Determination of maximum size of variable interest rate is a mandatory norm in credit agreements with non-residents

/22
February 2013

 

National Bank of Ukraine (hereinafter - NBU) in the Letter dated 02/14/2013 N 29-213/1846-1878 clarified some issues of credit relations between residents and non-residents.

 NBU focused on the fact that article 1056-1 of the Civil Code of Ukraine (hereinafter - the Code) requires mandatory determination of the maximum size of interest rate increases concluding credit agreement, in which a variable interest rate is implemented.

 Meantime the Law of Ukraine "On the International Private Law" (hereinafter - the Law) prescribes some restrictions of the right of choice of a law to be applied in legal relationships. These restrictions are related to forewarning of the public order and implementation of the  mandatory rules.

 According to Article 14 of the Law, its provisions do not limit the mandatory legislative rules in Ukraine, which regulate certain relations, regardless of the law, which was determined by the parties as applicable.

   On the NBU’s opinion, determination of the maximum increases of interest rate in credit agreements is mandatory. Basing on this, parties of credit agreement regulated by foreign laws, in which variable interest rate is prescribed, must comply with the requirements of Article 1056-1 of the Code.