Konsu

Compensation for sale of software to SMEs with a 50% discount

The Russian Government launched a program on June 28, 2021 to support rightsholders by reimbursing the cost of providing Russian software to small and medium businesses at a reduced cost (Government Decree No. 1031 dated June 28, 2021). This measure confers a significant advantage to Russian rightsholders although it gives rise to additional tax and other risks. We have outlined below the most significant risks and how to minimize them.Read more

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Recognition of the electronic correspondence of the parties as agreement on the terms of the contract

It is impossible to imagine in modern realities the activities of the company without the use of electronic means of communication. Increasingly, counterparties negotiate the terms of contracts using e-mail as the fastest and most convenient way to settle contractual relations. In practice, situations often arise in which one of the parties to the legal relationship decides to abandon the agreements. According to the judicial practice that has developed until recently, if the parties did not have time to sign the documents and the only confirmation of the obligations assumed is an email from the counterparty, it was quite difficult to defend the need to fulfill the obligations that one of the parties abandoned.

In the context of resolving this issue, the Resolution of the Arbitration Court of the East Siberian District in case No. A19-19914/2020, issued in January 2022, is interesting.

Factual background

A framework supply agreement was concluded between the parties. By exchanging e-mails, the parties agreed on the delivery of goods, but the specification for the delivery of goods was not signed. The supplier also sent an invoice by e-mail for making an advance payment for the ordered goods, which was paid by the buyer.

Later, the buyer applied to the Arbitration Court with a request for the return of the advance payment as unjust enrichment, substantiating its claims by the absence of a specification signed between the parties for the delivery of the ordered goods.

First instance position and appeals

The requirements of the buyer were satisfied in full. The courts motivated the decisions made by the non-conclusion of the supply contract on the terms agreed in the specification, since it was not signed by the claimant, and there is no evidence that the buyer received the goods for the transferred amount.

Cassation position

The Arbitration Court of the East Siberian District did not agree with the conclusions of the lower courts and reversed their decisions, sending the case back for a new trial. The court of cassation recognized the correspondence of the parties as an offer for the supply of goods, since all the essential conditions were agreed upon by the parties. The buyer, in turn, accepted the offer sent by the supplier by making an advance payment. Thus, the buyer unlawfully demanded a refund and was obliged to redeem the prepaid goods. Separately, it should be noted that in order to recognize the electronic correspondence of the parties as an agreement on the terms of the contract, the following conditions shall be met:

1. A framework agreement shall be concluded between the parties - that is, an agreement that defines the general conditions for the relationship of the parties.
2. The agreement shall provide for the possibility of agreeing on the essential terms of the transaction (concluding a contract, specification, addendum) in writing by drawing up an electronic document or by exchanging letters, telegrams, electronic messages.
3. The agreement shall contain the email addresses of the parties and the agreement on contractual terms shall be arranged using them.

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Records of beneficial owners for the Federal Tax Service and Rosfinmonitoring

Foreign organizations (except for those that are tax registered in the Russian Federation only because they provide e-services) and unincorporated foreign structures must provide every year by March 28^th the Federal Tax Service with information about their shareholders, beneficiaries, and managers as of December 31^st of the reporting of the year. They must also disclose the procedure for indirect participation (if any) of individuals and public companies if the share of their direct and/or indirect participation exceeds 5% (Article 23(3.2) Russian Tax Code).Read more

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Opening accounts in international banks in Russia

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Business reputation protection practice

With the extensive use of online media, review feeds, and the development of online services, the protection of business reputation has become an increasingly relevant issue as shown by frequent cases of dissemination of false information about legal entities to hamper their competitiveness in the market.Read more

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Registration of the downtime mode in 2022, taking into account the clarifications of the Federal Service for Labor and Employment (Rostrud) and law enforcement practice

In the context of restrictions towards the Russian Federation, companies may face downtime due to problems with logistics, supply of materials and consumables. Below are examples of the details for registration and payment for downtime, as well as clarifications from departments and judicial practice.Read more

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Recognition of Economic Sanctions as Force Majeure in the Execution of Contracts in Russia

Economic sanctions imposed by the European Union, the USA and a number of other countries against the Russian Federation have a significant impact on the ability of Russian legal entities to perform their obligations according to contracts with their Russian counterparties.Read more

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