News & Views

Ruble Devaluation Not Grounds to Decrease Lease Payments

5 April 2016

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Changes to the Russian ruble (RUB) exchange rates have significantly increased RUB lease payments for tenants who have a lease denominated in a foreign currency, namely the Euro or US Dollar, a situation to which both government officials and courts have taken attention. Thus far, no serious attempts have been made to legislate a solution to this issue; however, certain government officials have threatened to do so. The most widely reported statements were made by Viktor Yevtukhov, Deputy Minister of Industry and Trade of the Russian Federation, who requested landlords to set real estate lease rates in RUB. He further threatened to introduce a bill last August which would effectively prohibit setting lease rates in a foreign currency in Russia. Similar statements were made again in February of this year.

In addition, the Russian courts have also reviewed the issue. In a well-publicized case in February of this year, the Moscow State Commercial Court made a ruling in which it recognized the significant increase in rent due to the fluctuating exchange rate to result in unjust enrichment for the landlord (PAO Vimpel-Kommunikatsii v. PAO Tizpribor (No. А40-83845/2015)). The judge further set minimum and maximum exchange rates for payments to RUB 30-42/USD 1.

However, the Court of Appeals repealed the ruling and again confirmed earlier court practice which establishes that exchange rates are a business risk and should not be considered as a significant change of circumstances to an extent that it would give the tenant the right to terminate or amend a lease agreement. Therefore, there is at present no practice by the court’s to unilaterally amend exchange rates and lease payments.

Nevertheless, this issue may arise again. We will keep you informed on any developments, but at this point lease rates should remain unchanged regardless of currency exchange fluctuations.


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Victoria Goldman
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Luke Wochensky

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