The recent trends in the Russian legal services market reflect the dynamics and pace of business development in the country as a whole. The mass withdrawal of foreign companies and the increased sanction pressure on the Russian economy have created new challenges for both businesses and lawyers. At TEAM, we have successfully adapted to the new circumstances and client requests.
Our International Business Practice keeps consulting on and building international supply and payment chains. Until recently, such projects were similar to Minesweeper game. Schemes that worked yesterday pretty well are no longer working a month later — and the process of searching for new legal solutions has never stopped.
A standard option is the accreditation of representative offices of foreign companies in Russia. Currently, we are actively registering such representative offices, particularly for companies from China. Last year alone, there were about a dozen such projects, in particular, we accompanied the turnkey process of opening a branch for one of the largest Chinese textile manufacturers. We also provide ongoing consultation on corporate, customs and money transfer issues to Cainiao Supply Chain Management (RU), which handles over 90% of AliExpress shipments.
For TEAM, such projects brought a great opportunity to establish business relations with the Shanghai office of the Chinese law firm Yingke (which employs 20,000 consultants) and several other companies, allowing us to provide services in China.
From the perspective of growing demand for legal services to the Global East, in November 2024 TEAM organized a legal session at the Russian-Chinese Business Forum Rostki in Kazan. At the Forum, our lawyers and guest speakers discussed enforcement of international arbitration awards under Russian-Chinese disputes in both countries. TEAM also signed a cooperation agreement with the Chinese Business Center in St. Petersburg, which allows us providing comprehensive support to Chinese- Russian business relations beyond the mere legal services sector.
Commercial arbitration should be specifically noted. In our practice, over the past two years the number of such cases, including domestic disputes, has increased significantly. Trust in this institution is clearly growing, and the reasons are numerous, including the tax reform that have led to a significant grow in fees for cases brought before federal courts and the possibility to keep disputes confidential when settling them in non-state arbitration. As a result, a lot of companies now include arbitration clauses in their contracts.
Thus, last year we represented Russoprom Trading House in a dispute on illegal invocation of a bank guarantee against a subsidiary of Rosatom State Corporation held by the International Commercial Arbitration Court (Moscow). The arbitration award in favor of our client allowed them to receive a multi-million compensation from the defendant. A similar result in a state commercial court would be harder to achieve, taking into account that the defendant is a state-owned corporation.
Lawsuits following exit of foreign businesses from Russia have become another trend. In particular, we successfully defended the former CEO of a Finnish paint plant in a case brought by the new owners for losses allegedly caused to the company as a result of fulfilment by the former CEO, before the closing of the deal, of instructions of the original owner.
Another notable case is related to sale of a major St. Petersburg shopping Centre Pearl Plaza, where claims were made for damages caused by bad faith exit from negotiations. The claim exceeded RUB 240 mln and, besides, interim measures, that could have paralyzed the shopping center's operations while the case is being heard, were imposed. TEAM represented the original co-owner of the shopping center, and, in cooperation with consultants of leading Russian and international law firms, managed to close the case through settlement.
What to expect in 2025? It seems that the number of court and bankruptcy cases would be increasing, while such disputes would arise both from M&A deals and delayed deliveries of goods or inability to comply with warranty obligations. The relevant court practice is already well-established and nothing out of ordinary should emerge here.
Tax and customs disputes would be coming to the forefront as well – their number has already increased significantly in 2024. Tax disputes would be in the spotlight due to the ongoing tax reform and increased monitoring over business fragmentation — TEAM's Tax Practice has already handled such cases in 2024.
All circumstances taken together, a need in detailed analysis of project related to business structuring, tax optimization as well as a close attention to payment schemes involving foreign counterparties become crucial.
Another critical point is that a three-year period from the moment when a lot of foreign brands cease to operate in Russia is or will be expiring soon. This would predictably entail court cases for cancellation of trademarks due to their non-use. TEAM have relevant experience in handling such disputes, and we expect an increase in demand for the service.