Presentation - RULG-Ukrainian Legal Group, PA

Report
Russia: Legal News 2014
Sergey Pepeliaev, Managing Partner, Ph.D. in Law
9th Forum of Law Firms from CIS countries
Vienna, Austria: 27-29 June 2014
Slide
www.pgplaw.ru
Table of contents
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Antimonopoly Legislation…………………………………………………………………………….…
Corporate Law……………………………………………………………………………………………….
M&A………………………………………………………………………….…………………….……………
Land Law, Real Estate……………………………………………………………………….…………..
Intellectual Property………………………………………………………………………….……………
Employment and Migration Law…………………………………………………………….…………
Tax Law………………………………………………………………………………………………….………
Customs Law, World Trade Organisation.…………………………………………………...……
Foreign Currency Legislation…………………………………………………………………………..
Banking and Finance Legislation..……………………………………………………..……………
Medicine and Pharmaceuticals …………………………………………………………..………….
Regulation of oil and gas production and processing………………………………….…….
Telecommunications……………………………………………………………………………………….
The court System…………………………………………………………………………………………….
Having rulings of foreign courts recognised and enforced………….……………………..
Legislation on bankruptcy……………………………………………………………………………….
Administrative Law Regulation…………………………………………………………………………
Criminal Liability ………………………………………………………………………………………..…..
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Antimonopoly legislation (1)
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At the end of 2013 the Russian Federal Antimonopoly Service initiated a case in connection with a
violation of antimonopoly law, which took the form of collusion during the tender for purchasing
medical equipment in Yakutia. Since the Federal Law 'On protecting competition‘ has extra-territorial
application, a number of foreign companies were involved as defendants, one of which was
recognised as a party to the anti-competitive agreement.

In March 2014, the Ninth State Commercial ('Arbitration') Court of Appeal upheld a fine imposed on
a number of pharmaceutical distributors for participating in collusion during a tender for purchasing
pharmaceuticals.
The total fine exceeded RUB 400 million.

The Supreme State Commercial ('Arbitration') Court (SSCC) is to determine whether it is lawful and
legitimate on the part of the antimonopoly authority to conduct unscheduled audits before an
antimonopoly case is initiated. The company filed a claim with the SSCC seeking to have invalidated
the Guidelines for the Federal Antimonopoly Authority and its regional branches to conduct
scheduled and unscheduled antimonopoly compliance audits.
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Antimonopoly legislation (2)
One of the most promising tools of antimonopoly regulation is for the company to implement an
antimonopoly compliance system (a programme to prevent violations of antimonopoly legislation).
Senior management of the Federal Antimonopoly Service and representatives of the antimonopoly
authority have repeatedly drawn attention to antimonopoly compliance in their presentations and
speeches. The objective of the Federal Antimonopoly Service is to motivate and encourage market
players to implement their own antimonopoly systems, which will allow them to prevent and preclude
violations of antimonopoly legislation in a more effective manner.
One such incentive, according to the representatives of the Federal Antimonopoly Service, is to
introduce programmes according to which administrative liability will be mitigated for violating
antimonopoly legislation if the company has an antimonopoly compliance system in place. To this end,
the relevant amendments may be made to the Code of Administrative Offence.
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Antimonopoly legislation (3)
The Federal Law “On the contract system in the area of public procurement for state and municipal
purposes” entered into force on 1 January 2014*
The new law has seriously changed the procedure for regulating the whole procurement cycle: from
planning to performing a public contract.
The main changes were made to the following aspects of the state procurement system:
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A common information system
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Planning, justifying and and determining standard amounts with regard to public procurement
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Requirements for participants of public procurement
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Methods for selecting suppliers; tenders became the main method for selecting suppliers
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Rules for providing guarantees against bids/contracts and anti-dumping measures
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Performing, amending and terminating contracts.
* According to the position of the Federal Antimonopoly Service, clarifications of the antimonopoly authority that were
issued previously apply to the current regulation of the area of public procurement.
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Antimonopoly legislation (4)
The Federal Antimonopoly Service is actively involved in drafting amendments to the Federal Law “On
protecting competition” and other pieces of legislation (the so-called fourth package of amendments to
the antimonopoly law').
The drafting of the law started a rather long time ago and a considerable number of amendments were
made to it.
The main innovations of the fourth set of amendments to the antimonopoly law, among other things, will
be:
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The Presidium of Federal Antimonopoly Service will be created and a system will be established
for challenging out-of-court decisions of regional branches of the antimonopoly authority.
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The Rules for Trade Practices will be drafted further to the instructions of the Federal
Antimonopoly Service based on results of considering a case connected with abuse of the
dominant position or with regard to economic concentration
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The ban on vertical agreements will no longer apply to agency contracts.
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Reform of the Civil Code invalid transactions
On 1 September 2013 amendments came into force to the whole range of provisions of the Civil Code. Certain
provisions regarding invalid transactions were amended as well.

