VIS Trading Co Ltd v Nazarov & Anor

Under the Russian Civil Code, a communication may constitute an offer if it is sufficiently certain, shows an intention to be bound and contains the essential contractual terms. Its meaning must be assessed in context. A promise to repay principal and interest according to a stated timetable may be binding even where expressed as a plan. Under Article 438(3), requested forbearance can constitute acceptance and is distinct from pure silence. Initial inaction may be ambiguous, but subsequent conduct clearly indicating agreement to defer payment may complete the contract.

VIS Trading Co Ltd v Nazarov & Anor concerned loans made by VIS to companies controlled by Mr Nazarov. In April 2009, Mr Nazarov wrote on Ansol’s notepaper proposing deferment of repayment, monthly payments from September, repayment of principal by January 2010 and payment of interest during the second quarter of 2010.

VIS did not reply, but later sent reconciliation reports without demanding immediate repayment. The High Court held that the letter constituted a contract between VIS and Ansol under Russian law: [2013] EWHC 491 (QB). Ansol appealed, arguing that the letter was not a valid offer or acceptance and that the parties had been wrongly identified. The central issue was whether the letter and VIS’s subsequent conduct formed a binding contract.

1. Appeal dismissed. The Court of Appeal upheld the finding that the letter created a contract between VIS and Ansol requiring repayment of the outstanding loans in accordance with the stated timetable.
2. Under Article 435(1) of the Russian Civil Code, an offer had to be sufficiently certain, express an intention to be bound and contain the essential terms. The letter satisfied each requirement. It contained clear promises and did not contemplate further drafting.
3. Article 431 required the letter to be construed in its surrounding circumstances. The three loans were treated in the parties’ dealings as Ansol’s responsibility. The debt was identified in statements and reconciliation reports, and the letter was written on Ansol notepaper. Those circumstances supported the conclusion that Ansol made the offer to VIS, rather than Mr Nazarov making a personal offer to Mr Vorobyev.
4. The promise covered the whole debt, including principal and interest. References to a plan to repay principal and an ability to pay interest did not reduce the words to an aspiration. The offer was a composite undertaking containing a repayment programme.
5. For acceptance under Article 438(3), the action contemplated by the offer was deferment. Deferment required a decision not to demand immediate payment or enforce the debt for a period. It was not equivalent to mere silence. VIS’s initial failure to respond was ambivalent, but its later transmission of the June reconciliation report without demanding immediate payment, repeating the earlier demand or taking enforcement steps conveyed agreement to the deferment.
6. Forbearance could constitute acceptance under Russian law. The fact that Article 438(2) recognised limited circumstances in which silence could amount to acceptance did not prevent conduct going beyond silence from constituting acceptance under Article 438(3). Lords Justice Treacy and Lady Justice Black agreed with Lord Justice Christopher Clarke’s judgment.

• High Court of Justice, Queen’s Bench Division — Leggatt J held that the letter created a contract between VIS and Ansol requiring repayment according to the specified timetable: [2013] EWHC 491 (QB).
• Court of Appeal (Civil Division) — dismissed Ansol’s appeal and upheld the first-instance decision.