ATTENTION bank debtors: important decision made in Azerbaijan

The Civil Chamber of the Supreme Court of the Republic of Azerbaijan made a decision establishing unified judicial practice on the issue of calculating interest for late debt payments.

As reported by BAKU.WS, this information was distributed by the Supreme Court.

As it became known, the judicial dispute concerned the plaintiff's claim to recover additional interest from the defendant for the late repayment of a monetary debt. The plaintiff, combining the previously recovered principal debt and interest amount awarded by court decisions, demanded the calculation of new interest for late payment on the total amount.

The court of first instance rejected the claim, the appellate instance agreed with this position, after which the cassation appeals of both parties were considered by the Supreme Court.

In its decision, the Supreme Court emphasized that according to Articles 445.7 and 449 of the Civil Code of the Republic of Azerbaijan, late payment interest should be charged only on the amount of the unpaid principal debt and only until the day of debt repayment. Adding interest debt, previously recovered by a court decision, to the principal debt and subsequent calculation of interest on the total amount leads to "interest on interest," which is prohibited by law.

The Supreme Court noted that the recovery of interest debt by a court decision does not change its legal essence and does not transform it into a principal debt. The requirement of new interest on such interest debt disproportionately worsens the debtor's position and contradicts the principle of fairness.

The Supreme Court also indicated that the powers of the cassation instance do not include re-examining the factual circumstances of the case, but rather checking the correctness of the application of substantive and procedural law by the lower courts. In this regard, the legal assessment of evidence and conclusions of the appellate instance were recognized as justified.

As a result, the Supreme Court, having denied the satisfaction of the cassation appeals, left the decision of the appellate instance unchanged.