- Russian Federation
- Ninth circuit Arbitrazh Court of Appeal
BANK GUARANTEE - BETWEEN A RUSSIAN BANK AND A RUSSIAN COMPANY - REFERENCE TO UNIDROIT PRINCIPLES TO INTERPRET APPLICABLE DOMESTIC LAW (RUSSIAN LAW)
INTERPRETATION OF BANK GUARANTEE - UNCLEAR TERMS - TO BE INTERPRETED AGAINST PARTY THAT HAD SUPPLIED THAT TERMS (CONTRA PROFERENTEM RULE) - REFERENCE TO ARTICLE 4.6 OF UNIDROIT PRINCIPLES
The Russian company, the claimant, filed a lawsuit against the Russian bank, the defendant, for collection of the indebtedness under the bank guarantee, issued by the Russian bank in favour of the claimant.
The Russian bank refused to pay the indebtedness. In the court hearings the Russian bank refereed to the fact that claimant did not apply in writing to the bank with the application to pay the amount under the bank guarantee, which, however, was not indicated as a ground for non-payment in the official reply of the bank to the claimant. The court rejected the arguments of the Russian bank and referred to the applicable provision of the Russian law and legal position elaborated by the Supreme Arbitrazh Court (Russia’s supreme commercial court). The court also referred to the contra proferentem rule as contained in the UNIDROIT Principles.
The court’s reasoning is explained below.
As explained in paragraph 11 of the Resolution of the Plenum of the Supreme Arbitrazh Court of the Russian Federation dated 14 March 2014 No 16 ‘On freedom of contract and its limits’, in the event of unclear contract terms and the impossibility to establish the actual common will of the parties, taking into account the purpose of the contract and its wording, previous negotiations, the correspondence of the parties, the practice established in mutual relations between the parties, the customs and also the subsequent conduct of the parties to the contract (Article 431 of the Civil Code of the Russian Federation), the interpretation of the terms of the contract by the court should be in favour of the counterparty of the party that drafted the contract or proposed the wording of the relevant condition; until proven otherwise, it is assumed that such a party was a person who is a professional in the relevant field, requiring a special knowledge (eg, a bank under a loan agreement, a lessor under a leasing agreement and an insurer under an insurance contract). A similar rule is applied as generally accepted rule of interpretation of international commercial contracts (Article 4.6 of the UNIDROIT Principles).
(cf. S. Petrachkov / A. Bekker in "Perspectives in Practice of the UNIDROIT Principles 2016", IBA Publication 2019, p. 213-214)