Magomed Gasanov

Various types of management responsibility are not myths any longer, they have become a reality. We are glad to introduce our new guide devoted to current trends analysis – “The (non-)Myths of Management and Beneficiaries Responsibility”. We have prepared practical answers to the most frequently asked questions: “what one can be held liable for” and “what shall be done to avoid it”. We hope you find the material useful.

The Inter-Pacific Bar Association Journal ('IPBA') published an issue of «Cross-Border Fraud, Law and Investigations» focusing on cross-border cybercrime with examples from various countries. Maxim Alekseyev, Senior Partner of Tax Practice, and Magomed Gasanov, Partner of Dispute Resolution Practice, prepared the article «International Fraud in Current Russian Realities» on cyber-fraud in current realities with reference to Russia. The experts gave examples of cybercrime cases encountered by Russian companies, told about protective measures, as well as shared some rules and advice on how to avoid becoming a victim of a cybercrime.

Starting from February 2022, the President of Russia has adopted several decrees restricting conclusion and performance of transactions involving foreign entities and individuals. In most cases such transactions now require approval from a special governmental commission. Today the Russian Ministry of Finance published draft law No. 02/04/03-23/00136901 on making amend-ments to the Russian Code of administrative offences that introduce liability for breach of counter-sanctions measures aimed at ensuring of financial stability of the Russian Federation (hereinafter the “Draft law”). Please find below a brief overview of the Draft law. 1. Consequences of violation of the counter-sanction measures in accordance with the Draft law As follows from the Draft law, in case of non-compliance with the counter-sanctions measures (e.g. in case of conclusion of transactions in breach of the counter-sanctions), (1) citizens, (2) individuals car-rying out entrepreneurial activities without establishing a legal entity, and (3) legal entities will be fined in the amount from 20% to 40% of the transaction amount carried out in breach of the measures (failure to conclude transactions in breach of the counter-sanctions measures is proposed to be treated on the same basis as the transaction carried out in non-compliance with the measures). It is also proposed to extend similar liability to officials (including company officials), but to limit it to RUB 30,000. In cases when non-compliance with the counter-sanction measures does not have monetary value (e.g., making a gift), it is proposed to impose an administrative fine on individuals in the amount from RUB 4,000 to RUB 5,000, on officials - in the amount from RUB 40,000 to RUB 50 000, and on legal entities - in the amount from RUB 800,000 to RUB 1,000,000. 2. Persons and entities that cannot be brought to administrative liability in accordance with the Draft law The annotations to the Draft law specify that the administrative liability established by this article shall not apply to Russian residents which are credit institutions and entities engaged in insurance business. The Draft law also provides several exceptions when liability shall not apply. According to the text of the Draft law, if it is adopted, it becomes effective from 01 January 2024. We would like to draw your attention to the fact that this Draft law is a very early version. Between 22 March 2023 and 11 April 2023 it will be under public discussion, with several more stages of consideration ahead, so by the final stage of consideration the Draft law may change significantly. Please kindly let us know if you have any questions about this Draft law and its impact on your business.

In light of the sanctions imposed, ALRUD experts have prepared an Overview of Russian Counter-Sanctions measures that have been taken in response to the actions of unfriendly countries since 24 February 2022. The overview focuses on: Russian counter-sanctions measures Liability Prospects for foreign business Recent trends in litigation and arbitration Assumptions and limitations The review is updated on an ongoing basis. Follow the link to learn more. Download file We hope that the information provided herein will be useful for you. If you or any of your colleagues would like to receive our newsletters via e-mail, please fill in the Subscribe form at the bottom of the page. Practices: Crisis Management, Economic sanctions and Compliance *Note: Please be aware that all information provided in this letter was taken from open sources. Neither ALRUD Law Firm, nor the authors of this letter bear any liability for consequences of any decisions made in reliance upon this information.

