Caselaw on foreign currency transactions

The District Court of Yasamal had a hearing and made a relevant decision regarding a case that can create an effective precedent on litigations on foreign currency.

According to the circumstances of the case, it was claimed by the Financial Market Supervisory Authority that Caspian Legal Center Company (CLC) did not submit a document confirming foreign currency transactions and obtaining relevant services within 270 days, and a protocol on administrative offense was drawn up per Article 430.4 of the Code of Administrative Offenses.

CLC stated that relevant legal reports were obtained from foreign law firms in accordance with overseas legal projects, the services actually consisted of reports submitted by email, as well as there was no act of acceptance signed in paper and confirming the provision of the services, and such a requirement was not prescribed by law.

The Court rightly noted that according to Article 430.4 of the Code of Azerbaijan Republic on Administrative Offences (hereinafter CAO) and the requirements of “the rules of conducting transactions in foreign currency by residents and non-residents of the Republic of Azerbaijan", failure to submit a document confirming delivery of services over 270 days from advance payments in currency does not cause administrative liability under this Article, but not providing the services and not paying back the advance payment does cause administrative liability. At the same time it was noted by the Court that an expansive interpretation based on analogy is not applicable for cases on administrative offenses.

Therefore, proceedings on the case were terminated since the services were actually obtained by Caspian Legal Center (relevant reports and references have been attached to the case), and as prescribed by the relevant article of CAO, revealing the fact that services were not provided is a ground for administrative liability, but non-submission of relevant signed documents is not a ground.

The mentioned court precedent gives a reason to make such a conclusion that first of all, it is necessary to make sure that the services are provided either for banks or FIMSA to make a conclusion that legal entities have committed an administrative offense under relevant currency regulation rules. Thus, the absence of an act of acceptance does not mean that services have not been provided,  non-provision of services is necessary for the existence of an administrative offense.

You can write your questions about cases on money transfers in foreign currency and other similar cases on administrative offences.

Orkhan Beydiyev, Legal Manager

Email: [email protected], [email protected]

Phone: (050) 289 89 73, 012 (480 14 86)