On the judicial practice of considering civil cases on disputes arising from bank loan agreements

Regulatory Resolution of the Supreme Court of the Republic of Kazakhstan dated November 25, 2016 No. 7.

     Based on the practice of courts applying legislation on disputes arising from bank loan agreements, and for the purpose of uniform application of legislation in cases of this category, the plenary session of the Supreme Court of the Republic of Kazakhstan

     Decides:

The civil legislation governing relations arising from bank loan agreements is based on the Constitution of the Republic of Kazakhstan (hereinafter referred to as the Constitution) and consists of the Civil Code of the Republic of Kazakhstan (hereinafter referred to as the Civil Code), the Civil Procedure Code of the Republic of Kazakhstan (hereinafter referred to as the CPC), and the Laws of the Republic of Kazakhstan dated March 30, 1995 No. 2155 "On the National Bank Of the Republic of Kazakhstan" (hereinafter referred to as the Law on the National Bank), dated December 23, 1995 No. 2723 "On Mortgage of Immovable Property" (hereinafter referred to as the Law on the National Bank). – Mortgage Law), dated August 31, 1995, No. 2444 "On Banks and Banking Activities in the Republic of Kazakhstan" (hereinafter referred to as the Law on Banks), dated April 25, 2001, No. 178–II "On the Development Bank of Kazakhstan" (hereinafter referred to as the Law on the Development Bank), dated April 2, 2010, No. 261-IV "On Enforcement Proceedings and the Status of Bailiffs" (hereinafter referred to as the Law on Enforcement Proceedings), dated May 16, 2014 No. 202–V "On Permits and Notifications", dated July 26, 2016 No. 11-VI "On Payments and Payment Systems" (hereinafter referred to as the Law on Enforcement Proceedings). – The Law on Payments), dated January 14, 2013 No. 67-V "On the State Educational Accumulative System" (hereinafter referred to as the Law on the Educational Accumulative System), Resolution of the Board of the National Bank of the Republic of Kazakhstan dated December 23, 2019 No. 248 "On Approval of the Rules for Concluding a Bank Loan Agreement, including the Requirements for the Content, registration, mandatory terms of a bank loan agreement, forms of a loan repayment schedule and a memo for an individual borrower" and other regulatory legal acts.

     The footnote. Paragraph 1 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

When considering disputes arising from bank loan agreements, the courts should be guided by the legislation in force at the time of the emergence of these legal relations.

     When resolving disputes arising from bank loan agreements, courts should carefully examine the terms of the bank loan agreement, which must comply with the rules binding on the parties, established by legislation (mandatory norms) in force at the time of its conclusion.

     It should be borne in mind that if, after the conclusion of a bank loan agreement, legislation establishes binding rules for the parties other than those in force at the time of the conclusion of the agreement, the terms of the concluded agreement remain in force unless the newly adopted legislation establishes that it also applies to relations arising from previously concluded agreements (Article 383 of the Civil Code).

     A regulatory legal act providing for amendments and additions to the procedure for regulating relations arising from bank loan agreements applies to legal relations that arose after its entry into force, except in cases where the retroactive effect of the regulatory legal act or part of it is provided for by itself or by the act on the entry into force of the regulatory legal act.

When considering cases in this category, courts should proceed from the fact that, in accordance with paragraph 1 of Article 727 of the Civil Code, under a bank loan agreement, the lender undertakes to loan money to the borrower on the terms of payment, urgency, and repayment.

     By entering into contractual relations on a bank loan, the borrower undertakes to pay the lender remuneration for the use of borrowed money, determined in the contract by the established interest rate on the loan amount (fee), on time (urgency) and to return the borrowed funds (repayment).

      The payment condition cannot be stipulated under a bank loan agreement in which the lender is an Islamic bank (paragraph 1-1 of Article 727 of the Civil Code).

      The subject of a loan in the form of money and the conditions of payment, urgency, repayment allow us to consider a bank loan agreement as a type of loan agreement provided for in Article 715 of the Civil Code, and distinguish it from other agreements.