The approach significantly changed to transactions which are inconsistent with the law: they are treated
not as void, but only as voidable, unless the law directly stipulates that the transaction will be void. Such
transaction may be classified as void if it infringes third parties' rights or public interests;
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A provision appeared for the first time that a party which acts in bad faith may not dispute a transaction if
its actions give reasons to believe that this transaction is valid;
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A tentative (open) list of factors was set which indicate that a party clearly acted under influence of a
mistake. One of them is a mistake regarding a factor which was mentioned in the declaration of the party's
will;
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It has been directly stipulated that concealing any facts which are important when transaction is entered
into is treated as deception.
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Reform of the Civil Code - new
developments in the rules for an
assignment of rights
Provisions of the Civil Code were significantly amended regarding assignment
(cession) of rights (come into effect on 1 July 2014):
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The right of the parties to directly prohibit,
consequences of such prohibitions;
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Non-monetary obligations may be assigned only provided that such assignment does not make
performance more onerous for the debtor;
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It was directly permitted for a future claim to be assigned in the context of business relationships;
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The prohibition was abolished for recourse liabilities to be assigned;
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The term "assignment of a contract" was introduced which assumes that all rights and obligations under
the contract are transferred to another party;
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The party which assigns a claim (the transferor) is directly prohibited from performing any actions which
may incur the debtor's objections against the claim which was assigned.
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in a contract, rights from being assigned and the
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Reform of the Civil Code - corporate
legislation
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Significant changes were made to the Russian legislation on legal entities – public and non-public joint-stock
companies were introduced, while Companies with Additional Liability were removed from the list of legal
entities. A closed list of non-commercial legal entities was set.

