– the civil code is just not as commercially viable for
multinational companies as other legal approaches.
Understandably then, the question on every client’s lips
remains: ‘Is change likely?’ As it stands, even Russian-headquartered companies are more likely to structure
deals through international law. The consensus is that
the majority of cross-border deals will continue to be
done ‘offshore’ and channelled through English law for
the foreseeable future, but change is on its way.
‘The government largely agrees with our aims,’ says
Afanasiev. ‘Obviously it is a long term process but hopefully in the not too distant future we will have a more
user-friendly civil code.’
COURTING CHANGE
In addition to its civil code, Russia’s largest law firms are
looking to improve the commerciality of the country’s
approach to dispute resolution and ADR. Among the
drivers for this is the country’s advantageous geographical position between Europe and Asia, which provides a
potentially useful platform for the resolution of cross-border litigation between the two power blocs.
Currently, however, Russia’s courts are widely mistrusted.
‘There has been a lot of improvement in Russia’s
commercial court but there is still a long road ahead of
us. A short cut to justice could be provided by arbitra-
tion and the creation of a commercially viable arbitra-
tion centre in Russia,’ says Afanasiev. ‘Russia used to
have a credible arbitration center in the Soviet era but it
has been destroyed since then.’
Afanasiev outlines the three main requirements that
need to be fulfilled to put Russia on the map for inter-
national arbitration. ‘We need a totally new institution
based on the western model. We need a totally new
selection of arbitrators and we need to change the law
so that the state's power to intervene is limited.’
On the domestic front, it is clear that the demand for
arbitration services is there. Interestingly, in 2009 Russian
parties were involved in 11.5% of cases conducted at the
London Court of International Arbitration, while a further
3.5% concerned other CIS-based parties. The figures
reported by the Arbitration Institute of the Stockholm
Chamber of Commerce (SCC) were even more startling:
In 2009, Russian parties were second only to Swedish
clients as the biggest users of the SCC, accounting for 22
cases – importantly the majority of investor-state disputes
at the SCC concerned CIS countries.
On the international side, the growth of the Russian
economy coupled with recent government proposals to
reinvent Moscow as a global financial centre necessi-
In addition to its civil code, Russia’s largest
law firms are looking to improve the
commerciality of the country’s approach to
dispute resolution and ADR. Among the
drivers for this is the country’s
advantageous geographical position
between Europe and Asia, which provides
a potentially useful platform for the
resolution of cross-border litigation
between the two power blocs.
tates that Russia houses a credible arbitration system to
handle commercial disputes. At the moment, however,
the arbitration regime is tarred with the same brush that
affects many of Russia’s government bodies: Many
international clients fear some degree of local corruption is inevitable. It is a view of Russia that the country’s
leaders are determined to eradicate.
REGULATION STATIONS
‘Corruption has always been an issue in Russia,’ says
Andrey Zelenin, litigation and foreign investment spe-
cialist at Lidings – a Russian law firm that focuses on
advising foreign clients on local issues. ‘This is the case
whether you are a local or a foreign client, whether you
are looking at it on a business or at government level.
So the answer of the Russian government is to increase
attention in this area.’
In May 2011, Russian President Dmitry Medvedev
signed a bill that outlawed foreign bribery and raised
fines for giving or taking bribes to up to 100 times the
original amount of the bribe. The bill aims to crack
down on the country’s corruption culture and push it
closer towards full membership of the Organisation for
Economic Co-operation and Development (OECD).
‘I wouldn’t say that the previous legislation was
weak, there was no problem with the original legisla-
tion,’ Zelenin says. ‘The problem was with the enforce-
ment of the legislation. The changes to the framework
will make the legislation more workable.’
The law follows in the footsteps of the UK’s recently
enacted Bribery Act 2010 and has had the immediate
effect of keeping governance issues at the top of the
Russian corporate agenda.