      Due to the fact that obligations under a bank loan arise from an agreement, courts should clarify the creditor's (lender's) authority to conclude an agreement, as well as take into account the specifics and requirements established for bank loan agreements and the entities concluding them (paragraph 2 of Article 727, Article 728 of the Civil Code).

According to subparagraph 8) of paragraph 2 of Article 30 of the Law on Banks, the provision of a bank loan refers to banking transactions. This circumstance means that when concluding a bank loan agreement, the lender must have a license from the National Bank of the Republic of Kazakhstan to conduct bank loan operations. (Exceptions are provided for in paragraph 2 of Article 6 of the Law on Banks, subparagraph 29) of Article 8 of the Law on the National Bank, Article 7 of the Law on the Development Bank and other legislative acts of the Republic of Kazakhstan).

Courts should keep in mind that a bank loan agreement must contain conditions on the subject of the agreement, conditions that are recognized as essential by law or necessary for contracts of this type, as well as those on which an agreement has been reached at the request of the parties.

      It should be noted that the Law of the Republic of Kazakhstan dated July 3, 2019 No. 262-VI amended paragraph 2 of Article 34 of the Law on Banks (effective January 1, 2020), according to which the procedure for concluding a bank loan agreement, including requirements for the content, design, and mandatory terms of a bank loan agreement, the forms of the loan repayment schedule and the memo for the borrower, an individual, are approved by a regulatory legal act of the authorized body, taking into account the requirements established by civil law.

      The courts (judge) should take measures to reconcile the parties, assist them in resolving the dispute at all stages of the process by sending an invitation to the parties to participate in the conciliation procedure, notifying them of the receipt of a claim to the court, explaining the right to resolve the dispute (conflict) within the framework of the conciliation procedure (settlement agreement, mediation, participatory procedure) or by appeals to the banking Ombudsman, the benefits of reconciliation, as well as the right to mutually disclose and present evidence in accordance with parts one and two of Article 73 of the CPC.

     The footnote. Paragraph 5 is amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

When researching and evaluating a bank loan agreement, it should be established to whom and for what purposes, in which currency the bank loan was issued, how the issues of indexing payments under the agreement were resolved, and how to ensure that the borrower fulfills its obligations under the agreement.

      When determining in which currency the loan was issued, it should be noted that the Law of the Republic of Kazakhstan dated July 2, 2018 No. 168-VI "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Currency Regulation and Currency Control, risk-based supervision of Financial organizations, Protection of the Rights of Consumers of Financial Services and improving the activities of the National Bank of the Republic of Kazakhstan" The Law on Banks is supplemented by Article 34-1, paragraph 2 of which prohibits the provision of mortgage loans, not related to entrepreneurial activity, in foreign currency to individuals who do not have income in this currency during the six consecutive months preceding the date of the individual's application.

     Courts should keep in mind that the indexation of obligations and payments under a bank loan agreement issued in tenge with reference to the currency equivalent is not allowed. This restriction does not apply to contracts concluded between banks (paragraph 4 of Article 34 of the Law on Banks).

     The Law on Banks prohibits the provision of bank loans to persons registered in offshore zones, the list of which is established by the authorized body (paragraph 5 of Article 34 of the Law on Banks).

      Violation of these prohibitions by the parties to the bank loan agreement may result in the invalidity (nullity) of this transaction on the basis of paragraph 1 of Article 158 of the Civil Code and the occurrence of appropriate consequences.

     The footnote. Paragraph 6 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

When considering a claim for debt collection under a bank loan agreement, it is necessary to establish:

     what is the non-fulfillment or improper fulfillment of obligations under the contract and the reasons for these violations?;

     what caused the debt to be collected (principal, remuneration, penalty, fine, fine);

     to what extent do the debt collection requirements comply with the terms of the bank loan agreement;

     is the fulfillment of the obligation secured by a pledge;

     are there grounds for early fulfillment of obligations, including those secured by collateral, and foreclosure on pledged property (Articles 321, 721, 722 of the Civil Code);

     have the lender and the borrower taken measures to repay the debt, in what way they expressed themselves;

     are there circumstances allowing to reduce the debtor's share of responsibility and other circumstances necessary for the correct and objective resolution of the case?