A definition was introduced of the Sole Executive Body including multiple persons. Starting from 1 September
2014 members of non-public legal entities will have an opportunity to allow for several general directors to be
appointed;
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A new procedure has been set for decisions of general meetings to be formalised. Starting from 1
September 2014 minutes of a General Meeting will have to be notarised (non-public JSC) or certified by the party
which keeps the register of shareholders (public JSC). An LLC may use a simplified procedure;
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The procedure has been reformed for reorganising Russian legal entities. The major changes include it being
prohibited for a commercial organisation to reorganise itself into a non-commercial one and the transfer act no
longer being mandatory for reorganisation (the new provisions are to come into force on 1 September 2014);
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Starting from 1 October 2013 all newly created joint-stock companies must assign the task of keeping the
registers of shareholders to professional participants of the securities market. Before 1 October 2014 all jointstock companies must assign the task of keeping the registers to professional participants of the securities
market.
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M&A - new laws (1)
 On 1 July 2014 articles 860.7 – 860.10 of chapter 45 of the Civil Code come into force, which entrench an escrow
agreement as one of the agreements included in the Civil Code and regulate the procedure for entering into such
agreements.
Previously parties entered into escrow agreements under a foreign law to ensure that payments are secure
under the main agreement; now the parties may enter into such agreements under Russian legislation and
this will make it possible for the parties to use the services of Russian banks and avoid the risks connected
with decisions of foreign courts of law and arbitration courts being enforced in Russia;
 Founders and members of legal entities receive an opportunity to choose the applicable law for a founders'
agreement for a legal entity with foreign participation and the agreement regulating the members' rights
(shareholders' agreements, etc.), without violating the mandatory regulations of the local legislation of the
place where the legal entity was established.
Founders and members of legal entities will have an opportunity to submit to agreements of association
and shareholders' agreements governed by a foreign legislation, BUT it remains unclear which provisions of
the Russian legislation will be treated as mandatory for the purposes of such relationships.
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M&A - new laws (2)
 Federal Law No. 423-FZ dated 28 December 2013 "On amending the Federal Law 'On protecting
competition'", which came into force on 30 January 2014, has abolished the obligations of companies to
notify the Russian Federal Antimonopoly Service (the "FAS") of transactions performed and has retained only
the obligation to notify the FAS of transactions which have been performed within a group of companies.
 However, according to clarifications of the FAS, even after this law has come into effect, business entities
must notify the FAS of the transactions which were performed before 30 January 2014 .
Result: The number of documents required for transactions has been greatly reduced with a view to lowering
administrative barriers. This will have a favourable effect on medium-sized and large businesses and will
stimulate growth in business activity.
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Land Law, Real Estate (1)
 Increased number of disputes connected with identified cadastral value of real estate:
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Not only land plots, but also items of real estate are subject to a cadastral assessment (the
assessment must be performed not less than every 5 years);
The results of the cadastral assessment serve as the basis for calculating land tax and lease
payments;
On 2 November 2013 a Federal Law was adopted which amended the Russian Tax Code (No.
307-FZ) and according to which the cadastral value is the basis for calculation of the corporate
property tax for administrative, business and shopping centres, as well as any premises within
their territory;
The difficulties with the new cadastral value being applied retrospectively for the purpose of the
excessively paid tax and lease payments to be refunded) are caused by the case law not
providing any settled approaches regarding this matter.
 Amendments to the Civil Code regarding pledge (come into force on 1 July 2014)
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A possibility is introduced to pledge a future thing, future right or the whole property of the party
which performs the business activity;
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State registration is abolished of mortgage agreements;
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The procedure is amended for pledged property to be disposed of;
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The concept is introduced of a good-faith pledge holder;
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Other significant changes.
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Land Law, Real Estate (2)
Draft Federal law No. 444365-6 "On amending the Russian Land Code and certain items of Russian
legislation" (On 18 June 2014 approved by the Council of Federation and sent to the President for signing):

Adopted pursuant to the instructions of the President as well as the roadmap for refining the legal
regulation of town-planning activities and improving the entrepreneurial climate in the area of
construction which was approved by Directive No. 1336-r of the Russian Government dated 29 July
2013:
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Significantly reforms the procedure for land plots to be provided which are state and municipallyowned; abolishes tenders and entrenches auction as a priority form of competitive bidding for land
plots to be provided (the auction should be in the electronic form);
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The process for the land plot to be provided may be initiated by any interested party;
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A land plot may be provided for construction purposes on lease only;
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Limits are set for the durations for leasing out land plots for different purposes and terms and
conditions are fixed for lease agreements (e.g. the lessee's pre-emptive right is abolished to enter into
a lease agreement for a new time period, etc.)
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Closed lists are set of grounds on which ownership title to land plots may be transferred or on which
land plots may be leased out for a fee or free of charge.
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Intellectual property (1)
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Federal Law was adopted No. 35-FZ dated 12 March 2014 "On amending sections one, two and
four of the Russian Civil Code and certain items of Russian legislation".
The main set of the amendments comes into force on 1 October 2014.

