other direction during the period of non-execution of the judicial act. Thus, the collection of debt in foreign currency at the exchange rate set by the Russian Central Bank on the date of payment, in itself creates a fair mechanism for the creditor to compensate financial losses for the period of non-execution of the judicial act.
Source: Resolution of the Supreme Court of the Russian Federation of 12.07.2024 No. 308-ES21-27525 in case No. A32-2370/2021