Dealing with accounts receivable
Many companies increasingly face the prospect that their partners cannot fulfill their obligations because of the difficult economic situation and issues related to accounts receivable became relevant to many of our clients.Read more
Collection of accounts receivable in court proceedings
Any commercial organization or individual entrepreneur carrying out business activities under contracts that do not provide for 100% prepayment, face a situation sooner or later where the counterparty has receivables, payment of which is not always possible to achieve on a voluntary basis.Read more
Unenforceability of arbitration or prorogation agreement in connection with the sanctions of foreign states
The parties to a foreign economic contract, when structuring contractual relations, quite often include a condition in the contract to refer disputes to a foreign court (prorogation agreement) or international commercial arbitration (arbitration agreement) located outside the territory of the Russian Federation, or enter into a separate agreement regarding this issue.
However, the economic sanctions imposed by the European Union, the United States and a number of other countries against the Russian Federation, Russian legal entities and individuals have a significant impact on their ability to comply with an agreement on referring disputes to the jurisdiction of a foreign court or international commercial arbitration.
The arbitration clauses in contracts can be ignored if the chosen court is located in a state that has imposed sanctions against Russia
As the court of cassation pointed out in Resolution of the Commercial Court of the Far Eastern District dated December 26, 2022 in case No. A73-15265/2022 , a judicial dispute is subject to consideration in a Russian court if there are grounds to believe that the foreign court referred to in the contract will be unable to ensure a fair trial.Read more
Review of the judicial practice of the Supreme Court of the Russian Federation No. 2 (2022)
On October 12, 2022, the "Review of Judicial Practice of the Supreme Court of the Russian Federation No. 2 (2022)" was published, approved by the Presidium of the Supreme Court of the Russian Federation on October 12, 2022 (hereinafter referred to as the "Review").
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A new Presidential Decree has been published imposing additional restrictions on the corporate sector
In accordance with Decree No. 618 of the President of the Russian Federation dated September 08, 2022 “On Special Procedure for the Implementation (Execution) of Certain Types of Transactions (Operations) Between Certain Persons”, a special procedure has been established between residents and non-residents from unfriendly countries for transactions (operations) entailing, directly and (or) indirectly, the establishment, change or termination of the rights of ownership, use and (or) disposal of shares in the authorized capital of limited liability companies (with the exception of credit institutions and non-bank financial institutions) or other rights that make it possible to determine the conditions for managing such limited liability companies’ liability and (or) conditions for their entrepreneurial activities. From September 08, 2022 such transactions may be carried out (executed) only on the basis of permits issued by the Government Commission for Control over Foreign Investments in the Russian Federation and, if necessary, containing conditions for the implementation (execution) of such transactions (operations). As an exception, only certain transactions with shares in the authorized capital of users of subsoil plots are defined.
Provisions on agreements for out-of-court dispute settlement
Complying with a mandatory pre-trial dispute settlement procedure is a condition for anyone to exercise their right to go to court (Article 135(1(1)) Russian Code of Civil Procedure, Article 129(1(5)) Russian Code of Commercial Procedure). In cases provided by law or agreements, it is mandatory for the parties to an agreement to provide for a pre-trial dispute settlement procedure (Article 4(5) Russian Code of Commercial Procedure and other regulations) или договором.Read more
Indexation of court awards
On July 22, 2021, the Constitutional Court of the Russian Federation rendered ruling No. 40-P upholding a legal position that changes existing law enforcement practice. Business entities will now be able to get losses from inflation compensated if court awards are not enforced for a prolonged period. This ruling sets out a timeframe for indexation of awarded amounts and allows companies to use this mechanism without waiting for the adoption of a federal law.Read more
Tax clause as a way of protecting property interests from counterparties’ unlawful actions
To meet the requirements of Article 54.1 of the Russian Tax Code, taxpayers must exercise “due diligence” when choosing counterparties. Tax risks will arise for companies if their counterparties violate tax law, so the Federal Tax Service recommends including a tax clause in contracts to reduce such risks.Read more