Pursuant to article 1246(5) of the Civil Code, Directive of the Russian Government No. 512
dated 4 June 2014 was adopted "On approving the Rules for paying remuneration for employee
inventions, employee utility models, employee industrial designs".
These Rules will not apply if the employer and the employees enter into an agreement which
sets the amount, terms, conditions and procedures for remuneration to be paid.
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Intellectual property (2)
The following amounts of consideration have been set:
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for creating an employee invention, 30 percent of the employee's average salary for the last 12
calendar months;
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for creating an employee utility model or an industrial model, 20 percent of the employee's
average salary for the last 12 calendar months;
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The resolution becomes effective on 1 October 2014.
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Boosting the fight against infringing products in the Internet: extending the scope of anti-piracy
law to all types of content
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A draft law is being prepared to amend Federal Law No. 149-FZ "On information, information
technologies and on data protection" dated 27 July 2006, and the Russian Civil Procedure Code.
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Intellectual property (3)
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The aim of the proposed changes is to extend the existing procedure for restricting access to
video content owing to it being illegally posted in the Internet, to all copyright items and items
subject to related rights, including books, music, photographs, and software.
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The draft law clarifies the procedure for a communications provider to block illegal content.
For instance, it sets out that if a communications provider has no technical capability of
restricting access to an illegally posted copyright item or an item subject to related rights, such
communications provider must restrict access to the whole information resource.
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So far, the draft law has been passed in the first reading.
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Employment and Migration Law
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A federal law has been adopted which considerably limits on supplying personnel from 1 January
2016. For instance, it will be permitted to supply personnel to (1) duly accredited private
employment firms, or (2) within corporations (if a separate relevant federal law is adopted).

'Golden parachutes' for top managers of companies with public ownership are limited to the
amount of an average salary for three months

On 4 August 2014, a federal law becomes effective which obliges Russian citizens who have
received a second citizenship or a permit for permanent residence in a foreign country, to report
this to the Federal Migration Service which will keep records about such citizens. Not complying
with this obligation may result in administrative and criminal liability. The reporting period for those
who already have a second citizenship is until 3 October 2014.

From 1 January 2015, foreign citizens applying for work permits, patents, and permanent or
temporary residence permits, must evidence their knowledge of the Russian language, history and
the fundamentals of Russian legislation. An exception has been made for individual categories of
foreign citizens, including highly skilled professionals and members of their families.
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Tax Law (1)
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For the purposes of ‘deoffshorising’ the Russian economy, a draft law has been prepared to
establish the institution of controlled foreign companies, corporate tax residence and a beneficial
owner;

The Federal Tax Service has drafted laws concerning tax abuse, tax advising and 'tax monitoring'
(submitted to the State Duma);
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The Ministry of Economic Development has drafted a law concerning cost sharing in a group of
companies;
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The situation with taxing land and property has become more sensitive owing to legal entities being
taxed based on the cadastral value and such cadastral value of citizens' and entities' land plots
being overstated.

