- Kyiv Regional Commercial Court
INSURANCE CONTRACT - BETWEEN AN UKRAINIAN INSURANCE COMPANY AND AN UKRAINIAN BANK - UNIDROIT PRINCIPLES APPLIED AS MEANS OF INTERPRETING DOMESTIC LAW (UKRAINIAN LAW)
HARDSHIP - REFERENCE TO ART. 6.2.1 UNIDROIT PRINCIPLES
Claimant, a Ukrainian insurance company, and Respondent, a Ukrainian bank, entered into an agreement (hereinafter "Agreement"), according to which Claimant insured the bank's loan portfolio. Later, Claimant terminated the Agreement, alleging breaches of the Agreement by Respondent and a substantial change in circumstances due to the occurrence of the recent global economic crisis. In particular Claimant argued that the economic crisis had led to the insolvency of many the Respondent's clients, causing Claimant considerable losses due to frequent insurance payouts to Respondent, which did not take any steps to attempt to collect the debts, as it was more profitable for it to receive the insurance payouts instead.
The Court rejected the claim on the ground, among other things, that the global economic crisis in this case did not constitute a substantial change of circumstances. In support of its conclusion, the Court referred to the UNIDROIT Principles of International Commercial Contracts, which may be applied to interpret the applicable domestic law. In particular the Court referred to article 6.2.1 "Contract to be observed", which states that even where performance of the contract becomes more burdensome for one of the parties, that party is obliged to perform its duties.
Original in Ukrainian available at the Unified State Register of Court Decisions: http://www.reyestr.court.gov.ua/}}