1. A pledge agreement is neither exchange or donation of goods, nor onerous or gratuitous transfer of property, including for temporary use.

The Supreme Court’s position

12 December 2022 the Tashkent Interdistrict Economic Court declared the claimant insolvent, initiated liquidation proceedings and appointed a liquidation manager. After that, the liquidation manager, based on Art 63 III of Law of 12 April 2022 No LRU-763 on Insolvency, requested to declare the pledge agreement concluded between the parties invalid, apply the consequences of its invalidity and cancel all attachments imposed on the vehicle owned by the claimant.

The court of first instance erred satisfying the claim. Although the claimant did not change the basis of the claim under Art 157 EPC, the court of first instance declared [the pledge agreement] invalid, citing Art 123 CC and Article 63 of Law No LRU-763. [The Collegium has cited Art 63 III of Law on Insolvency]. Although the transaction (pledge agreement) cannot be declared invalid in the circumstances based on the above-mentioned legal norm, the court of first instance incorrectly applied the substantive law declaring it invalid. Because in this case, the debtor [the claimant] did not exchange or donate goods, the property was not transferred free of charge or on a paid basis (including for temporary use), and the claimant did not prove with specific evidence in accordance with Arts 68 and 72 EPC that the debtor’s situation had significantly worsened compared to a similar transaction, leading to financial losses.