The introduction of a new environmental charge to the state environmental fund is being prepared
(for the disposal of batteries, plastic dishware, lamps, worn home appliances and other consumer
goods);
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Legal entities may now create their own web accounts.
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Tax Law (2)
Taxation of investment projects in the Far East Federal District
1.
Profit Tax (instead of 20%):
 0 – 10 % for 5 years from when the first income
is received from the investment project
 10-18 % during the next five years
 The rate depends on the regional legislation
2.
Conditions:
 Investments in manufacturing of goods in the specified regions
 Amounts of capital investment: RUB 50,000,000 over a period of not more
than tree years or
RUB 500,000,000 over a period of 5 years.
3.
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The law sets certain requirements and limitations.
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Customs law
and foreign trade regulation
 On 29 May 2014, an international treaty was signed by Russia, Belarus and Kazakhstan for the creation of
the Eurasian Economic Union (EAEU), with effect from 1 January 2015.
 The EAEU is the next integration stage of some former Soviet states after the Customs Union (CU)
was established;
 The main purpose of the EAEU is to ensure that not only goods but also capital, services and
workforce may freely circulate across its member states;
 It is planned to draft a new EAEU Customs Code which will supersede the Customs Code of the
Customs Union and will allow for the codification of many international treaties/agreements adopted
when the Customs Union was being created;
 Armenia and Kyrgyzstan have already voiced their intention to join the EAEU by 2015.
 Within the obligations assumed when joining the WTO, Russia is continuously decreasing import duties for
over 5,600 commodity headings in the Customs Tariff. The new rates will come into effect on 1 September
2014.
 The crisis with TIR carnets being used during customs transit still persists.
 Starting from 2013, the EAEU has introduced 4 anti-dumping countervailing duties; in addition, 6 antidumping investigations are now in progress (among other things, in relation to Chinese and Ukrainian goods).
 In December 2013, Russia (as a member of the World Trade Organisation) filed its first claim against the
European Union in relation to a package of energy adjustments when conducting anti-dumping investigations
into Russian companies of the metallurgical and chemical sectors; on 30 April 2014, Russia filed with the
WTO a claim against the Third EU Energy Package which lays down that gas-extracting companies may not
own main pipelines located in the EU.
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Foreign currency legislation (1)
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The ban on funds being directly deposited into residents' foreign accounts has been approved.
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It is prohibited for high-ranking officials and their families to own property abroad.
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On 30 June 2013, tightened criminal liability regulations were enacted (article 193 and article
193.1 of the Russian Criminal Code).
Criminal liability arises if amounts starting from RUB 6 million are not refunded from abroad (the previous figure
was RUB 30 million); instances of outstanding amounts not being refunded during one year are added together.
The new article 193.1 of the Russian Criminal Code punishes the transfer of cash abroad using false documents (a
threshold amount is not set, the amount of RUB 6 million or more is considered to be a large amount, which serves
as a qualifying feature for article 193.1(2)).

Article 24 of the Law on currency regulation has been updated with an obligation on exporters to
receive a portion of the export revenue in Rubles. Now the government should determine the exact
proportion and the countries in the relationship with which this portion may be received.
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Foreign currency legislation (2)
Changes to be expected in 2014:
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Amendments regarding foreign salaries: it is expected that persons who work abroad but
keep their currency residence in Russia, will be allowed to receive salary in their accounts
with foreign banks.
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Amendments regarding factoring: it is expected that residents are allowed to sell the
rights to claim towards residents (for example, from export contracts) with discount,
without being subject to penalties for not receiving part of the revenue. The new lender
will be responsible for repatriating the whole amount.

The limitation period for being held administratively liable under article 15.25 of the
Russian Code of Administrative Offences will increase to 3 years (now, the period is 1
year).

It is expected that the liability for repeat violation of the time frame for drafting records
and financial reports concerning currency transactions will be differentiated. Now, when
a violation is repeated, a severe penalty of RUB 400,000 to RUB 500,000 is applied,
irrespective of the length of the delay; whereas if the violation has been committed for
the first time, the penalties are differentiated.
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Banking and Finance Legislation
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To ensure smooth provision of payment services, a National System of Payment Cards is
being created in Russia.
From 1 July 2016, all domestic payments are to be effected within national payment systems
(international payment systems may be used only for cross-border payments, including those
which are denominated in foreign currency).

All entities providing trade services (or performing work or other services) must ensure that
payments can be made using national payment instruments, along with cash payments (at
the customer's choice). From 1 January 2015, administrative liability will be introduced for
violating this requirement.

The procedure for using electronic means of payment is specified. The concept of the
simplified identification of the client will be liberalised, and the rules for using non-identified
means of payment will be toughened.
From 1 July 2014 new rules of the Civil Code will be enacted which allow banks to open
collateral accounts and escrow accounts.
On 1 July 2014, the new law "On consumer credits (loans)" will be enacted which regulates in
detail the limits of banks’ discretion when they enter into loan agreements with consumers.