In disputes arising from bank loan agreements, the courts should carefully check their legality and validity, and examine the correctness of calculations of principal debt, remuneration, and penalties.

If necessary, the court may involve specialists with special knowledge, both at the stage of preparing the case for trial and during the court session (Article 77 of the CPC).

      Courts should take into account that the Law of the Republic of Kazakhstan dated November 24, 2015 No. 422-V "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Non-performing Loans and Assets of Second-tier Banks, Provision of financial services and Activities of financial organizations and the National Bank of the Republic of Kazakhstan" (hereinafter – The Law on Non-Performing Loans) Article 34 of the Law on Banks was supplemented by paragraph 7-1 (effective July 1, 2016), which establishes the order of repayment of the borrower's debt under a bank loan agreement, subject to certain conditions (applies to legal relations that arose from the date of its entry into force from previously concluded agreements).

     If the amount of the payment made by the borrower is sufficient to fulfill the borrower's obligation, then this amount will repay the borrower's debt in the order specified in the bank loan agreement.

     The footnote. Paragraph 8 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

When examining the arguments of the parties, the courts should take into account the provisions of the Rules on Internal Credit Policy approved by the governing body of a bank, mortgage organization or organization providing loans to agro-industrial entities, one hundred percent of whose voting shares are directly or indirectly owned by the national managing holding (paragraphs 8, 9, 10, 11 of Article 34 of the Law on Banks).

     The rules on internal credit policy define the conditions for granting bank loans, including those necessary for issuing a bank loan, criteria for the borrower's solvency, categories of persons to whom bank loans can be provided, the amount, timing, requirements for securing, monitoring by the lender of loans issued.

     The footnote. Paragraph 9 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

In order to correctly determine the range of circumstances relevant to the case, the courts should examine the documents of the loan dossier, which, as a general rule, opens on the day of signing the loan agreement and closes only at the time of its termination.

     The courts must determine from the documents of the loan dossier whether the lender has conducted a comprehensive, complete and qualitative assessment of the borrower's creditworthiness (solvency). In particular, the borrower has a constant and sufficient income and other sources to repay the loan, debts on taxes and other mandatory payments to the budget, to third parties.

     If the court determines that the assessment of the borrower's creditworthiness was not carried out by the lender or was carried out improperly, which affected the borrower's non-fulfillment and (or) improper fulfillment of obligations under the bank loan agreement, the court may reduce the debtor's share of liability (the amount of penalties, fines, penalties (paragraph 1 of Article 364 of the Civil Code).

     The footnote. Paragraph 10 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

The debtor's share of liability may also be reduced if the creditor intentionally or negligently contributed to an increase in the amount of losses caused by non-performance or improper performance, or did not take reasonable measures to reduce them. For example, the lender applied to the court untimely with a claim for debt collection, for foreclosure on mortgaged property, by artificially delaying the deadline for filing a claim, which led to an increase in the amount of penalties (fines, penalties), to an increase in the amount of the borrower's total debt, which gave the lender grounds for suing the court for foreclosure on collateral property.

     The creditor's guilt may also manifest itself in the failure to take measures that depend on him to prevent or limit the amount of his losses if the debtor has taken measures for a pre-trial settlement of the dispute by writing to the creditor with disclosure of information about the causes of the debt, other objectively confirmed circumstances (facts) that cause the formation of his debt, including with a request to amend the terms of the agreement.

Not every default or improper fulfillment of an obligation on the part of the borrower grants the lender the right to collect debts under a bank loan agreement and foreclose on mortgaged property.

     As a general rule, the debtor's liability for non-fulfillment and (or) improper fulfillment of an obligation occurs if there is fault, provided that otherwise is not provided for by law or contract. The debtor is found innocent if he proves that he has taken all measures in his power to properly fulfill the obligation.

