Russia: Legal News
2011
Sergey Pepeliaev, Managing Partner
22-24 June 2011
Almaty
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Administrative Sanctions for Violating Trade Law of
28 December 2009
• The sanctions are brought in by Federal Law No. 411-FZ of 28 December 2010;
• Three dedicated articles have been included in the Code of Administrative
Offences: 14.40, 14.41 and 14.42;
• The penalty for an administrative offence can be up to:
- RUB 5,000,000 for legal entities;
- RUB 50,000 for individuals;
•Russian antimonopoly authorities have been given powers to draft statements on
administrative offences and examine such offences.
Result – this category of cases has considerably expanded in number
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Liability for Economic Crimes
Sources: Federal Laws of the Russian Federation No. 383-FZ dated 29
December 2009 and No. 60-FZ dated 7 April 2010
• Measures of restraint no longer include custody, more opportunities have been
provided for release on bail;
• The ‘prejudgment’ concept has been modified;
• The threshold for financial operations, damage, income and arrears to be
classified as crimes have been increased between fourfold and sixfold;
• The concept of ‘active repentance’ has been introduced for tax crimes;
• Violations of license terms and requirements have been decriminalised;
• So-called ‘pseudo-entrepreneurship’ is no longer classed as a crime;
• What constitutes the crime of ‘money laundering’ has been revised.
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Liability for Economic Crimes
Source: Federal Law of the Russian Federation No. 97-FZ dated 4 May 2011
• There are more stringent penalties for legal entities or persons on their behalf who
pay, offer or promise bribes (fines can be up to 100 times the amount of the bribe);
Elements of crimes classed as ‘accepting a bribe’ or ‘offering a bribe’ have been
revised: list of crime committers expanded, provision made for additional classification
criteria (such as material amount and especially large amount of the crime);
• A concept of ‘brokering bribery’ has been introduced as a new element of crime;
• Criminal liability: fines between 25 and 100 times the amount of the bribe, or
imprisonment and a fine equal to the bribe.
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Antimonopoly Legislation
• The third set of antimonopoly amendments:
- clarifying elements of offences that involve concerted practices and unlawful
coordination;
- developing criteria of comparable markets;
- making provisions for legalising inter-group transactions by sending notices;
- adopting a fixed penalty in place of a turnover penalty;
- decriminalising offences (concerted practices, vertical agreements).
• Resolution No. 1 10/54-10 of the Federal Arbitration Court dated 22 December 2010
in the ZAO SUEK case.
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Court System
• Expanding the use of electronic communications in courts;
• New procedure to award compensation when a person’s rights to judicial
proceedings within a reasonable timeframe, or to enforce a court judgment within
a reasonable timeframe, have been infringed.
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Labour, Employment and Migration Laws
• Starting from July 2010 court rulings on employment disputes must be published;
• A ban may be imposed on ‘borrowed labour’ (the draft law was adopted in the first
reading in May 2011);
• Tougher criminal sanctions have been introduced for failure to pay out salary (in full
or in part) or other disbursements to employees;
• The new law on mediation has been in force since January 2011 (including
employment disputes);
• The procedure for filing notices that ex-civil servants have been employed has come
into effect (article 164.1 of the Labour Code);
• The need to amend labour and employment legislation is being widely discussed;
• The new procedure for hiring highly-qualified foreign professionals is operating
smoothly – work permits and visas are issued for a period of up to 3 years, the
timelines are observed.
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Anticipated Events in Customs Law
 1 July 2011
Customs Union operates on a full scale
• cancelling customs control on the border
between Russia and Kazakhstan
 1 January 2012
Common Economic Space starts functioning
• free circulation of products, services, capital
and human resources
 1 January 2013
Agreement on Eurasian Economic Union (EEU):
• codifying all agreements on the common
economic space and customs union
• getting the common market functioning
• developing common economic policy
• moving towards a currency union?
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Customs Union and World Trade Organisation
Agreement on the Functioning of the Customs Union in the
Multilateral Trading System
(19 May 2011)
1. From the date when any of the Member States joins the WTO:
• the provisions of the WTO Agreement become a part of the Customs Union’s
legal system;
• the rates of the Customs Union’s Unified Customs Tariff must not exceed the
import tariff rates under the schedule of concessions and obligations to grant
access to a Member State’s commodity market;
2. A Member State that is not a member of the WTO may elect not to abide by WTO
Agreement, including in respect of obligations that have become part of the
Customs Union’s legal system;
3. Terms and provisions of the WTO Agreement, including obligations assumed by
the parties as pre-requisites for joining the WTO have priority over the relevant
provisions of international treaties signed within the Customs Union, as well as
decisions issued by the Customs Union’s bodies.
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Corporate Legislation
• Civil legislation is being actively reformed;
• Interest and shares in the issued capital may now be paid with rights of
claim against the company;
• Procedure for paying dividends on shares and distributing the profits of
limited liability companies has been modified;
• Procedure has been amended for maintaining registers of stockholders;
• Judicial practice on shareholders’ agreements and agreements between
members is actively being developed.
