SIGNUM lawyers have successfully represented the interests of the Client in court proceedings in relation to claims on debt and penalty recovery

Our recent dispute resolution experience includes representing the interests of a client in the court case on debt (including currency adjustment) and penalty recovery in the amount of KZT 34 mln. under the Supply Agreement (hereinafter referred to as ‘Agreement’) in the court of first instance.

During the court proceedings the Debtor argued that the debt should not include amounts incurred after application of currency adjustment and claimed that applied currency adjustment which was provided for in the Agreement did not refer to the Agreement amount and was the additional costs, not related to the Agreement.

The main issues that might rise from currency adjustment in short term agreements is the following. In accordance with Art. 282 of CPC of the RK currency adjustment can be applied in long-term liabilities under conditions specified by parties. Such wording can be interpreted as permission to use currency adjustment only in long-term agreements. A long-term agreement is an agreement concluded for more than a year. However, there is no expressed prohibition of applying currency adjustment in short-term liabilities under the provisions of CC of the RK. Thus, currency adjustment can be applied to short-term liabilities as well due to the discretionary nature of civil legislation. Moreover, in accordance with Art. 380 of CC of the RK citizens and legal entities shall be free in concluding agreements, which means that parties can specify any conditions which are not contrary to the existing legislation, including conditions on applying currency adjustment under the agreement.

Following complex legal proceedings, the court of first instance satisfied all the claims of our Client and held that the Debtor must pay the debt amount with currency adjustment since it is provided for in the Agreement.