     Other rules are established for a person engaged in entrepreneurial activity who has not fulfilled or improperly fulfilled obligations. Such a person is liable for property unless he proves that proper execution was impossible due to force majeure, that is, circumstances that were extraordinary and unavoidable under the given conditions (natural disasters, military actions, etc.). The law does not include such circumstances, in particular, the absence of goods, works or services necessary for execution on the market.

     Legislation or a contract may provide for other grounds for liability or exemption from it (Article 359 of the Civil Code).

     The courts need to clarify these circumstances and give a proper legal assessment to the debtor's arguments, supported by evidence, about the objective reasons that prevented the fulfillment of obligations (for example, the borrower's violation of the loan repayment conditions was caused by the fact that he was in the hospital due to the birth of a child, about which there are medical documents, etc.).

The borrower is obliged to return the loan object and pay remuneration for its use in accordance with the procedure and terms stipulated in the contract (paragraphs 1 of Articles 715, 718, 722, 727 of the Civil Code).

      Violation of these obligations is the basis for collecting the debt from the borrower, but taking into account the specifics provided for in Article 728 of the Civil Code (paragraph 2 of Article 727 of the Civil Code).

     For early debt collection from the borrower in case of violation of the deadlines for the repayment of the next part of the loan item specified in the agreement (if the agreement provides for the return of the loan item in installments), for the payment of remuneration (if the agreement provides for the payment of remuneration on the loan in advance of the repayment period of the loan item itself), it is necessary that the violation of the deadline the refund lasted more than forty calendar days (paragraphs 3 and 4 of Article 722, paragraph 7 of Article 728 of the Civil Code).

The cases in which the lender has the right to demand early repayment of the loan item from the borrower are provided for in Article 321, paragraph 3 of Article 720, paragraph 2 of Article 721, paragraphs 3, 4 of Article 722 of the Civil Code.

      The right of the lender not only to demand early repayment of the loan object, but also the right to foreclose on the collateral if its claim is not satisfied, is fixed in paragraph 2 of Article 321 of the Civil Code.

      When applying paragraph 2 of Article 321 of the Civil Code, courts should proceed from the fact that this paragraph was supplemented by the Law of the Republic of Kazakhstan dated July 17, 2015 No. 333-V "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on strengthening the protection of property rights, guaranteeing the protection of contractual obligations and increasing liability for their violation". subparagraph 4).

     From which it follows that if the pledgor (borrower) violates the obligation secured by the pledge (Articles 317, 720 and 722 of the Civil Code, Article 20 of the Mortgage Law), the pledgee (lender) has the right to demand early fulfillment of the obligation secured by the pledge, and if his claim is not satisfied, foreclose on the collateral.

In accordance with the Law of the Republic of Kazakhstan dated May 24, 2021 No. 43-VII, Article 36 of the Law on Banks is set out in a new version (effective October 1, 2021), if there is a delay in fulfilling obligations under a bank loan agreement, but no later than twenty calendar days from the date of its occurrence, the bank (the organization that carries out certain types of banking transactions) is obliged to notify the borrower in the manner and within the time limits stipulated in the bank loan agreement, on the occurrence of a delay in fulfilling an obligation under a bank loan agreement and the need to make payments under a bank loan agreement, indicating the amount of overdue debt as of the date specified in the notification; the right of the borrower, an individual under a bank loan agreement, to apply to a bank (an organization engaged in certain types of banking operations); the consequences of the borrower's failure to fulfill its obligations under a bank loan agreement loans. A bank (an organization that performs certain types of banking operations) has the right to involve a collection agency to notify the borrower.

      In cases of dissatisfaction with the requirements arising from the notification, as well as failure by the individual borrower to exercise the rights provided for in paragraph 1-1 of Article 36 of the Law on Banks, or lack of agreement between the parties on changing the terms of the bank loan agreement, the bank (an organization engaged in certain types of banking operations) has the right to consider applying the measures provided for in paragraphs 2, 2-1 of Article 36 of the Law on Banks.