On August 25, 2021, international ranking agency IFLR1000 published the results of EMEA rankings that represent IFLR1000's 31st 2021/22 edition. The rating evaluates law firms in different areas. ALRUD law firm is again top ranked for M&A, Banking, Restructuring and Insolvency, Project Finance, PPP, Capital Markets: Debt and Equity, Project development: Mining and Energy. Individual nominations in IFLR1000: Alexander Zharskiy, Partner and Head of the Corporate and M&A Practice, and Anton Dzhuplin, Partner of the Corporate and M&A, Banking and Finance practices are “Highly regarded” in the rating. Sergey Petrachkov, Partner and Head of the Dispute Resolution and Restructuring/Insolvency Practices, and Magomed Gasanov, Partner of Dispute Resolution, Restructuring and Insolvency Practices, and Head of White Collar Crime, Compliance and Investigations are nominated in the category “Rising star partner”. Artur Chernykhov, Associate of the Dispute Resolution and Restructuring and Insolvency Practices, and Ekaterina Mayorova (Rogacheva), Associate of the Banking & Finance Practice, are mentioned as “Rising star” in the rating. Congratulations to the ALRUD team! IFLR 1000 is one of the leading international legal publications. The publication's specialists annually conduct market research around the world, on the basis of which they make a rating of the best practicing lawyers and law firms.

On October 20th, ALRUD Law Firm held a webinar “2020 Opportunities and Challenges: Legal Encyclopedia of Russian Life”. During the webinar, ALRUD experts introduced the main trends of modern legal Russian life, by considering the legal consequences of the current crisis due to the pandemic, and discussing the key points, in legislation and in practice, relating to various fields of law and industry. In addition, the speakers presented typical problems and challenges of commercial contracts. Also, issues related to changes in work regimes and key aspects of HR digitalization were introduced. During the discussion, ALRUD experts described the current legal view on the data protection in relation to the pandemic and evaluated what to expect further on this issue. Speakers mentioned the trend towards greater control over business, both by the regulators and the public. At the same time, the range of impact of the pandemic, on changes in Russian legal proceedings, was detailed. In addition, new realities for leasing, construction and other transactions were identified. Among other things, ALRUD experts touched upon the legal aspect of taxation in Russia. In particular, the speakers specified new tax conditions for IT companies and described changes in some aspects in the Double Tax Treaties with Russia, which will come into force in 2021. All listeners of the webinar received answers to their questions from ALRUD experts: Magomed Hasanov, Partner of Dispute Resolution Practice and Vassily Rudomino, Partner of Antitrust Practice, contributed to the discussions during the webinar. Petrova Anastasia, Senior Consultant of Data Protection and Cybersecurity Practice, Egiazarova Margarita, Senior Consultant of Labor and Employment Practice, Akhundov Teymur, Senior Consultant of Corporate Practice, Boris Ostroukhov, Senior Consultant of Commercial Law Practice, and Stanislav Veselov, Senior Consultant of Real Estate Practice also shared their understanding the modern Russian legislation. Denis Becker, Consultant of Dispute Resolution Practice, and Sergey Artemiev, Consultant of Tax Practice, presented some legal changes in Russia, too. To apply for a video recording (in the English language), please click here.

