Assignment of Claims in Russia: How a Debt Changes Hands

A creditor in Russia may transfer a claim to another person by agreement, and the debtor's consent is not needed unless the law or the contract requires it. Article 382 of the Civil Code covers this assignment and also the transfer of a right by operation of law. The debtor who has not been notified in writing is protected: if he pays the original creditor before he receives the notice, he is discharged, and the risk of the lack of notice lies with the new creditor.

Assignments are used in debt collection, in sales of receivables and in group restructurings. They look simple, but mistakes in the notice, in the description of the claim or in the handover of documents lead to lost cases. This guide explains how an assignment works, what the debtor may demand, which claims cannot be assigned and what the new creditor should do before the first lawsuit.

What Can Be Transferred and in What Scope

The new creditor receives the right in the same scope and on the same terms as it existed at the moment of the transfer, as the commentary to Articles 382 and 384 explains. This includes the rights that secure the claim and the right to interest, unless the agreement says otherwise. The debtor can raise against the new creditor every objection that he had against the original one.

Monetary claims can usually be assigned in part when the subject is divisible. A claim for a penalty can be assigned separately from the main claim or together with it, including amounts that will accrue in the future, and the exact amount need not be stated as long as the claim can be identified (Plenum of the Supreme Court Resolution No. 54 of 21 December 2017, paragraph 14; Article 388.1 on future claims).

Assignment may be paid or gratuitous. The agreement should describe the claim precisely: the contract on which it arises, the debtor, the amount, the period and any interest or penalty included. A vague description allows the debtor to argue that the claim was never identified.

When the Debtor's Consent Is Required

As a rule the debtor's consent is not needed. The exception arises where the identity of the creditor matters to the debtor, and then the assignment without consent is not allowed under Article 388(2). The commentary mentions agreements on joint activity as an example, and notes that ordinary monetary obligations do not usually depend on the creditor's identity.

A contract may also forbid assignment or require consent. Courts examine whether such a clause is clear, and the effect of its breach depends on the wording. For monetary claims, Article 388(3) says that a contractual ban or restriction does not invalidate the assignment, but the original creditor remains liable to the debtor for breaching the clause.

If an assignment without the debtor's consent creates additional costs for an individual debtor, the original and the new creditor are jointly liable to reimburse them (Article 382).

Notice to the Debtor

Article 385 deals with the notice. A notice of the transfer has force for the debtor whether it is sent by the original creditor or by the new one. If the new creditor sends it, the debtor may refuse to pay until he receives proof of the transfer, and this does not apply when the notice comes from the original creditor.

If the debtor receives notices of several successive assignments, the payment made in accordance with the latest notice is proper performance (Article 385(2)). The new creditor should therefore send the notice without delay, with the assignment agreement or an extract that shows the claim and the signatures.

The notice should be sent by a method that proves delivery. It states the name of the new creditor, the bank details for payment and a reference to the contract. A debtor who received no notice and paid the former creditor is discharged, and the new creditor cannot demand the money again.

Duties of the Original Creditor

Under Article 385 the original creditor must hand the new creditor the documents that prove the claim and give the information needed to enforce it. The Code does not list the documents. The agreement may do so, and when it sets no period, a reasonable one applies.

The original creditor must also disclose facts that affect the claim, such as objections raised by the debtor or earlier payments. A creditor who hides them may be liable to the buyer for the resulting losses. In practice, the buyer asks for a warranty on the existence and amount of the claim.

A failure to hand over documents does not normally cancel the transfer, but it exposes the original creditor to a claim for damages and makes the new creditor's case in court harder.

Assignment in Cross-Border Debt

A foreign company that buys a claim against a Russian debtor is a new creditor under the same rules. Russian courts require documents proving the claim and the assignment, with certified Russian translation, and a power of attorney for the representative.

If the original contract contains an arbitration or jurisdiction clause, the new creditor is usually bound by it, because the claim passes on the same terms. The new creditor should read the clause before choosing the court.

The assignment itself may be governed by a foreign law, but the relations between the new creditor and the Russian debtor are examined under the law that governs the claim. This is a question for analysis in each case.

Due Diligence Before Buying a Claim

Check that the claim exists and that the contract was performed by the original creditor. Ask for the acts, invoices and correspondence. Check whether the limitation period has expired, because the buyer inherits it. Check the debtor's solvency and whether bankruptcy proceedings have begun. Make sure the claim has not been assigned to someone else already: under Article 390(4), when the same claim was transferred to several persons, it passes to the one who received it first.

A purchase price that is much lower than the face value of a debt usually reflects these risks, and the buyer should not assume that the court will apply a different standard because the claim changed hands.

Steps After the Purchase

Sign the agreement and the act of transfer. Send the notice. Obtain the documents. Calculate the debt and the interest. Send a demand to the debtor in the new creditor's name. Then, if needed, file the claim with all attachments.

The attorney drafts assignment agreements and notices, reviews claims before purchase and represents new creditors and debtors in court. The first review covers the claim documents and the agreement.

The main channel of communication with the attorney is email: attorneypetrova1@gmail.com.