1. Procedural claim that the legal transaction is void ab initio under Art 116 CC may be contrary to good faith and an abuse of rights, even if the illegal action (forgery of an official document) is confirmed by the criminal court’s sentence, in case it is not proven by the claimant in the first instance.

The facts of the case

2 July 2021 Respondent No 1 (the ‘Bank’) and Respondent No 2 concluded a credit agreement. On the same day the said Respondents and the Claimant* concluded the suretyship agreement to secure the credit extended to Respondent No 2 among other collaterals. The sole participant of the Claimant discovered the suretyship only when it received a collection instruction from the Bank due to a prior default of Respondent No 2. Such instruction resulted in the cessation of the Claimant’s activities.

The criminal court convicted the representative of the Claimant under Art 228 III Penal Code (‘use of a knowingly forged document’) for a forged signature of the Claimant’s participant** on the suretyship agreement. Based on this fact the Claimant asked the economic court to invalidate the suretyship agreement under Art 115 and 116 CC***.

The court of first instance dismissed the claim. The court of appeal instance ruled in favour of the Claimant. The Bank brought an appeal to the Supreme Court.

The Supreme Court’s position

[The Collegium has consequently cited Art 115 CC, Nr 11 RPL dd 20 November 2023 No 33, Art 116 CC.] The Claimant failed to prove the invalidity of the suretyship agreement under Arts 115 and 116 CC*4.

[The Collegium has also cited Art 126 CC and Nr 17 RPL dd 20 November 2023 No 33.] Neither the criminal court found that the Bank knew or clearly should have known of signing of the suretyship agreement by the unauthorized representative during its conclusion, nor the claimant proved it.

[The Collegium has cited Art 9 CC.*5] The record demonstrates that on 6 May 2023 the Claimant’s [advocate] has been authorized by a director of the Claimant through signing a power of attorney. During the court proceedings the [Collegium] found that [the convicted representative who signed the disputed suretyship agreement] was the true director of the Claimant. The [advocate] has not denied this fact. It can be seen from this that [the convicted representative], as the director of the Claimant, not acting honestly, reasonably, and in good faith in civil law relations, committed actions aimed at abusing his rights. Thus, although the criminal court found the representative guilty of forgery of an official document (suretyship agreement), the [Collegium] believes that this circumstance is a bad-faith action aimed at avoiding liability (fulfilling obligations). Considering the above, the court of first instance made a right decision to dismiss the claim after correctly applying the norms of substantive and procedural law because the argumentation of the Claimant was not sufficient to invalidate the suretyship agreement.