This is to inform you that the Resolution of the Government of the Russian Federation dated October 01, 2020 No. 1587, has extended the moratorium on bankruptcy of companies, at the request of their credi-tors, until January 07, 2021. In this regard, we would like to draw your attention to the key provisions related to the moratorium regime and its extension. 1. Moratorium – the first results. It is too early to summarize the preliminary results of the first 6 months of the moratorium. Nevertheless, there is already a number of obvious difficulties in the application of moratorium regulation. First, we would like to mention the formality of the codes of Russian National Classifier of Types of Economic Activity (‘OKVED’) as the sole criterion for applying the moratorium to certain legal entities. The actual main activity of the company could be indicated among the additional activities, or not indicated at all. However, the courts take a purely formal approach and refuse to apply the moratorium, if the main OKVED code is not included in the list. In addition, despite the utmost clarity of the law setting forth the rule that applications, accepted by the court at the time the moratorium was introduced, are subject to further consideration in trial, difficulties do arise in practice. In particular, arbitrazh courts often defended the debtors, whose bankruptcy was initiated by its creditors long before the pandemic and adoption of governmental measures to mitigate its consequences. 2. Who is subject to the moratorium extension? After the moratorium extension, a number of the debtors’ categories were excluded from the list: bankruptcy immunity under the creditors’ applications will remain in force only for legal entities and individual entrepreneurs, which operate in one of the areas most affected by the pandemic, as determined by the Government of the Russian Federation. Mainly, these are the industries of retail trade and the provision of services to the population, services in the sphere of culture, leisure and sports, as well as transport activities. To check whether a company, with a certain OKVED code, is included in the list of affected industries, it is enough to type in the TIN / OGRN of the company on the website of the Federal Tax Service of Russia. Therefore, the moratorium regulation will not apply to strategic and systemically-important enterprises. At the same time, in case of initiation of a bankruptcy case for such debtors, the periods of 'depth' (prior to the bankruptcy initiation period, when the transaction is concluded), for challenging transac-tions on special bankruptcy grounds, are extended for the period of the moratorium. According to statistics from the Federal Tax Service of Russia, the moratorium will affect more than 517,000 companies and 1.6 million individual entrepreneurs. 3. What are the consequences of the moratorium extension? We wrote in detail about the consequences of the moratorium introduction in the framework here. The main consequence is the impossibility for creditors to initiate the bankruptcy procedure of the person under moratorium, as well as to enforce debt recovery from him, in any way. Meanwhile, the debtor itself, subject to the moratorium regulation, is still entitled to declare itself bankrupt. In turn, a number of restrictions apply to the companies under moratorium, in particular, the prohibition of any payments under corporate rights (including dividend payments) and the redemption, or acquisition, of outstanding shares by the debtor, as well as the conclusion of set-offs, in violation of the priority provided by the Bankruptcy Law. 4. Is it possible for the company to waive the moratorium? An entity, subject to the moratorium regulation, retains the opportunity to withdraw from the moratorium regime by publishing the relevant information on the website of the Unified Federal Register of Significant Information on Facts of Operation of Subjects of Economic Activities (‘Fedresurs’). Please kindly note that a previously-published withdrawal from moratorium regime is no longer valid, since the date of the moratorium extension. For this reason, the notice on withdrawal shall be republished. According to the Fedresurs, at the end of August 2020, there were about 750 companies notifying their withdrawal (out of 3.5 million under the moratorium regime). 5. What opportunities does the moratorium offer for companies? In addition to the obvious advantage of protection against creditors' claims, one of the main amendments of Art. 9.1 of the Bankruptcy Law is the possibility for a debtor, under the moratorium regime, to obtain a judicial installment of debts (sudebnaya rassrochka). In fact, a judicial installment plan is a prototype of a rehabilitation procedure (i.e., aimed at restoring solvency), which has common features with a settlement agreement: the debtor secures the opportunity to pay off its debts, retains property, and its management stays empowered. The key difference (and at the same time, the advantage) of the judicial installment plan, from the settlement agreement, is that its enforcement does not require the creditors’ consent, but only the court's granting of the application. 