Weekly Client Alert # 27

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NEW REGULATIONS ON GUARANTEE

 

Amendments to RA Civil Code

According to the new regulations presented in the draft to the “Law on the amendments and additions to the Civil Code of the Republic of Armenia” (hereinafter referred to as the “Draft”), the individual guarantor will henceforth bear secondary (“subsidiary”) liability for the principal debtor’s obligations before the creditor.

The exhaustive list of the cases where the guarantor will be jointly liable and the conditions after the exhaustion of which the creditor will only be able to make a claim against the guarantor will be defined.

The mechanisms aimed at preventing adverse legal consequences that may arise in the future in connection with the obligations assumed under the guarantee agreement will also be set.

The Draft was adopted by the National Assembly in the second reading and in full on January 19, 2021.

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Amendments to the RA Civil Procedure Code

The draft to the Code stipulates that the claims against the guarantor should henceforth be brought in one proceeding as part of a claim against the principal debtor, except in the case where the principal debtor is declared bankrupt. At the same time, in case of non-fulfillment of the abovementioned requirement, the Court has the right to return the claim.

Moreover, the closing section of the relevant court decision hereafter should contain an indication of the guarantor and the secondary (“subsidiary”) or joint liability of the guarantor:

The draft to the Code was adopted by the National Assembly in the second reading and in full on January 19, 2021.

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Amendments to RA Law On Compulsory Execution of Judicial Acts

According to the draft to the Law, the foreclosure on the property (including the seizure) owned by the guarantor who bears secondary (“subsidiary”) liability should be executed after foreclosure on the property owned by the principal debtor. At the same time, the legislator defines the exhaustive list of the conditions the presence of at least one of which will allow the relevant foreclosure to be executed (for example, the principal debtor is declared bankrupt or the total value of the property owned by the principal debtor is insufficient to satisfy the claim, etc.).

The draft to the Law was adopted by the National Assembly in the second reading and in full on January 19, 2021.

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Government decrees

 

A Package of Measures for Social Support of Servicemen Who Were Injured as a Result of Military Operations in Artsakh

In order to provide social assistance to servicemen who were injured as a result of the military actions launched by the Republic of Azerbaijan against the Republic of Artsakh since September 27, 2020, on January 29, 2021 the Government of Armenia approved a social support package for providing one-time assistance.

In this support package, persons injured as a result of military operations who are receiving (received) medical care and services in medical institutions, which do not have a disability or have or may have a third group of disability, are provided a one-time assistance in the amount of AMD 500,000.

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