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Land Law and Real Estate (1)
• Agricultural land circulation has been improved. Among other things:
• a procedure was developed to withdraw land plots which are used at variance
with their purpose or misallocated;
• a procedure was set up for selling and purchasing interest in jointly-owned land
plots;
• The Federal Law “On appraisal activities in the Russian Federation” has been
amended to create the legal terms for mass cadastral valuations and a basis for taxing
real estate effectively in the future;
A list of border areas has been approved where land plots may not be owned by
foreign nationals, persons without citizenship or foreign legal entities.
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Land Law and Real Estate (2)
•
Notices have been published on how to apply legislation in terms of how ownership
arises, is terminated and protected, as well as other rights in rem. Among other things,
the notices clarify how ownership arises by prescription*
• Clarifications have been issued on how to use legislation in lawsuits involving
unauthorised construction. Among other things, the clarifications provide an extensive
list of the persons entitled to demand that facilities built without authorisation be
demolished**
• Legal issues relating to mortgages and levying execution on mortgaged property
have been settled ***
* See Resolution No. 10 of the Plenum of the Supreme Court and Resolution No. 22 of the Plenum of the Supreme
Arbitration Court dated 29 April 2010 “On certain issues of court practice arising in disputes over ownership and
other rights in rem”.
** See Information Letter No. 143 of the Presidium of the Supreme Arbitration Court dated 9 December 2010
“Overview of arbitration courts’ practice in applying article 222 of the Russian Civil Code”
*** Resolution No. 10 of the Plenum of the Russian Supreme Arbitration Court dated 17 February 2011 “On certain
issues of applying pledge legislation”.
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Currency Legislation
•
More liberal currency rules:
-
the upper limit for a foreign currency transaction which may be signed without
issuing a so-called ‘passport’ has been raised to USD 50,000 (from USD 5,000),
-
the timeframe for filing identification certificates on currency transactions and
other documents has been increased from 7 to 15 days.
•
Three draft laws have been produced to simplify the supervisory functions:
-
a ban has been introduced on submitting documents more than once,
-
electronic document management systems will be used,
-
the extent of liability has become less stringent and more proportionate.
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Tax Law
• Draft laws on transfer pricing and consolidated groups of taxpayers: is this the
light at the end of the tunnel?
• Accelerated VAT refund starting from 1 January 2011;
• De-codification of taxes, i.e. emergence of taxes which are not provided for in the
Tax Code;
• Signing the Protocol that amends the Russia-Cyprus tax treaty;
• Adopting electronic VAT-invoices and expanding electronic document
management within the tax authorities and arbitration courts;
• Outlawing the retroactive effect of clarifications issued by higher-instance courts;
• Reduction in the number of tax disputes in courts.
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Bankruptcy Legislation
• Court-appointed administrators may act as private practitioners, but are no longer
obliged to register as individual entrepreneurs.
• The practice of applying Chapter III.1 (“Challenging a debtor’s transactions”) of the
Federal Arbitration Law “On insolvency (bankruptcy)” has been expanded and
became more detailed.
• The priority for compulsory pension insurance contributions has been changed.
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IP Legislation (1)
 A new draft of the Civil Code has been presented for discussion. The draft Civil Code
amends, among other things, Section 7, and in particular:
• the general provisions regulating the rights to the results of intellectual activity and
means of individualisation;
• the regulations on using intellectual property via the Internet;
• the copyright and related rights, as well as rules relating to patent rights.
 President Dmitry Medvedev has signed an order to establish the Federal
Service for Intellectual Property
The Federal Service for Intellectual Property has been vested with the powers of
Rospatent and of the Federal Agency for Legal Protection of Results of Intellectual
Activity with Military, Special and Dual Purposes.
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IP Legislation (2)
 A number of memoranda have been signed and draft programs are being further
developed within the scope of the program titled Patent Prosecution Highway (“PPH”).
Spain signed a Memorandum on 28 March 2011, and Finland signed one on 8 December
2010).
PPH pilot program was launched on 1 March 2011.
 The prospects of a dedicated court for copyright issues are being widely discussed.
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Administrative Law Regulations
• New licensing rules for businesses. The licensing rules are established by the Government,
but they may not stipulate that general statutory requirements, as well as regulations
as to the types and volume of products, work and services, must be complied with.
However, there are exceptions concerning a whole range of activities;
• State inspections shall be governed by general provisions of federal legislation, but
provision has been made for a number of exceptions.
• A new law on the police has been adopted;
• New Resolution of the Government has been adopted to establish administrative
rules for federal executive bodies. The Resolution sets out detailed regulations
on the inspctions of companies and services provided by state bodies to businesses.
All information is available on a dedicated Internet portal.
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Legal Services Market
The Russian Ministry of Justice is making further steps
towards:
• making the legal profession:
- more regulated;
- centralised;
• reforming advocacy legislation;
• evolutionary development and self-regulation;
• establishing an open market.
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Contacts
12, Krasnopresnenskaya
Nab., Entrance 7, World
Trade Center-II,
Moscow, 123610, Russia
Т: + 7 (495) 967-00-07
F: +7 (495) 967-00-00
E- mail: [email protected]
54, Shpalernaya St.,
Golden Shpalernaya Business Center
St. Petersburg, 191015, Russia
Т: +7 (812) 33-07-17
F: +7 (812) 333-07-16
E-mail: [email protected]
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