6. What is a judicial installment plan? The judicial installment plan provides, for the debtor, the opportunity to pay off its creditors according to its obligations that are due at the time the installment plan is introduced, or will “mature” within a year after its introduction, in equal monthly installments. The default installment period constitutes 1 year, but could be increased to 2 years, and for strategic enterprises - to 3 years, if the debtor's revenue has decreased by more than 50%. Still, in this case the debtor is obliged to provide security in the form of a bank guarantee, or other collateral to unsecured creditors. Based on this, we tend to consider that, in practice, it will be difficult to obtain an installment plan for more than a year. 7. How to obtain a court installment plan? A debtor, under the moratorium regime, has the right to file, within a bankruptcy case, an application on a judicial installment plan, subject to the following conditions: {{A)}} The debtor's income has fallen by more than 20%, compared to the income for the same period of the previous calendar year. Since the Bankruptcy Law does not specify what is meant by a 'similar period', in practice it is advisable to define such periods by analogy with the periods of payment of income tax. {{B)}} Initiation by the debtor of the bankruptcy proceeding during the moratorium period, provided that, prior to the introduction of the moratorium, no one filed an application for the debtor’s bankruptcy. {{C)}} The introduction of the supervision procedure (initial bankruptcy procedure) and holding of the first meeting of the debtor's creditors, at which no decision was made to approve agreement. In this regard, in practice, obtaining an installment plan is possible only after 5-6 months from the date of the introduction of the observation proceedings, against the debtor. {{D)}} The debtor must pay off debts to citizens for damage to life, or health, and for the payment of severance pay and remuneration of employees. Considering the similarity of the legal regulation of court installments and the settlement agreement in bankruptcy, we assume that the subsequent court practice will highly likely elaborate additional criteria necessary for the application of this procedure. For example, (a) the economic feasibility of the rehabilitation plan or (b) the absence of a deterioration in the creditors’ position, in comparison with the situation if the debtor was in bankruptcy proceedings. 8. What rights do creditors have during the installment plan period? Creditors, whose claims amount to more than 10% of the total amount of the register of creditors' claims, have the right of access to information about the debtor's property and obligations, as well as the right to receive a quarterly report on the execution of the court installment plan. In case of non-fulfillment of the terms of the court installment plan, creditors have the right to submit an application for the cancellation of the installment plan and the resumption of bankruptcy proceedings. We hope that the information provided herein will be useful for you. If you or any of your colleagues would like to receive our newsletters via e-mail, please fill in the Subscribe form at the bottom of the page. Практика: Dispute Resolution Practice, Restructuring and Insolvency Practice Note: Please be aware that all information provided in this letter was taken from open sources. Neither ALRUD Law Firm, nor the authors of this letter bear any liability for consequences of any decisions made in reliance upon this information.

ALRUD has once again taken high positions in M&A, Banking, Capital Markets, Restructuring and Insolvency, Project Finance and Project Development (Mining, Power, PPP/PFI) in the international ranking of law firms IFLR1000 of the International Financial Law Review. ALRUD has improved its results and moved up in Restructuring and Insolvency and Project Development: Mining. Partners Alexander Zharskiy (‘Highly Regarded’ in M&A, Banking, Restructuring and Insolvency), Anton Dzhuplin (‘Highly Regarded’ in M&A, Banking, Restructuring and Insolvency, Pharmaceuticals and Life Sciences, Social Infrastructure), as well as Associate Ekaterina Mayorova (Rogacheva) (‘Rising Star’ in Banking) are recommended in the individual rankings. The IFLR1000 is the guide to the world's leading financial and corporate law firms and lawyers. The IFLR1000 has been producing legal market intelligence since 1990 and remains the only international legal directory dedicated to ranking law firms and lawyers, on the basis of financial and corporate transactional work. For more information click here.

On 19 June 2020, Federal Law No. 171-FZ dated 08 June 2020 (“Law”) introducing some critical amendments aimed at protection of the Russian sanctioned entities will enter into force. The amendments were made to the Russian Arbitrazh Procedure Code, which governs litigation in state commercial courts. These might be extremely important for conducting business with Russian entities placed under foreign sanctions. Please see a brief outline of the recent changes below: 1. Key changes 1.1 Default exclusive jurisdiction of Russian arbitrazh courts In accordance with this novel legislation, as a default rule, Russian courts now have exclusive jurisdiction over the following disputes: Disputes involving entities under the sanctions of foreign states, state association and institutions (not only the USA or EU sanctions, but sanctions of any country); Disputes between Russian entities, between Russian and foreign entities, or between foreign entities, the grounds of which are the sanctions against Russian citizens or organizations. This default rule does not apply if there is (1) an international treaty or (2) prorogation agreement in favour of foreign court or arbitration agreement with seat of arbitration outside the territory of the Russian Federation between the parties. Taking into account the underlying purpose of this new piece of legislation, it appears that in fact this reservation is aimed to serve as a legitimate cover for the actual transfer of the resolution of all disputes involving Russian sanctioned entities to Russian courts. 