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The Constitutional Court normalized the rights of the bank to receive interest in the form of payment for a loan

The prescription of the first sentence of part one of 1050 of the Civil Code of Ukraine does not limit the bank’s right to receive interest in the form of a fee for using a loan.

This decision was made by the Constitutional Court of Ukraine (CCU), reports press office of the judiciaryreports Ukrinform.

“On June 22, the Second Senate of the CCU adopted decision No. 6-p (II) / 2022 on the case of the constitutional complaint of the State Savings Bank of Ukraine joint-stock company regarding the compliance with the Constitution of Ukraine of the prescription of the first sentence of the first part of Article 1050 of the Civil Code of Ukraine. The judge-rapporteur on this case – Sergei Golovaty,” the message says.

The CCU informed that the formula of the challenged order of the Civil Code is as follows: “if the borrower does not repay the loan amount in a timely manner, he is obliged to pay the amount of money in accordance with Article 625 of this Code.”

Oschadbank noted that at the time of the conclusion of the loan agreement, and during its execution, he had legitimate expectations to receive interest for the use of money until the day the loan was repaid, and such legitimate expectations did not depend on the good faith of the borrower’s behavior (timely or untimely repayment of the loan).

According to the bank, this regulation limits the bank’s receipt of accrued interest for the use of the loan by the time the loan is due, and not by crediting the money borrowed to the lender’s bank account.

“The Bank believes that as a result of this, it was unlawfully deprived of the right of ownership acquired in accordance with the law (Article 41 of the Constitution of Ukraine), its right to entrepreneurial activity, which is not prohibited by law (Article 42 of the Constitution of Ukraine), is limited,” the statement says. .

For its part, the Constitutional Court came to the conclusion that both at the time of the conclusion of the loan agreement and during the loan period, the bank had legitimate expectations to receive interest for the use of money until the day the loan was repaid, which means that the right to demand the bank to pay such interest to it is property and according to the right, the protection of which is guaranteed by Article 41 of the Constitution of Ukraine.

Read also: KSU recognized as unconstitutional a paragraph of an article of the Customs Code due to the exorbitance of the fine

Among other things, the CCU came to the conclusion that the application of the prescription of the first sentence of part one of Article 1050 of the Code as such, aimed at granting the lender the right to receive three percent per annum of the overdue amount and inflationary losses in the form of civil liability measures for improper performance by the borrower of monetary obligations, cannot influence the right of the lender to receive interest as payment for the use of the loan, that is, the right to demand from the debtor the fulfillment of obligations under the loan agreement in kind.

“As a result, the decision established that, in the aspect of the issues raised in the constitutional complaint, the prescription of the first sentence of the first part of Article 1050 of the Code does not restrict the bank’s right to receive interest as payment for the use of the loan, does not entail negative consequences for the bank’s right to conduct business, and therefore is such that it complies with the Constitution of Ukraine (is constitutional),” the message says.

As reported, on June 15, the Constitutional Court recognized as unconstitutional a paragraph of an article of the Customs Code of Ukraine regarding fines for violation of customs rules.

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