Welcome to the Russia/Eurasia Committee Newsletter

Our Newsletter brings you timely, in-depth articles to complement the news we deliver to

you in our biweekly Eurasian Law Breaking News.

Our Newsletter counts on you for its content. We publish it whenever we have articles to publish. This way, your contributions reach our readers quickly. The more you contribute, the more frequently we publish. And we welcome timely articles that have been published elsewhere.

This issue features these articles:

The Overlap between Intellectual Property Laws and Competition Laws in the Russian Federation by Anne Wright Fiero. Anne Wright Fiero in the principal member of The Fiero Group, a research-based organization focused on assisting companies and individuals in developing and protecting their intellectual property globally. Anne is a graduate of the University of Chicago Law School, and obtained her degree from Duke University with high honors in Russian and Political Science. She has focused on the areas of intellectual property and competition law for almost twenty years. Anne also helps edit the Russian/Eurasian Committee’s Eurasian Law Breaking News. Please feel free to contact her at: afiero@mchsi.com.

Update on the Personal Data Protection Regime in Ukraine by Irina Paliashvili and Olena Zolotarevska. Irina Paliashvili is the President and Senior Counsel of the Washington, D.C.-based RULG-Ukrainian Legal Group, P.A. Irina graduated with high honors form the Kiev State University Law School, where she also earned a Ph.D. in Private International Law. She also holds an LL.M. in International and Comparative Law from the George Washington University School of Law. Irina founded the CIS Local Counsel Forum, an informal network of managing and senior partners of leading business law firms in the CIS economic region. She currently holds the rotating chair of the CIS Leading Counsel Network. Irina is a Vice-Chair of the Russia/Eurasia Committee. Please feel free to contact her at: irinap@rulg.com.

Olena Zolotarevska is a Senior Counsel of the RULG-Ukrainian Legal Group, P.A. She graduated with honors in Private International Law from Kyiv National Taras Shevchenko University, Institute of International Relations. She co-founded and practices pro bono at the Law Clinic in Kyiv. At the RULG-Ukrainian Legal Group, she focuses her practice on commercial law and in private finance and the energy sector. Her email address is olena.zolotarevska@ulg.kiev.ua.

Overview of Ukrainian Deregulation Measures, also written by Irina Paliashvili, Yaroslav Shkovrets, and Olena Zolotarevska. Yaroslav Shkovets is a Counsel at the RULG-Ukrainian Legal Group, P.A. He graduated from Kyiv National Taras Shevchenko University with a Master Degree in Law and a Master Degree in Translation with high honors. His practice includes corporate, labor, and real estate law. His email address is yaroslav.shkvorets@ulg.kiev.ua.

The RULG-Ukrainian Legal Group’s contributions to this Newsletter were originally published as “legal alerts” in late May. Readers should check for more recent developments, as the matters covered in both articles might have been affected by recent legislative and administrative actions.

Please make plans now to attend the ABA Section of International Law’s Third Annual Conference on the Resolution of CIS-Related Business Disputes in Moscow on September 12. This Conference, like its widely-acclaimed predecessors, is a “must attend” event for anyone interested in the resolution of business disputes in Russia and the other CIS countries. The Conference will feature world-class experts on topics including corruption in the courts, insolvency litigation, professional responsibility dilemmas in international disputes, shareholder rights, third-party funding of litigation and arbitration, state entities as parties in arbitration, choice of law in cross-border transactions, and a review of recent developments in business dispute resolution. A reception at Spaso House will follow the Conference. Registration is now open, and early registration is encouraged because the Conference and the Spaso House reception will be fully subscribed. This year’s Conference will be held at the Ritz-Carlton. For more information, visit www.americanbar.org/groups/international_law or call +1-202-662-1660.

We hope you will enjoy this issue of the Committee Newsletter. We welcome your contributions to the next issue.

Dmitri Evseev

Christopher Kelley

Committee Co-Chairs

The Overlap Between Intellectual Property Laws and Competition Laws in the Russian Federation

Anne Wright Fiero

The relationship between intellectual property laws and competition laws is no stranger to debate. In the Russian Federation, as in the United States, the long-term goal of both systems is to benefit the consumer by ensuring free and fair competition and by encouraging investment and innovation in new technologies.¹ However, an inherent tension also exists between laws that may grant monopoly power to intellectual property holders and laws that restrict the exercise of that monopoly power.

