ART DE LEX lawyers defended 1.3 billion RUB in a cassation appeal

The Moscow District Court of Arbitration dismissed the cassation appeal of the Government and the Ministry of Finance of the Republic of Dagestan, confirming the judicial acts of the lower courts and allowing Investtorgbank (ITB) to recover 1.3 billion rubles in state guarantees from the Republic of Dagestan through its government and the Ministry of Finance.

In December 2013, LLC Dagagrokompleks (DAK) took billions of loans to modernize the agroindustrial complex of the Republic of Dagestan. In addition funds allocated in its budget, DAK received loans of 1.3 billion RUB from the ITB and 3.2 billion RUB from Rosselkhozbank.

For the purpose of ensuring the fulfillment of DAK's credit obligations, the government of the Republic of Dagestan issued a state guarantee, obligating it to bear joint liability to the bank for the loan amount.

DAK did not fulfill its obligations to repay the loan, and in February 2016, ITB filed with the Moscow Arbitration Court to recover 1.3 billion RUB from the government (the guarantor) and the Ministry of Finance of the Republic of Dagestan. The court found the bank's claims reasonable, and in April 2017, it decided to fully satisfy the claim. In June, the Ninth Arbitration Court of Appeal left this decision unchanged. The government and the Ministry of Finance of the Republic of Dagestan appealed decision in the Arbitration Court of the Moscow District.

Arthur Zurabyan, the head of the ART DE LEX dispute resolution and mediation practice, as well as Valery Ivacheva, a lawyer in the ART DE LEX firm, successfully represented the interests of ITB.

Arthur Zurabyan stated, “In the dispute that already has lasted almost two years, this is a landmark decision. One cannot say that the case is complete, but the cassation instance hearing on October 19 fully confirmed the judicial acts of the lower courts that were in favor of ITB. As for the actual execution, we must be extremely careful to take into account not only the interests of the recoverer but also the important goals of the regional budget. Of course, in such disputes, it is optimal to conclude an agreement immediately upon the announcement of the judicial decision.”