RESOLUTION OF THE PLENUM OF THE SUPREME COURT OF THE KYRGYZ REPUBLIC

of May 24, 2019 No. 10

About some questions of court practice on application of the legislation on pledge

For the purpose of ensuring unity of practice of application by courts of the legislation in case of the dispute resolution, connected with mortgage legal relationship, taking into account the made changes in the Civil code of the Kyrgyz Republic and the Law of the Kyrgyz Republic "About pledge", the Plenum of the Supreme Court of the Kyrgyz Republic, being guided by part 3 of article 98 of the Constitution of the Kyrgyz Republic, article 18 of the constitutional Law of the Kyrgyz Republic "About the Supreme Court of the Kyrgyz Republic and local courts" decides to make the following explanations:

1. In case of the dispute resolution, connected with the pledge relations to courts it is necessary to be guided by the Constitution of the Kyrgyz Republic, the Civil code of the Kyrgyz Republic (further - KR Group), the Land code of the Kyrgyz Republic (further - ZK KR), the laws of the Kyrgyz Republic "About pledge" (further - the Law "About Pledge"), "About state registration of the rights to real estate and transactions with it", the constitutional Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic", other laws and regulatory legal acts of the Kyrgyz Republic, and also rules of international law and the international treaties of the Kyrgyz Republic which are component of its system of law.

If the pledger is subject to process of bankruptcy, relations on pledge are regulated also by the Law of the Kyrgyz Republic "About bankruptcy (insolvency)".

Foreign physical persons and legal entities, and also stateless persons in the relations on pledge have the same rights and perform the same duties, as physical persons and legal entities of the Kyrgyz Republic, considering the features provided by the laws of the Kyrgyz Republic.

2. Pledge is method of ensuring execution of the cash or expressed in cash obligation on the security of the property right or other corporeal right to property. Owing to pledge the creditor according to the obligation provided with pledge (pawnbroker) has the right in case of non-execution, improper execution by the debtor of the obligation provided with pledge to become widespread the requirements from the cost of pledged property is preferential before other creditors of the pledger.

3. The form of the agreement of pledge shall conform to requirements of Art. 328 of KR Group.

Registration of the rights to the pledged real estate - compulsory procedure of registration of the rights and encumbrances (restrictions) for real estate in the Unified State Register of Rights on real estate (Art. 20 of the Law "About Pledge").

Non-compliance with requirements of the law imposed to form of the pledge agreement of property attracts its invalidity. Such agreement is considered insignificant.

Courts should mean that registration of right to claim on agreement performance of pledge concerning personal estate - the voluntary procedure which gives the priority right to the pawnbroker before other creditors.

The unregistered right to claim according to the pledge agreement of personal estate in the Unified State Register of Rights of requirements of personal estate does not attract invalidity of the transaction made according to requirements of the law providing the right to require obligation fulfillment (item 3 of Art. 328 of KR Group, Art. 21 of the Law "About Pledge").

The pledge of personal estate (which is not subject to state registration) arises after the date of transmission of this property to the pawnbroker and if it is not subject to transfer, then from the moment of the conclusion of the pledge agreement.

4. Courts should mean that except the objects specified in Art. 4 of the Law "About Pledge", the right can be subject of pledge also. (For example: the right to money, right to use, including the rights of the lessee, the intellectual property right, debt requirements and other rights (requirements) following from contractual commitments).

If other is not provided by the pledge agreement, the main thing which is pledge subject is considered pledged together with its accessories as a unit.

5. Pledge of the building, construction or the apartment house extends to the parcel of land on which there are these buildings, constructions or the apartment house, and also on that part of the parcel of land which is necessary for use of the pledged object according to its appointment. The right of pledge can extend to all parcel of land, inseparable from the building, construction or the apartment house if it is specially stipulated in the pledge agreement.

In case of common equity or common joint property on the parcels of land, pledge it can be established only on the parcel of land belonging to the citizen or the legal entity allocated to the independent site (item 3 of Art. 49 of the Law "About Pledge").

6. Pledge of the right to development and use of mineral deposits and other natural resources which owner is the state is performed according to the Constitution of the KR, KR Group, ZK KR, the Law KR "About subsoil" from the consent to that of authorized state bodies.

At the same time it must be kept in mind that the agreement of pledge of mineral right without registration in authorized state body on subsurface use is insignificant, and the right on it invalid (Art. 38 of the Law "About Subsoil").

7. Subject of pledge the be rights having personal character, including the right to the salary, pension, the right to personal services, the alimony, indemnification to health cannot.

Transfer to pledge of the property withdrawn or limited in civil circulation or property which privatization is prohibited or concerning which in "the procedure established by the law obligatory privatization, and also property on which according to the law collection cannot be turned (For example is provided is not allowed: roads, rivers, public buildings and constructions, etc.).

8. According to Art. 11 of the Law "About Pledge" and Art. 329 of KR Group the subsequent pledge if it is not prohibited by prior pledge agreements of the same property which were not terminated by the time of the conclusion of the subsequent pledge agreement is allowed. If the prior pledge agreement provides conditions on which the subsequent pledge agreement can be signed, the last shall be imprisoned with observance of these conditions.

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