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Negotiations with Visa and Mastercard are being held concerning the legislative provisions being eventually alleviated so that international systems
may stay in the Russian market of payment services.
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Medicine and Pharmaceuticals

The Russian Government is close to finishing its consideration of fundamental draft amendments to the
Federal Law "On the circulation of pharmaceuticals" which affect the sphere of state registration of
pharmaceuticals, pre-clinical and clinical research, the circulation of biological and biologically similar
drugs etc.; it is expected that the document will be submitted to the State Duma as early as at the end
of summer;

The government is heading for limiting state procurement of pharmaceuticals and medical products
manufactured abroad in order to promote their localisation in Russia: a draft resolution of the Russian
Government has already been prepared in relation to medical products; however, it it has been sent
back to be revised owing to the comments it received;

The Ministry of Healthcare has developed rules for approving and changing various lists of
pharmaceuticals for different purposes - with a view to procuring them in accordance with their trade
names, drawing up lists of vital and essential medicines, strict record keeping and storage, etc.

In accordance with the amendments to the Federal Law "On the circulation of pharmaceuticals",
pharmaceutical companies which finance professional events for future medical staff will be obliged to
inform the Russian Federal Service for Surveillance in Healthcare about this fact, and observe a
number of restrictions when financing and organising such events.
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Regulation of oil and gas production
and processing

On 1 December 2013, Gazprom’s monopoly to export liquefied natural gas was cancelled. Now,
Rosneft, Zarubezhneft and Novatek (Yamal-SPG) also enjoy such right. The requirements for state
companies' subsidiaries have been eased: their minimum membership interest in the issued
capital has been reduced from 100% to 51% (or 50% plus 1 share) (further to amendments to
the Law on gas export);

On 1 October 2013, a simplified procedure and right was introduced for users of mineral
resources to engage any third parties for creating, operating and using production islands,
facilities and structures, and for performing drilling work on the continental shelf (further to
amendments to the Law on the continental shelf);

On 1 January 2014, tax and customs benefits were introduced, as well as special terms for taxing
offshore projects (further to amendments to the Tax Code and the Law on customs tariffs);

On 1 September 2013, benefits in relation to the mineral extraction tax for deposits of tight oil
(further to amendments to the Tax Code);

On 1 January 2014, the mineral extraction tax rate for oil increased from RUB 470 to RUB 493 for
1 tonne of oil extracted (further to amendments to the Tax Code);

From 1 July 2014 on, a new formula for calculating mineral extraction tax for gas and gas
condensate becomes effective (further to amendments to the Tax Code).
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Telecommunications

Further regulation of Internet activities - the "law on bloggers" has been adopted. Among other
things, this law has:
—
—
—

introduced the term "blogger": the owner of an Internet site and/or page where publicly
available information is posted with more than 3,000 Internet users accessing such site or
page during a day;
defined rights and obligations of bloggers;
imposed an obligation on those who organise the dissemination of information over the
Internet (e.g. social networks) that they must notify the authorised state authority when
they start their activities and they also must store for 6 months the information left by
users.
On 1 May 2014 amendments to legislation came into force which are aimed at combating mobile
fraud:
—
—
the term "content services" was introduced: a category of telecommunication services
which are inseparably connected with mobile communication services and aimed at
increasing their consumer value (acquiring information, participating in voting, games,
etc.); the fees for such services are paid by the subscriber to the telecommunication
services provider with which it has entered into an agreement for telecommunication
services;
the subscriber may request that the telecommunication services provider create a separate
personal account for it specifically for the purpose of paying for content services;
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Telecommunications (2)
—
—


a telecommunication services operator may provide content services to a subscriber only
after the the subscriber's direct consent is obtained to pay for such services;
the telecommunication services provider must provide the subscriber with information
regarding the fees for the services and brief description of the services, as well as
regarding the company providing the service and the account from which the funds will be
debited to pay the fees for such services.
Draft law No. 410633-6 to combat text messaging spam was adopted by the State Duma in the
first reading:
—
bulk or automatic text or other non-voice messages may be sent only provided that the
party which ordered such messages to be sent obtains the subscribers' prior consent;
—
messages may be sent only on the basis of an agreement entered into by the ordering
party with the corresponding telecommunication services provider;
—
at the subscriber's request the telecommunication services provider must stop sending
the messages.
Russian Ministry of Telecommunications is developing new Rules for providing telephone
communication services. These will replace the existing Rules for providing mobile
communication services and Rules for providing fixed communication services.
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Court system

Merger of the Russian Supreme State Commercial ('Arbitration') Court (SSCC) and Russian Supreme
Court (SC) (the SC will 'absorb' the SSCC):
― Anticipated changes in the court operating rules
― Creating a uniform approach to interpreting legislation, including changing approaches to
issues where positions of the SSCC and SC differed.

