Olga Benedskaya on Meta-Leasing v Partner-M

Olga Benedskaya from Muranov, Chernyakov and Partners comments the controversial hire-purchase case Meta-Leasing v Partner-M. We wrote about it here.

Olga Benedskaya
attorney, senior associate

Muranov, Chernyakov & Partners
+7 495 783-74-50

The decision of the Presidium of the Supreme Commercial Court (case А28-732/2010) of July 12, 2011 is a good example of how judges limit the abusive exercise of rights.

For many years in Russia the lessors have been able to force on lessees unfavourable terms about payment, termination and return of the leased asset. Quite often, a financial leasing agreement is constructed in such a way that when the amount of the lease payments that have been made comes up to the value of the property, the lessee gets the option to buy the asset for a small, symbolic price. In the event of default, therefore, a lessor can terminate the agreement, keep all lease payments and the asset. Obviously, this means a heavy loss for the lessee, disproportionate to the degree of fault.

The existence of such terms in lease agreements has been rationalized though the principle of contractual freedom. The very high level of abstraction of this principle makes it a common justification of the abusive exercise of rights.

We should remember that the freedom of contract does not imply that parties may act and exercise their rights in sole discretion, without regard to the rights of others, including their counterparts. That is exactly what the Presidium of the Supreme Commercial Court has said. The court has upheld the lessee’s right to demand the money that have been paid up to the moment of termination of a lease agreement when the asset remains with the lessor.

Thus, the Supreme Commercial Court has supported the balance of lessor’s and lessee’s interests which should advance financial leasing / hire-purchase in Russia.

Muranov, Chernyakov & Partners