The matter in brief
How it went
Situation. After an LLC was liquidated, its former participants discovered that a bank had withheld part of the balance on the current account without lawful grounds, citing its internal regulations.
What we did. We challenged the bank’s actions in the commercial court and, after losing on appeal, prepared and filed a cassation appeal with a refined legal position based on banking legislation.
Result. The cassation court set aside the rulings of the lower courts and ordered the bank to return the withheld funds to the LLC’s former participants in full.
The legal framework for recovering funds from a bank through cassation
Grounds for restricting transactions on an account. Articles 854 and 858 of the Russian Civil Code expressly prohibit a bank from restricting a client’s disposal of its funds on its own initiative. Debiting and withholding are allowed only in cases expressly provided for by law or by contract, not by a credit institution’s internal regulations.
Cassation proceedings in commercial litigation. Chapter 35 of the Arbitrazh Procedure Code governs the hearing of cases in the district commercial court. Unlike an appeal, the cassation instance does not re-assess evidence or establish new facts; it checks only whether the lower courts correctly applied substantive and procedural law (Article 286 of the Arbitrazh Procedure Code).
Deadline for filing a cassation appeal. Under Article 276 of the Arbitrazh Procedure Code, the appeal is filed within two months of the date the contested court act enters into legal force, through the commercial court that decided the case at first instance.
Grounds for setting aside a court act. Article 288 of the Arbitrazh Procedure Code lists among the grounds for setting aside or amending a decision the incorrect application of substantive law and the breach or incorrect application of procedural law, if this led or could have led to an incorrect court act.
How a cassation appeal usually runs
The general sequence for a typical dispute that reaches cassation, not counting possible extensions or the particulars of an individual case.
First instance and appeal
The dispute goes through the court of first instance and then, if either party appeals, through the appeal court, whose ruling enters into legal force.
Preparing and filing the cassation appeal
The appeal is prepared citing the specific provisions of law that the applicant considers to have been breached or wrongly applied. Timeframe: 2 months from the date the contested act enters into force.
Acceptance of the appeal for consideration
A judge of the district court decides alone whether to accept the appeal, checking compliance with the formal requirements for its content and enclosures. Timeframe: 5 days from receipt of the appeal.
Hearing by the district court
The hearing takes place without examination of new evidence; the parties set out their arguments on breaches of law committed by the lower courts. Timeframe: up to 2 months from receipt of the appeal together with the case file.
The ruling and its enforcement
The district court either leaves the act in force, sets it aside and remits the case for a new hearing, or adopts a new court act. It takes effect immediately on the day it is adopted (Article 289 of the Arbitrazh Procedure Code).
Common mistakes in cassation appeals
Repeating the appeal arguments without a new legal basis. Cassation is not a “third attempt” to retell the facts of the case. An appeal that simply repeats the position taken on appeal, without pointing to a specific error in the application of law, usually achieves nothing.
Trying to submit new evidence. The district court does not examine new documents or re-assess existing ones. Any attempt to add further evidence at this stage is rejected as outside the powers of the cassation instance.
Missing the two-month deadline. The period for filing runs from the date the act enters into force, not from the moment the party receives its text. Missing it without a valid reason and without an application for reinstatement closes the route to cassation.
A formal appeal with no reference to specific provisions. General phrases about the decision being “unlawful and unfounded”, without saying which provision of substantive or procedural law was breached and how this affected the outcome, sharply reduce the chances of the act being set aside.
What to bear in mind while the dispute is unresolved
Enforcement is not suspended automatically. Filing a cassation appeal does not by itself suspend enforcement of the contested act. A separate application for a stay is needed, which the district court may grant, including against counter-security (Article 283 of the Arbitrazh Procedure Code).
Remittal for a new hearing. Cassation does not always resolve the dispute finally. In the case of material procedural breaches, the case may be sent back to the lower court, which extends the process by months.
Interest continues to accrue. For as long as the funds remain wrongfully with the bank, interest for the use of another’s money may accrue on them under Article 395 of the Russian Civil Code. This is a claim separate from the principal debt and should be taken into account in the calculation.
Obtaining a writ of execution after winning. A favourable ruling from the district court does not mean the money comes back automatically. You need to obtain a writ of execution in good time and present it for enforcement, rather than relying on the bank to comply voluntarily.
Cassation appeals in numbers
General benchmarks for this practice area, not figures for any specific case.
A similar situation? Let us discuss the details at a consultation.
Frequently asked questions
Can I file a cassation appeal after losing on appeal?+
Yes, this is the standard route of challenge. The key is to meet the procedural deadline and to prepare an appeal with new arguments that were not raised before.
How can an international arbitration award be recognised in another country?+
Through recognition and enforcement proceedings under the 1958 New York Convention, to which most countries are party.
Is this a real case or a generalised example?+
It is a real matter from the firm’s practice. We publish it without company names or the names of the participants, as every client agreement includes a non-disclosure clause.