Creating a uniform procedural code.
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Having rulings of foreign courts
recognised and enforced


The reform of legislation regarding international commercial arbitration (still in progress). Its main
objectives:

reduce the timelines for proceedings up to the writ of execution being obtained with regard
to a certain type of cases;

leave less opportunity for abuse when a court ruling to recognise and enforce an arbitral
award is challenged (there is a risk that this will be done by shortening the cassation stage);

improve the quality of court work in Russia by 'moving' the first instance court with regard
to a certain type of cases (possibly to the level of cassation courts);

arbitrability of corporate disputes provided that the arbitration institution is located in
Russia and special rules are complied with.
Risks associated with having foreign arbitral awards recognised on the basis of reciprocity and
international comity:

in view of sanctions introduced in the US, Canada and the EU, which, among other things,
restrict the right of Russian individuals and legal entities to justice.
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Bankruptcy legislation (1)
The Federal Law 'On insolvency (bankruptcy)' has been amended to include provisions
that regulate the bankruptcy of certain categories of debtors, including with regard to

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

real estate developers (i.e. persons that attract funds and/or
property of those that participate in construction) (amendments introduced by
Federal Law No. 189-FZ dated 2 July 2013);
private pension funds (amendments introduced by Federal Law No. 410-FZ dated 28
December 2013),
specialised financial institutions and mortgage agents
(amendments introduced by Federal Law No. 379-FZ dated 21 December 2013);
agricultural organisations and farming enterprises (amendments
introduced by Federal Law No. 419-FZ dated 28 December 2013).
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Bankruptcy legislation (2)
Federal Law No. 410-FZ dated 28 December 2013 has made amendments to
legislation on bankruptcy, which are aimed at improving guarantees for creditors of
financial organisations, among other things:



insurance of contributions from individual entrepreneurs has been introduced
in a case of a bank going bankrupt;
the right to challenge transactions of financial institutions has been granted to
the provisional administration acting in the period before the bankruptcy case
goes to court;
the status of the state corporation 'Agency for insurance of contributions' has
been reinforced and performance of its additional functions has been ensured.
This agency exercises the powers of a receiver for bankrupt banks that
attracted contributions from individuals.
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Administrative law regulation

The Russian Ministry of Labour and Social Protection has developed guidelines for organisations
to
take
measures
to
prevent
and
fight
corruption
(published
on
the
web
site
http://www.rosmintrud.ru as of 16 April 2014);

The Russian Constitutional Court has restricted the ability to apply administrative punishments
below the lower level for an administrative sanction only in situations when the court is
considering whether to apply an administrative fine of RUB 100,000 or more as a measure of
administrative punishment, which cannot be replaced by a warning;

The State Duma has adopted in the first reading a draft Russian Code of Administrative Court
Proceedings introduced by the Russian President. However, at present a concept is being
developed to draft a unified procedural code;

The drafting of the new version of the Russian Code of Administrative Offences has started (new
version).
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Criminal liability for offences in
the economic sphere (1)

