Constitutional Court holds meeting to review which currency should be used while paying loans – UPDATED

Baku: Ferhad Abdullayev: The court will pass a judgment on the matter in the near future

The Plenum of the Constitutional Court has today held a meeting.

The meeting presided over by Chairman of the Constitutional Court Ferhad Abdullayev was dedicated to the enquiry of the Commissioner for Human Rights (Ombudsperson) of the Republic of Azerbaijan and Goychay district court covering the issue of which currency should be used while paying loans.

Representative of the Ombudsman Office Mahir Mammadov, judge of Goychay district court Elkhan Babayev, and as experts BSU Associate Professor Azad Talibov, judge of Supreme Court Ilgar Damirov, judge of Baku Court of Appeal Mehdi Asadov, Director General of the Central Bank of Azerbaijan Rashad Orujov, head of the department of Azerbaijani Parliament Rovshan Muradov attended the meeting.

Mahir Mammadov, department chief at the Ombudsman’s Office, said manat is shown in the Constitution as the payment currency.

“Moreover, the Civil Code says if either of the sides is a foreign legal entity or an individual, payment can be made with foreign currency. There are controversies among some sentences in articles 439.1 and 439.7 of the Civil Code. They need to be clarified,” he added.

Judge Elkhan Babayev of the Goychay district court noted in his speech at the meeting that there has been much discussion in society as to which currency should be used to pay loans.

“In 2013, ATA Bank allocated a loan of AZN 25,000 to Seymur Gasimov and his family members. The Bank gave the loan in US dollars. But the contract signed between them does not mention who will cover the shortcoming in case of an up or down of currency. However, it does mention that the loan should be paid off with US dollars. The devaluation caused disagreement between the parties who ultimately appealed to court,” he noted.

Later on, assistant professor Azad Talybov of Baku State University, judges at the Supreme Court and the Baku Court of Appeal – Azad Talybov and Mehdi Asadov respectively – made their speech as an expert.

CBA Director General Rashad Orujov said in his speech that banks perform a very important function in economy.

“According to the world experience and local legislation, customers can put money in banks in any currency. This is risky for banks. To prevent risks, banks decide on their own which currency to use. People’s funds saved in banks are likely to be exchanged with foreign currency. According to the law, money is considered to be item. Those indebted to banks must fully pay off their debts. Otherwise decisions are risky for banks. To prevent losses in the banking structure, significant amounts of funds from the state budget can be needed, and that would bring about the emergence of additional expenditures and an increase in the number of taxpayers,” said Rashad Orujov.

Rovshan Muradov, department chief at the Azerbaijani Parliament, said in his turn citizens have carried out a dollarization process amounting to AZN 500 million since February.

“And that created much liability for banks. The state can provide some compensations and allowances to tackle such situations. And banks can cut down on the interest rate. But we cannot force them to do it. The interests of both banks and citizens must be considered when adopting a decision,” he said.

Later on, chairman of the Constitutional Court Farhad Abdullayev said the court would soon make a decision on the matter and announce it.

A relevant decision on the devaluation of manat rate adopted by the Central Bank on February 21, raised questions among citizens. A while ago, the Commissioner for Human Rights (Ombudsperson) of the Republic of Azerbaijan and the Goychay district court sent an enquiry and a request to the Constitutional Court in order to review the Civil Code’s compliance with the Constitution and also for the Civil Code’s articles 439.1 439.2 and 439.7 to be explained. At the same time, an explanation for some articles of the Civil Code was requested.

SOURCE: Azeri Press News Agency