When considering this category of cases, the courts need to establish the legality of the lender's claim to the borrower for early repayment of the loan, as well as to clarify compliance with the procedure for sending a notification to the borrower.

      If the court (judge) finds that the notification was not sent to the borrower or was sent in violation of the provisions of Article 36 of the Law on Banks, or in the case of a request from the borrower – If the plaintiff fails to comply with the requirements provided for in paragraph 1-2 of this article for the mandatory pre-trial settlement of a dispute with the borrower, the court (judge) returns the claim to the bank (an organization engaged in certain types of banking operations), then in the presence of these circumstances, the court (judge) returns the claim, since the plaintiff has not complied with the procedure established by law for this category of cases or the procedure provided for by the agreement of the parties pre-trial settlement of the dispute and the possibility of applying this procedure has not been lost (subparagraph 1) of the first part of Article 152 of the CPC).

      If the claim has been accepted by the court, it is left without consideration (part one of Article 168, subparagraph 1) of Article 279 of the CPC).

     If the lender has a court decision that has entered into force in this legal relationship, then the legal relations of the parties continue not from the bank loan agreement, but from a judicial act.

      In accordance with the first part of Article 239 of the CPC, the court, at the request of the recoverer, may make an appropriate indexation of the sums of money collected by the court based on the base rate of the National Bank of the Republic of Kazakhstan on the day of execution of the court decision.

      To explain to the courts that the provisions of article 36 of the Law on Banks do not apply to the claims of a bank (an organization engaged in certain types of banking operations) to heirs for the recovery of loan debt within the value of the borrower's property transferred to them.

     The footnote. Paragraph 15 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

The fulfillment of obligations under a bank loan agreement may be secured by a penalty, pledge, guarantee, surety, and other means provided for by law or contract (paragraph 1 of Article 292 of the Civil Code, Article 35 of the Law on Banks).

      When applying article 35 of the Law on Banks, the courts should take into account that this provision has been repeatedly amended and supplemented. In accordance with the Law of the Republic of Kazakhstan dated February 10, 2011 No. 406-IV "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on mortgage Lending and Protection of the Rights of Consumers of financial services and Investors" (hereinafter – The Law on Mortgage Lending), the above-mentioned article is set out in a new edition, and paragraph 2 of this article provides for restrictions on the accrual and collection of penalties (fines, penalties) under a bank loan agreement, (including under a mortgage loan agreement) the amount of penalties (fines, penalties) for violating the obligation to repay the loan amount and (or) payment of remuneration may not exceed 0.5 percent of the overdue payment amount for each day of delay, but not more than ten percent of the amount of the loan issued for each year of the bank loan agreement (paragraph 2 of Article 35 of the Law on Banks) concluded with an individual.

     At the same time, this provision of the law applies to relations that have arisen from previously concluded bank loan agreements. A penalty (fine, fine) under a bank loan agreement concluded with individuals, paid before the enactment of the Law on Mortgage Lending, or a penalty (fine, fine) payable in accordance with a judicial act that has entered into force, is not subject to recalculation.

      According to the Law on Non-performing Loans, paragraph 2 of Article 35 of the Law on Banks is set out in a new wording. By virtue of this provision, under a bank loan agreement concluded with an individual, the amount of the penalty (fine, penalty fee) for violating the obligation to repay the loan amount and (or) pay remuneration may not exceed 0.5 percent of the overdue payment amount for each day of delay during the ninety days of delay. exceed 0.03 percent of the overdue payment amount for each day of delay, but not more than ten percent of the loan amount for each year of the bank loan agreement.

      This provision of the law was put into effect on July 1, 2016 and applies to legal relations arising from previously concluded contracts. A penalty (fine, penalty) under a bank loan agreement concluded with an individual, paid before the enactment of the said Law on Non-performing Loans, or a penalty (fine, penalty) payable in accordance with a judicial act that has entered into force, is not subject to recalculation.