1.2 New grounds for unenforceability of prorogation and arbitration agreements The Law stipulates that if a prorogation or an arbitration agreement is “unenforceable” due to the impact of the anti-Russian sanctions barring a Russian sanctioned person from access to justice, Russian courts will have jurisdiction over the dispute. The Law does not define “barriers to access to justice”, but due to the recent public deliberations of the Law by its authors one can assume that Russian courts may consider as such barriers any difficulties for Russian persons in paying arbitration charges or state fees, in hiring a lawyer or any other administrative or factual difficulties related to participation in proceedings. Moreover, we cannot exclude that some Russian courts will consider the mere application of sanctions provisions that prohibit granting a Russian entity’s claim by a foreign court or arbitral tribunal (so-called non-claim and non-liability clauses) as barriers to access to justice for Russian sanctioned persons. For example, recently, even before the adoption of the Law in the Instar Logistic v Nabors Drilling Innovation case (No. A40-149566/2019) Russian courts have found their jurisdiction due to the conclusion that the sole fact of sanctions imposition constitutes barriers for the Russian sanctioned company’s access to justice “since under the current US sanctions regime the Russian sanctioned company’s ability to protect its rights and economic interests is significantly limited.” Moreover, in this case Russian courts have changed the choice-of-law agreement between the parties, so that now Russian law governs the dispute instead of English law. One should also bear in mind that according to the well-known Russian Constitutional Court position compliance by Russian and foreign entities with the anti-Russian sanctions can be considered as bad faith conduct violating the public policy of the Russian Federation1. This might be the other ground for Russian courts not to apply the anti-Russian sanctions provisions, which may limit or exclude a foreign counterparty’s liability, in order to protect Russian sanctioned persons. 1.3 Anti-suit injunctions for Russian sanctioned persons The Law also introduces a brand new injunction for Russian law, namely a Russian analogy of anti-suit injunctions prohibiting commencement or continuation of foreign court or arbitration proceedings, if Russian courts have jurisdiction over the dispute. Violation of these injunctions will be punished by a penalty in favor of the other party up to the amount of the claim. Additionally, the Law also stipulates a kind of estoppel for the parties, who did not object to a foreign court’s or arbitral tribunal’s jurisdiction, providing that in such a case the mentioned party will not be able to object on this basis to the recognition and enforcement of a foreign court decision or an arbitral award in the territory of the Russian Federation. 2. Legal consequences Thus, commercial relations with Russian sanctioned persons can now be affected by the new Law in the following way: Unenforceability in the territory of the Russian Federation of a foreign court order or an arbitral award issued in contradiction with Russian court’s view on its jurisdiction over the dispute; High likelihood of declaring prorogation or arbitration agreements with Russian sanctioned persons unenforceable by Russian courts due to the mere existence of the sanctions; Non-application by Russian courts of the anti-Russian sanctions provisions via public policy exception or via change of choice-of-law agreement that can automatically lead to a foreign party loss of the case; Foreclosure of assets in the territory of the Russian Federation in case of enforcement of Russian court decision or violation of anti-suit injunctions imposed by Russian courts. 3. Problematic issues The Law definitely provokes many complicated legal issues. First of all, the Law does not provide for any provisions regarding its operation in time. Therefore, the question of whether it will apply to prorogation or arbitration agreements concluded before or after its effective date remains open and potentially very controversial. The absence of provisions regarding (1) the possibility of transferring a dispute to the Russian domestic arbitration, (2) the procedure for the recovery of a penalty for violation of the Russian anti-suit injunctions also constitutes a legal gap that will require a thorough legal analysis of these issues. 4. Possible solutions Despite the unlikeliness of such Russian judicial acts’ recognition and enforcement abroad and, therefore security of assets outside Russia, it is advisable to take additional measures to proactively protect business interests in commercial relationships with Russian entities that are or can be included in any sanctions lists, including: Drafting of sanction clauses with mechanisms to settle potential disputes without the need to apply to any forum. Selection of a seat of arbitration in the territory of neutral countries that have not imposed the anti-Russian sanctions. This can help avoiding the administrative restrictions that EU or US arbitration institutes shall comply with. This could potentially lower the risks of triggering Russian courts to recognize an arbitration agreement as unenforceable due to such minor administrative barriers. Application of enhanced methods of obligations securing, which could help to enforce obligation without applying to the jurisdictional bodies or to enforce a potential non-Russian court order or arbitral award (e.g. using escrow accounts with banks outside the Russian Federation, or other collateral outside Russia, etc.). 1 See Decision of the Constitutional Court of the Russian Federation N 8-P dated February 13, 2018. We hope that the information provided herein will be useful for you. If you or any of your colleagues would like to receive our newsletters via e-mail, please fill in the 'Subscribe' form at the bottom of the page. Practice: Dispute Resolution Note: Please be aware that all information provided in this letter was taken from open sources. Neither ALRUD Law Firm, nor the author of this letter bear any liability for consequences of any decisions made in reliance upon this information.

