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Anastasia Vasilenko published “The legal practice is searching for approaches” in The Lawyers’ Newspaper

Source: The Lawyers’ Newspaper

The legal positions of the courts in the protection of the rights of citizen investors have no common denominator.

In the commentary to an article by Julia Sevastyanova titled “The protection of investor rights” (see: LN, No. 22 (303) 16-30 November 2019) Anastasia Vasilenko analyzed the factors that, in her view, contribute to the ineffectiveness of the state guarantees, with respect to citizens-investors, and she expressed the opinion that not all of them have a negative impact on the system regulating the protection of their rights. In general, she notes that the legal practice is still looking for approaches to resolving disputes with investing citizens.

In the first of the series of articles on the methods of legal protection of the rights of bank depositors, the author gives an overview of the factors that resulted in ineffective state guarantees, with respect to citizen-depositors, and she analyzes the peculiarities of investor-bank relations in case of an insured event.

Julia Sevastyanova is skeptical about the current system of protection of the rights of citizen-depositors and criticizes future changes, which, in her opinion, will complicate and lengthen the procedures for protecting the rights and legitimate interests of investors when a bank is acting in bad faith.

It is difficult to argue with her about the urgency of the problem of legal protection for depositors in an atmosphere of frequent revocations of banking licenses, repeated actions by the Central Bank of Russia to sanitize the banking sector, and unfair actions of bank employees who place deposits on an “off-balance sheet.”

Nevertheless, I cannot share the position that a special law regulating the protection of consumers of financial services is necessary. The adoption of such a separate law will be just another form of bureaucratization and a multiplication of norms that already exist in several legislative acts. The necessary regulation is already contained in the Civil Code, the Law on Protection of Consumer Rights, and the Law on Insolvency (Bankruptcy).

To illustrate the importance of the need for special regulations, the author cites two contradictory acts of the Supreme Court of the Russian Federation.1 In the first, the court decided that determining a bank’s penalty for the late return of a deposit is to be in accordance with the provision of Paragraph 5, Article 28 of the Law on Protection of Consumer Rights (while Article 856 of the Civil Code provides the general norm). In the second–quite contrary to the first–the Supreme Court indicated that, for a late return of a deposit, the bank will pay interest, under Article 856 of the Civil Code, but not consumer penalties. Of course, the constantly fluctuating position of the Supreme Court of the Russian Federation, primarily due to the increased burden dealing with insolvent banks, is a sign of instability in the system. At the same time, the Supreme Court also will interpret the proposed special law for the benefit of the economy, which will not lead to any real protection for depositors.

I cannot see any negative consequences in changing the approach to contestability and nullifying bank transactions if they do not comply with the law. Obviously, it is impossible to go along with the axiom of “the citizen-depositor is unprotected and weak.” The depositor has a responsibility in concluding contracts in a responsible manner, and such a measure as recognizing a contract and its consequences as void should be commonplace.

In addition, there seems to be a far-fetched criticism of the institution of the consumer ombudsman as well as criticism of the introduction of pretrial procedures. Of course, the legal community perceives the widespread introduction of commissioners, in many areas, as a parody of the real protection of rights. Nevertheless, they have the possibility of not only relieving the judicial system from disputes that do not require high legal qualifications but also significantly improving the level of financial literacy by having the commissioners provide advice to citizens.

In addition, by extending protection through the introduction of pretrial procedures, the legislature has allowed investors to save a significant amount of time and effort. First, at the pretrial stage, there is a great chance of resolving the situation. Second, the court procedure does not seem “simple and understandable” to anyone and requires a qualified legal representative, the payment of court costs, and more.

In essence, the author refers to the analysis of the legal positions of the Supreme Court and the Constitutional Court of the Russian Federation, and she draws the reader’s attention to the varying position of the courts. The author rightly points out the increasing number of cases qualifying for depositors’ claims against banks as meeting the requirements of the third stage, not the first, based on the Deposit Insurance Agency methodology. This is a very important point because if the claim gets to the third level, the chance of receiving funds reduces to zero. The obvious negative factor is the illogical qualification the court applied in case No. A40-172055/13, in which the court qualified the deposit as a loan because the text of the contract did not comply with the standard form (it is surprising that an individual would issue a loan to the bank in the amount of 30 million RUB).

The author also speaks about another important aspect: the application of the bankruptcy law to those claims for the repayment of deposits that allegedly insolvent credit institutions satisfy. The Supreme Court of the Russian Federation rightly has stopped the practice of applying Article 61.2 of the Law on Bankruptcy to such payments.
In general, one can assume that the legal practice still is looking for approaches to resolve disputes involving citizen-depositors, but it still would be useful to get more practical advice from the author of the article on the methods of proof in the system of protecting the rights of bank depositors.

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* The Decision of the Supreme Court of the Russian Federation of 14 July 2015, No. 13-KG15-3, and the Decision of the Judicial Collegium for Civil Cases of the Supreme Court of the Russian Federation of 27 September 2016, No. 88-KG16-7 (included in Paragraph 7 of the “Review of judicial practice in cases related to the protection of consumers of financial services” and approved by the Presidium of the Supreme Court on 27 September 2017).

The complete article is available in The Lawyers’ Newspaper at https://www.advgazeta.ru/mneniya/praktika-ishchet-podkhody/.