When considering cases of debt collection under a bank loan agreement, it is necessary to investigate the reasons that led to the debtor's breach of obligations, the presence or absence of grounds for liability for breach of obligations provided for in Article 359 of the Civil Code (in particular, the debtor's fault, force majeure, etc.), the creditor's fault (Article 364 of the Civil Code) and others relevant to the case circumstances.

     If it is established that the penalty (fine, fine) to be paid is excessively large in comparison with the creditor's losses, the court, at the request of the debtor, has the right to reduce the penalty (fine, fine), taking into account the degree of fulfillment of the obligation by the debtor and the interests of the debtor and the creditor that deserve attention (Article 297 of the Civil Code).

      Taking into account the provisions of Article 297 of the Civil Code, the court (judge) must explain to the defendant (debtor) the right to file a motion for reduction of the penalty if it is excessively large compared to the creditor's losses. In the court's decision, the conclusions on the reduction of the penalty must be motivated.

     The footnote. Paragraph 17 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

When establishing the liability of the parties, the courts should take into account that the Law on Banks provides not only for measures applied to an insolvent borrower, but also for measures to protect it, depending on the purpose of the bank loan.

      In accordance with paragraph 6-1 of Article 34 of the Law on Banks, a bank (an organization engaged in certain types of banking operations) is prohibited from demanding payment of remuneration, penalties (fines, penalties), as well as fees and other payments related to the issuance and servicing of a loan accrued after ninety consecutive calendar days of delay in fulfilling an obligation to repay any of the payments on the amounts of the principal debt and (or) remuneration, except for the following cases, when, on the date of conclusion of the bank loan agreement, the amount of the principal debt was fully secured by a pledge of the property to be registered and (or) a pledge of money.

     The footnote. Paragraph 18 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

When considering disputes on debt collection and foreclosure on pledged (mortgaged) property, it should be borne in mind that, in accordance with Article 299 of the Civil Code, the creditor (mortgagee) has the right, in case the debtor fails to fulfill the obligations secured by the pledge, to obtain satisfaction from the value of the pledged property primarily to other creditors.

     This right of the creditor (mortgagee) does not deprive him of the opportunity to obtain satisfaction of his claims at the expense of other property of the debtor that is not pledged. In this case, the creditor is deprived of the right to obtain preferential satisfaction of his claims over other creditors.

      In accordance with paragraph 2 of Article 299 of the Civil Code, when enterprises, buildings, structures, apartments, rights to land and other immovable property (mortgage) are pledged, this legal relationship is regulated by the Mortgage Act. The general rules on collateral contained in the Civil Code apply to mortgages if other rules are not established by the Mortgage Law.

      In accordance with article 20 of the Mortgage Law, in case of default by the debtor of the main obligation, the mortgagee has the right to satisfy his claims by:

     mortgage sale in court;

     the sale of mortgages out of court, if this is provided for by legislative acts or in the mortgage agreement, or in a subsequent agreement of the parties.;

     taking ownership of the mortgaged property in case the auction is declared invalid (Article 32 of the Mortgage Law).

     The extrajudicial sale of collateral is the right of the creditor-mortgagee and does not exclude the possibility of the sale of this property by a court decision.

      It should be borne in mind that the extrajudicial sale of property is not a mandatory procedure for pre-trial dispute resolution. Therefore, the non-application by the pledgee of an out-of-court procedure for the sale of pledged property is not a reason for the court to leave a claim without consideration on the grounds provided for in subparagraph 1) of Article 279 of the CPC.

     The footnote. Paragraph 19 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

According to paragraph 1 of Article 305 of the Civil Code, the pledgor can be either the debtor himself or a third party.

By pledging his property to secure the fulfillment of the borrower's obligations to the lender, the pledgor-a third party (real surety) (hereinafter referred to as the real surety) does not become a party to the secured obligation, that is, he does not acquire the rights and obligations of either the lender (lender) or the borrower (debtor). Therefore, the real guarantor does not incur any equity, solidarity, or subsidiary obligations to the lender together with the borrower, as provided for in paragraph 2 of Article 269 of the Civil Code, and therefore the corresponding liability.