Brief Overview of Russian Intellectual Property and Competition Laws

Russia amended its intellectual property laws in 2006 (effective January 1, 2008), consolidating them into the Russian Federation Civil Code. See supra, n. 2 (“Civil Code (Part Four)”). The latest iteration of intellectual property law provides for the private, exclusive ownership of intellectual activity, which includes the “individualization of legal persons, goods, works, and services.” Civil Code (Part Four),art. 1225 (defining intellectual property, also known in Russia as industrial property); id., art. 1229 (discussing grant of private ownership over intellectual and industrial property rights). The Russian intellectual property system is based on a first to file rule (not the first to invent or use system of U.S. law), meaning that priority is given to an intellectual property right based on the date an application to register that right is filed with “the appropriate Federal executive authority on intellectual property”. Id., arts. 1350(2), 1381, 1494; see also S. Budylin and Y. Osipova, Total Upgrade: Intellectual Property Law Reform in Russia, 1 Col. E. Eur. LJ 1, 19 (2007).

The Federal Service for Intellectual Property, Patents and Trademarks, known as ROSPATENT, is responsible for administering intellectual property laws in the Russian Federation. In recent years, ROSPATENT has worked more closely with the Federal Antimonopoly Service (known as “FAS”), the government entity tasked with ensuring the freedom of economic activity and creating conditions favorable to the “effective functioning” of the markets. See supra, n. 2 (“Competition Law”), Ch. 1, art. 1. On April 9, 2010, the two entered into an “Agreement of Cooperation”, promising to work jointly on: stimulating competition, encouraging innovation, sharing information, and developing amendments to Russia’s Competition Law with a focus on the protection of intellectual property rights. See http://www.fips.ru.sitedocs/ rp_fas.pdf (text of Agreement of Cooperation (in Russian)).

Russia implemented its current Competition Law in 2006 (effective July of 2009), with a primary focus on dominant control (i.e., monopolization), concerted action, and unfair competition. Competition Law, art. 1. Recent amendments include the extension of the Competition Law to activity occurring outside Russia², a lower market share threshold needed to establish “dominant” market control, and expanded investigatory powers of the FAS. Id., arts. 5.1(1), 5.61, 25.2, 25.3 and 25.4.

Overlap Between the Laws

Russian Competition Law addresses intellectual property rights. For example, Article 14 (generally prohibiting unfair competition), bars the illegal use or exploitation of intellectual property. Specifically, it prohibits the sale, exchange or other way of input of a commodity into circulation if there was illegal use of the results of intellectual activity and equalized to them means of individualization of a legal person, means of individualization of production, works [or] services.

Competition Law, art. 14.1(4) (emphasis added).

Since the Competition Law was amended, FAS has barred a handful of activities arising under this unfair competition clause.³ In the last two years, FAS not only issued terminating directions, but also imposed severe fines in connection with various trademark violations. See, e.g., FAS Press Release of 16 February 2011, available at: http://www.en.fas.gov.ru/ news/news_31216.html (discussing Federal Arbitration Court of Moscow confirmation of FAS $348M Ruble fine against MOEK OJSC for violating, in part, unfair competition provisions in Part 1; Article 14); FAS Press Release of 21 January 2011, available at: http://www.en.fas.gov.ru/ news/news_31170.html (decision of Saratov Regional Arbitration Court upholding decision against “Chisty Gorod” Ltd. based on violations of Article 14); FAS Press Release of 23 April 2009, available at: http://www.fas. gov.ru/english /news/n_23734.shtml (direction to terminate based on confusing use of marks in the sale of sausage products); FAS Press Release of 19 May 2009, available at http://www.fas.gov.ru /english/news/ n_27930.shtml (The FAS also issued a Directive to Terminate Infringement, and imposed a 7,132,643 RUB fine (approximately $235,000), against the Bank of Moscow, based on the bank’s improper use of the name “Sochi 2014” in connection with one of its mutual funds).

Competition Law also prohibits the abuse of a dominant market position, but clearly exempts the exercise of exclusive intellectual property rights:

[the] [r]equirements of this Article are not extended over the actions on implementation of exclusive rights for the results of intellectual activity and equalized to them means of individualization of a legal person, means of individualization of production, executed works or rendered services.

Competition Law, art. 10.4 (emphasis added).