Anticipated abolition of a special procedure for initiating criminal proceedings with regard to tax
offences
On 11 October 2013, Russian President introduced to the State Duma draft law No. 357559-6 'On
repealing certain provisions of pieces of Russian legislation'. This draft law was prepared by the
Investigative Committee of the Russian Federation
Article 140(1.1) of the Criminal Procedure Code (introduced by Federal Law No. 407-FZ dated 6
December 2011) is repealed. According to this article, only those materials that have been sent by
the tax authorities in accordance with legislation on taxes and levies (i.e. based on results of a tax
audit and if there is a decision to hold the taxpayer liable for a tax offence) to determine whether a
criminal case should be initiated may be used as a ground for initiating criminal cases in connection
with tax offences (articles 198 - 199.2 of the Russian Criminal Code).
The right has been restored of law enforcement authorities to conduct inspections of taxpayers and to
initiate criminal cases when there is no decision in place of the tax authority to hold a taxpayer liable
for a tax offence.
This has raised a great concern of the business community
It is the 'longest' draft law in terms of time of all the draft laws submitted by the president. The
authorities have to look for compromises
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Criminal liability for offences in
the economic sphere (2)
Has a compromise been found?
The procedure suggested by the Federal Tax Service for the tax authority to participate in criminal
proceedings is theatrical props that do not affect the procedural decisions made by the
investigative committee:

The tax authority is not obliged to conduct audits based on the materials provided by the
Investigative Committee.

Data provided by the tax authority is of the nature of information or a notification and does
not affect the decision taken by the investigator of the Investigative Committee to initiate a
criminal case
Result: the procedure for initiating criminal cases with regard to tax offences, which was in effect
before, is now fully restored
Forecast: the law enforcement system will put more pressure on business
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Criminal liability for offences in
the economic sphere (3)

Law enforcement authorities will have more powers when conducting pre-investigation checks
Federal Law No. 23-FZ dated 4 March 2013 'On amending articles 62 and 303 of the Russian
Criminal Code and Criminal Procedure Code'
The law enforcement authorities are entitled, when checking a communication informing them
about an offence, before the criminal case is initiated, to take procedural actions, among other
things to obtain clarifications, request and seize documents and items, to schedule and conduct
forensic examinations, to review documents, to examine items and conduct desk audits or
inspections, and to analyse documents and items.
Increased importance of pre-investigation checks: the information received during a preinvestigation check is treated as evidence in the criminal case (earlier this information could be
used only as a ground for deciding to initiate a criminal case)
There is a trend according to which the guilt is established even before the pretrial stage.
The fact that a criminal case is initiated = the guilt of the suspect has been established.
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Criminal liability for offences in
the economic sphere (4)
 The number of individuals convicted for offences in the economic sphere (articles 169 – 199.2 of
the Criminal Code) keeps decreasing
2009 – 11,502 persons convicted
2010 – 8,175 persons convicted
2011 – 6,072 persons convicted
2012 – 4,276 persons convicted
2013 – 3,728 persons convicted
Will this trend change if the special procedure for initiating criminal cases with regard to tax
offences is cancelled?
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Contacts
Moscow
St. Petersburg
Krasnoyarsk
Russia, 123610, Moscow,
12 Krasnopresnenskaya Nab.,
WTC-II, Entrance 7, Floor 15
Tel.: +7 (495) 967-00-07
Fax: +7 (495) 967-00-08
E- mail: [email protected]
Russia, 191015 St. Petersburg,
54 Shpalernaya St.
Golden Shpalernaya Business
Centre
Tel.: +7 (812) 640-60-10
Fax: +7 (812) 640-60-20
E-mail: [email protected]
Russia, 660077, Krasnoyarsk,
Vesna Business Centre
Vesny St. Floor 16
Tel.: +7 (391) 277 -73 -00
Fax: +7 (391) 255-07-07
E-mail: [email protected]
Yuzhno-Sakhalinsk
Vladivostok
Russia, 693000, Yuzhno-Sakhalinsk,
6 Antona Buyukly St.
office 401/2
Tel.: +7 (4242) 726-786/87
Fax: +7 (4242) 726-758
E-mail: [email protected]
690091, Vladivostok, Russia
6-v Sukhanova St., room 1
Tel.: +7 (423) 243-23-00
+7 (423) 243 -30 -33
Fax: +7 (423) 243 -23 -66
E-mail: [email protected]
www.pgplaw.ru
www.russinvecchi.ru
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