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SPIC 1.0. Investors are given back the proven mechanism and the right to extend contracts due to the sanctions

On 14 March 2022, a law came into force reviving the SPIC 1.0 mechanism for new investment projects, and allowing extending the terms of contracts already concluded due to foreign sanctions. The amendments were developed by the Government as part of a package of anti-crisis measures.

As part of the development of this law, the Government has also clarified the rules for concluding SPIC 1.0. The updated rules came into effect on 1 April 2022.

Recognition And Enforcement Of Foreign Arbitral Awards In Russia – Remarkable Cases Of 2019-2020

Despite a large number of disputes involving Russian entities that are complicated by the presence of a foreign party, the practice of recognizing and enforcing international commercial arbitration decisions in Russia is not always consistent. This is especially true for cases where the other party (against whom a decision is rendered) alleges that the enforcement of the decision is in contradiction to public policy. This argument is the most common defence strategy, although the least predictable in terms of the court’s findings.

Readers are offered an overview of a number of interesting court cases for 2019–2020, which contain conclusions that are significant for practice formation.

Russia to initiate termination of double tax treaty with Cyprus

In early April, Russia sent a letter offering to amend the text of the agreement on avoidance of double taxation (DTT) by increasing tax rates in terms of taxable dividends and interest payments to Cyprus. However, after almost four months of negotiations, the parties failed to reach a consensus.

According to the information published by the Russian Ministry of Finance, with due regard to close economic and historical ties between the two states, the Russian party formulated options for a compromise and offered to swiftly hold (the ongoing week) face-to-face negotiations in Cyprus but received a refusal. Consequently, Russia’s Ministry of Finance announced that it would initiate denunciation of the DTT.

Antitrust Compliance Law Adopted

On March 1, 2020, the President of the Russian Federation signed a law amending the Law on the Protection of Competition and at the level of federal legislation defines the concept of antitrust compliance and the basic requirements for it.

Differentiation of liability for anti-competitive agreements

Federal Law No. 135-FZ dated July 26th, 2006 and entitled “On protecting competition” established several types of anti-competitive agreements that are prohibited (cartels, vertical agreements, and other agreements). These varieties differ significantly from each other in terms of the degree of their negative impact on competition and the threat they present for the public. However, until just now the measures for administrative enforcement that could be taken with people who signed any one of these anti-competitive agreements did not differ from each other in any way.

Long-term procurement arrangements in the pharmaceutical sector: new options or additional risks?

From 1 September 2016, investors under special investment contracts (SPICs), as well as regional investors, may benefit from additional preferences during the procurement of various types of product for state and municipal needs. Whether these preferences will create long-term procurement options in the pharmaceutical sector is one of the key questions for pharmaceutical companies planning to invest in localisation in Russia.

Tightening of administrative responsibility for violation of legislation on the contract system

Before its spring session ended, the State Duma of the Russian Federation adopted Federal Law dated 3 July 2016 No. 318-FZ “On Amendments to the RF Administrative Offences Code”. This law increased the number of actions that can be considered as administrative offenses, involving the violation of procurement procedures, as established by the legislation on the contract system, as well as the tightening of administrative responsibility for specific violations.

Legal or contractual penalty – dispute resolved by the Supreme Court of the Russian Federation

The Civil Code establishes two types of penalties for untimely performance of obligations – contractual and legal.In practice, there appear disputes related to the different interpretations of the legality of reducing the size of legal penalties, agreed upon by parties to an agreement. According to one position, such a reduction is possible because of the discretionary nature of civil legislation. The second opinion holds that the legal penalty is a minimum amount due for the delay in the fulfilment of obligation, and therefore its reduction is not possible. Recently, the Supreme Court has eliminated the legal uncertainty in this matter when considering a specific dispute.

The Supreme Court is against illegal tax control over price levels

On 11 April 2016, the Judicial Chamber on Economic Disputes of the Supreme Court issued a ruling on Case No. A63-11506/14, and with that, sided with the taxpayer in a dispute with the tax authorities. The Supreme Court of the Russian Federation stated that the territorial tax authorities, within cameral and field tax audits, are not allowed to control the market price levels in transactions between related parties.

Retail Generation: guaranteeing supplier should pay for electricity not demanded by buyers

On the right of retail electric power producers to recover from guaranteeing suppliers of unjust enrichment in the form of revenues received by the network from “surplus” electricity.