Although it is not totally clear how FAS, or the Russian courts, will interpret this exemption, it is not likely that intellectual property holders will enjoy a blanket antitrust exemption. FAS has increased, not decreased, its scrutiny over dominant market players, including those holding private intellectual property rights, and has proposed heightened penalties for those misusing intellectual property rights. See, e.g., supra, n. 7; see also FAS Press Release of 7 April 2009, available at: http://www.fas.gov.ru/english/news /n_23326.shtml (concerning FAS Order No. 193, dated3 April 2009, adding 10 pharmaceutical companies to FAS “Register of Economic Entities” whose share of the relevant market exceeds 35%); cf. Competition Law, art. 5.61 (allowing for proof of dominant control with less than 35% of the market when, among other things, competitors face high market barriers due to technological restrictions (such as exclusive patent rights)); see also gazeta.ru/culture/2010/07/22/a-3400407.shtml (discussing imposition of 7.6 million ruble fine (approximately $250,000 M) against publisher – more than its total annual revenue – in connection with copyright infringement of well-known Russian science fiction writer’s works) (in Russian).⁴

Russian intellectual property legislation also contemplates an intersection with Competition Law. It provides, for example, that the legal protection afforded to the holder of a trademark can be invalidated if the holder abuses his right and/or engages in unfair competition. Civil Code (Part Four),art. 1512.2(6); cf. Competition Law, art. 14.1(4) (generally barring the illegal use of any form of intellectual property as unfair competition). No similar grounds currently exist for invalidation of copyright or patent rights based on misuse or unfair competition.⁵

Conclusion

The extent of the overlap between Russian intellectual property laws and Russian Competition Law remains an open question. Russia is clearly focused on adopting practices and policies that will position the country as a global market player. Recent joint action by the FAS and ROSPATENT also suggests that the two agencies will work in tandem to develop laws that are more consistent with international standards, and complementary to both competition and innovation.

1 See, e.g., Grazhdanskiy Kodeks RF [GK] [Civil Code], Part Four (Russ.), Federal Law No. 230-FZ, 18 December 2006, 289 Rossiiskaia Gazeta 25 (2006) (effective 1 January 2008) (“Civil Code (Part Four)”), art. 1229; Law on Protection of Competition, No. 135-FZ, 26 October 2006, 31 SZ RF (Part 1), item 3434 (amended 17 July 2009) (“Competition Law”), Ch. 1, art. 1.

  

2 Provisions of the Competition Law are applicable to agreements reached outside of Russia and/or to people or entities doing business outside of Russia, if the impact

“affect[s] the state of competition in the Russian Federation.” Competition Law, art. 3. The FAS determines, in its discretion, whether activity restricts competition within the Russian Federation. Id., art. 3, comments.

3 In 2006, for example, FAS issued a “Direction to Terminate Infringement” to the company OOO, based on evidence that the company was infringing another’s copyright and/or authorship rights through the sale of counterfeit DVDs. Report of FAS on Competition Policy in 2006, available at http://www.fas.gov.ru/english /decisions/15843.shtml. In 2007, FAS issued similar Instructions to Terminate Trademark Violations to: (1) Ladoga Industrial Group (for using a birch tree logo confusingly similar to a registered trademark), and (2) KhimExpo (for using product labeling confusingly similar to a registered trademark). See FAS Press Releases of 13 March 2007, available at http://www.fas. gov.ru/english/news/n_11642.shtml and http://www.fas.gov.ru/english /news/n_11618.shtml. In 2008, FAS likewise issued Directions to Terminate Trademark Violations to: (1) Master Beverages Industries PTE, Ltd. (for using a confusingly similar product label) and (2) Delphin Industries (for using confusingly similar labels on its oil products). See FAS Press Releases of 12 December 2008 and 11 December 2008, available at: http://www.fas.gov .ru/english /news /n _21469.shtml and http://www.fas. gov.ru/english/news/n_21487.shtml.

4 The Economic Registry has some consequences for merger control (including heightened duties to notify FAS concerning board or leadership changes), and it allows the FAS to more closely monitor a listed entity for potential monopolistic behavior, but otherwise entry on the Registry imposes no specific duties or consequences.

5 ROSPATENT has proposed amendments to the Civil Code concerning the early termination of trademark and patent rights, but those draft regulations do not, as yet, provide for early termination or nullification of a patent based on its use in “unfair competition”. See http://www1.fips.ru/wps/wcm/connect/eeab8a004bfda528a5ebddoc7e 0eb6d/reg_nedystv.pdf?MOD=AJPERES (text of proposed Administrative Rules (in Russian)). Nevertheless, ROSPATENT has recently invalidated a patent based on conduct that, at least in part, the FAS had found to be a violation of Competition Law, art. 11.1(8) (prohibiting concerted practices that may lead to high barriers to entry created by exclusive patent rights). See FAS Press Release of 10 February 2009, available at: http://www .fas.gov.ru/english /news/n 22115.shtml (invalidating Elektroapparat patent based on, among other things, improper use and marketing of patents). As the cooperation between these agencies continues to improve, actions against intellectual property holders who engage in unfair competition may increasingly be grounded not just in Competition Law, but in the intellectual property laws as well.