     The real surety with his property, on his own responsibility and at his own risk, ensures the fulfillment of the debtor's obligation to the creditor (Articles 292, 299 of the Civil Code), that is, within the framework of the pledge agreement concluded between him, the creditor and the debtor, acquires the rights and obligations of the pledgor.

      At the same time, according to paragraph 7 of Article 319 of the Civil Code, the real surety has the right at any time before the sale of the pledged object has taken place, to terminate foreclosure on it and its sale, having fulfilled the obligation secured by the pledge or that part of it, the fulfillment of which is overdue. The agreement limiting this right is null and void. In this case, the pledgor, on the basis of his voluntary will, having repaid the debt owed on the loan, assumes the rights of the debtor. Within the meaning of this provision, the legislator grants the real guarantor the right to choose in order to preserve his pledged property.

     The footnote. Paragraph 20 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

Under the pledge agreement, the creditor has the right, in the event of non-fulfillment by the debtor (borrower) of the obligation secured by the pledge, to obtain satisfaction from the value of the property pledged by the real surety primarily to other creditors of the person to whom this property belongs (the pledgor), with exceptions established by the Civil Code.

     Unlike the guarantor, who jointly with the debtor is jointly and severally liable to the creditor, and the surety, who is vicariously liable to the creditor (Article 332 of the Civil Code), the real surety does not bear the above types of liability to the creditor. If the rights of the creditor under this obligation are transferred to the guarantor and the surety when they fulfill their obligations to the debtor's creditor (Article 334 of the Civil Code), then the transfer of these rights to the real surety is not provided for by the current legislation.

      Therefore, a real surety, whose property has been sold by a creditor, in accordance with the procedure provided for by law, does not acquire the right to demand compensation from the debtor for the value of the collateral sold to him, unless the parties to the pledge agreement provide for this right in the contract itself or such right is not provided for by legislative acts. The grounds provided for in paragraph 3 of Article 344 of the Civil Code apply only if the conditions specified in paragraph 7 of Article 319 of the Civil Code are met, according to which the real surety has the right at any time before the sale of the pledged object, to terminate foreclosure on it and its sale, having fulfilled the obligation secured by the pledge or that part of it, the fulfillment of which is overdue.

     If the repayment of the debt under the main agreement has become impossible as a result of the debtor's illegal actions, the real surety, whose property has been sold to repay the debt, has the right to demand compensation from the debtor.

Explain to the courts that by resolving claims for debt collection under a bank loan agreement, the court may refuse to satisfy a claim for foreclosure on mortgaged property if the debtor's violation of the obligation secured by the pledge is insignificant and the amount of the mortgagee's claims is clearly disproportionate to the value of the pledged property (paragraphs 2 of Article 317 of the Civil Code, Article 21 of the Mortgage Law).

     The violation of the obligation secured by the pledge is insignificant and the amount of the pledgee's claims is clearly disproportionate to the value of the pledged property under the combination of the following conditions:

     the amount of the unfulfilled obligation (excluding penalties (fines, penalties) is less than ten percent of the value of the pledged property determined by the parties in the pledge agreement;

     The period of delay in fulfilling the obligation secured by the pledge is less than three months.

     For mortgage loans that are not related to entrepreneurial activity and secured housing of an individual, other requirements are established, in the presence of which foreclosure on mortgaged property is not allowed.

     In this case, the violation of the obligation secured by the pledge is insignificant and the amount of the pledgee's claims is clearly disproportionate to the value of the pledged property, given the combination of the following conditions:

     the amount of the unfulfilled obligation (excluding penalties (fines, penalties) is less than fifteen percent of the value of the pledged property determined by the parties in the pledge agreement;

     The period of delay in fulfilling an obligation secured by a pledge is less than six months (paragraph 2 of Article 317 of the Civil Code).