Best Lawyers – one of the most authoritative international legal ratings – has published the results of the Russian legal market research 2021. The rating is based on the estimates of internationally recognized market players. This is not the first time that ALRUD has taken a leading position in key practices, and this year our experts have managed to expand their presence in the rating. Maxim Alekseyev, Senior Partner, is the winner of the Lawyer of the Year 2021 rating in the field of business administrative regulation. For the second year in a row, the labor practice team brings ALRUD the title of the Law Firm of the Year in Russia 2021. This year, Irina Anyukhina, Partner and Head of the Labor practice, becomes the winner of the Lawyer of the Year 2021 in the field of Labor law. Best Lawyers recommends ALRUD experts in the following fields of law: Arbitration and Mediation - Vassily Rudomino, Senior Partner, Magomed Gasanov and Sergey Petrachkov, Partners and Dmitry Kuptsov, Senior Associate Banking and Finance Law - Alexander Rymko, Partner Capital Markets Law - Vassily Rudomino, Senior Partner and Alexander Zharskiy, Partner Competition / Antitrust Law - Vassily Rudomino, Senior Partner, German Zakharov, Partner, Ruslana Karimova and Ksenia Tarkhova, Senior Associates, Roman Vedernikov, Associate Construction Law - Irina Anyukhina, Partner and Stanislav Veselov, Senior Associate Corporate Law - Maxim Alekseyev and Vassily Rudomino, Senior Partners, Alexander Zharskiy, Partner, Olga Pimanova and Oleg Ezhov, Of Counsels, Sergey Khanaev, Senior Associate, Dmitry Pashkov and Alexander Kleschev, Associates Corporate governance and Compliance - Alla Azmukhanova, Associate Criminal Defense - Alexander Mikhailov, Associate Information Technology Law - Irina Anyukhina, Maria Ostashenko and Anton Dzhuplin, Partners and Ksenia Erokhina, Senior Associate Insolvency and Reorganization Law - Vassily Rudomino, Senior Partner, Sergey Petrachkov and Alexander Zharskiy, Partners Intellectual Property Law - Irina Anyukhina and Maria Ostashenko, Partners and Ilya Khodakov, Associate Investment - Vassily Rudomino, Senior Partner Labor and Employment Law - Vassily Rudomino, Senior Partner, Irina Anyukhina, Partner, Olga Pimanova, Of Counsel, Margarita Egiazarova and Anastasia Petrova, Senior Associates Litigation - Vassily Rudomino, Senior Partner, Magomed Gasanov and Sergey Petrachkov, Partners, Boris Ostroukhov, Senior Associate, Denis Bekker, Associate Media Law - Irina Anyukhina and Maria Ostashenko, Partners Mergers and Acquisitions Law - Vassily Rudomino and Maxim Alekseyev, Senior Partners, Alexander Zharskiy and Andrey Zharskiy, Partners, Timur Akhundov, Senior Associate Privacy and Data Security Law - Irina Anyukhina, Partner Real Estate Law - Irina Anyukhina and Alexander Zharskiy, Partners and Aleksey Kalinkin, Associate Regulatory Practice - Maxim Alekseyev, Senior Partner and Dina Kravchenko, Associate Tax Law - Maxim Alekseyev, Senior Partner, Elena Novikova, Of Counsel, Sergey Artemiev, Associate Technology Law - Anton Dzhuplin, Partner Telecommunications Law - Irina Anyukhina and Maria Ostashenko, Partners Trusts and Estates - Kira Egorova, Of Counsel, Ekaterina Vasina, Senior Associate