On 3 June 2014, Ukrainian Parliament adopted the Law of Ukraine "On Moratorium on Foreclosure of Ukrainian Citizens' Property Provided as Collateral for Foreign Currency Loans" (the "Law").
Pursuant to the most recent publically available draft of the Law, it addresses the issues of indebtedness under foreign currency consumer loans provided to citizens of Ukraine by the local credit institutions. The Laws' main provisions are as follows: Prohibition of foreclosure on property pledged/mortgaged on the basis of pledge/mortgage agreements constituting security under the mentioned loans. Prohibition of recovery from debtor's other property/proprietary rights in case of deficiency of the proceeds obtained from the prior pledge/mortgage enforcement. Prohibition for credit institutions to assign (sell or otherwise transfer) indebtedness under the foreign currency consumer loans to third parties.
The Law shall not be applicable in the territory of Crimea.
The Law shall become effective as of the date of its official publication and may be cancelled by adoption of legislation regulating conversion of foreign currency loans into local currency ones and other related issues.
Notably, in 2011, the Verkhovna Rada of Ukraine prohibited extending foreign currency loans to individuals.
For further information please contact Asters' partner Andriy Pozhidayev,
counsel Gabriel Aslanian and associate Anna Tkachova.