     The footnote. Paragraph 22 as amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

The courts need to pay attention to the fact that if a loan is provided by a bank, then one of the measures applied to a borrower who violates the terms of the agreement is to foreclose in an undisputed (non-acceptance) manner on money, including by submitting a payment claim, available on any bank accounts of the borrower (if such foreclosure is stipulated in the bank loan agreement), subject to the exceptions provided for in paragraph 10 of Article 27 of the Law on Payments.

     This measure of influence on the borrower is applied in the presence of the following conditions in combination:

     the occurrence of a delay in fulfilling an obligation under a bank loan agreement;

     notifying the borrower by the bank in the manner and within the time limits stipulated in the bank loan agreement of the occurrence of a delay in fulfilling obligations under the bank loan agreement and the need to make payments, indicating the amount of overdue debt as of the date specified in the notification, the right of the borrower – an individual under the bank loan agreement to apply to the bank (an organization engaged in certain types of banking operations) and about the consequences of the borrower's failure to fulfill its obligations;

     failure to comply with the requirements arising from the said notification (Article 36 of the Law on Banks).

     The footnote. Paragraph 23 is amended by the regulatory decree of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

When applying, in accordance with the procedure established by law, for recovery of money (including by presenting a payment claim) held in any bank accounts of the debtor, it is necessary to comply with article 28 of the Constitution, according to which a citizen of the Republic of Kazakhstan is guaranteed a minimum wage and pension, social security by age, in case of illness, disability, loss of breadwinner and for other legal reasons, and article 115 of the Labor Code of the Republic of Kazakhstan, which follows, that the total monthly amount of deductions from an employee's salary or pension may not exceed fifty percent (article 95 of the Law on Enforcement Proceedings).

When applying restrictions on foreclosure on money, it should be borne in mind that the Laws of the Republic of Kazakhstan dated January 21, 2019 No. 217- VI and May 24, 2021 No. 43-VII amended paragraph 2 of Article 36 of the Law on Banks (effective October 1, 2021).

     According to this rule, the collection of debts of an individual borrower under a bank loan agreement by submitting a payment request is limited to fifty percent of the amount of money held in his bank account and (or) of each amount of money subsequently deposited into the borrower's bank account, and is carried out regardless of the receipt of the entire amount into the bank account, necessary for the full fulfillment of the payment request. At the same time, the amount of money stored in the current account of an individual must be at least the minimum subsistence level established for the relevant financial year by the law on the republican budget. This restriction does not apply to money held in the savings account of an individual borrower.

     The footnote. Paragraph 25 is amended by the regulatory resolution of the Supreme Court of the Republic of Kazakhstan dated 09/29/2022 No. 7 (effective from the date of the first official publication).

One of the grounds for termination of obligations is the death of a citizen (paragraph 1 of Article 367 of the Civil Code).

      The death of the borrower terminates his obligations under the loan agreement if the execution can be carried out only with the personal participation of the debtor on the basis of Article 376 of the Civil Code.

     The issue of maintaining obligations to the testator's Bank must be resolved when the notary forms the composition of the inheritance (Article 1040 of the Civil Code).

      The heirs who have accepted the inheritance, according to the requirements of Article 1081 of the Civil Code, are liable for the obligations of the testator as joint debtors within the limits of the value of the property transferred to each heir.

      The death of the borrower does not terminate the obligations under the bank loan agreement of the guarantor, surety, mortgagor, whose liability is provided for by the provisions of paragraph 2 of Article 269, Articles 287, 288, 299, 329, 330 of the Civil Code.

According to article 4 of the Constitution, this normative resolution is included in the current law, is generally binding and comes into force from the date of the first official publication.

Chairman

The Supreme Court

Republic of Kazakhstan

Judge

The Supreme Court

Republic of Kazakhstan,

Secretary of the plenary session

K. MAMIE

© 2012. RSE na PHB "Institute of Legislation and Legal Information of the Republic of Kazakhstan" of the Ministry of Justice of the Republic of Kazakhstan  

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