Update on the Personal Data Protection Regime in Ukraine

Irina Paliashvili

Olena Zolotarevska

Effective 01 January 2011, the Ukrainian Law On Personal Data Protection(the “Law") took effect, introducing requirements for the gathering, processing, storing, and transferring of personal data (See RULG Legal Alert dated 19 November 2010 http://www.rulg.com/leg_alerts.asp).

Scope of Applicability

The Law is applicable to all owners and processors of personal data databases (except for physical persons who create a database for personal use, journalists who carry out their professional duties and creative figures implementing creative activity).

The Law provides for the establishment of State Register of Personal Databases, administered by the “authorized state body on data protection,” and stipulates that personal databases are subject to mandatory state registration according to the prescribed procedure

Important Caveats

·         Since the Law will be fully functional only after all relevant regulations are adopted and take effect, and only a part of such regulations have been created, especially in the important area of registration of personal databases, creating the scope for inescapable technical breach of the Law.

·         Owing to the complexity and ambiguity of some provisions, recourse to formal legal advice should be obtained well in advance of any plan for compliance measures within an organization.

Current Personal Data Protection Regime

The latest regulations in the sphere of personal data protection comprise the following:

·         Regulation of the State Service of Ukraine on Personal Data Protection approved by the Decree N 390/2011 of the President of Ukraine (effective 6 April 2011): The State Service of Ukraine on Personal Data Protection is a central executive body that is directed and coordinated by the Cabinet of Ministers through the Minister of Justice of Ukraine. It is authorized to:

a)   propose state policy on personal data protection;

b)      implement state policy on personal data protection;

c)      perform control over compliance with legislation on personal data protection; and

d)      implement international legal cooperation in the sphere of personal data protection.

·         Letter of the State Committee on Land Resources N 4280/21/11-11 dated 24 March 2011: This Letter establishes rules for filling out information on adjacent owners.

·         Letter of National Bank of Ukraine N 18-311/695-2160 dated 08 April 2011: This order of processing of personal data being bank secret was adopted by the National Bank of Ukraine. Once personal data protection regulations are adopted by the Cabinet of Ministers of Ukraine, the authorized government agency for financial monitoring and the National Bank of Ukraine will amend existing rules of storage, protection, use, and disclosure of bank secrets.

Court practice

An overview of court decisions for the period from January 2011 to May 2011 indicates that judges already make references to the Law in decisions concerning the circulation of information. But still Ukrainian court practice does not yet have cases specifically in the sphere of personal data protection.

Liability for Violations in the Sphere of Personal Data Protection in Ukraine

On 3 February 2011, the Ukrainian Parliament adopted in the first reading a Bill introducing administrative and criminal liability in the area of personal data protection, namely:

a)      administrative liability for evasion of personal database registration, creation of or work with a personal database before its state registration, and breach of regime of accessing personal data resulting in fines in amount USD 638-4,250; and

b)      criminal liability for unlawful gathering, storage, usage and distribution of personal data without the person's consent is subject to fines in amountUSD 1,700 – 4,250, compulsory community service or imprisonment.           

            The State Register of Personal Databases has not yet been established, therefore, for the moment, legislative requirements regarding state registration of personal databases cannot be practically complied with. For the Bill to become law, it must be finally adopted by the Parliament (in the second or third reading), signed by the President and officially published.

Overview of Ukrainian Deregulation Measures

Irina Paliashvili

Yaroslav Shkvorets

Olena Zolotarevska

The Government of Ukraine – the Verkhovna Rada (the "Parliament") and the Cabinet of Ministers - has recently developed and enacted a number of long-awaited measures in the sphere of deregulation of business activity and improvement of the regulatory regime (customs, public procurement). A special dedicated authority – the Cabinet of Ministers Deregulation Assignee – was established in February 2011 to oversee deregulation.

As a result of these efforts, between 2010 and 2011 Ukraine’s average Ease of Doing Business rank has improved by 2 points (from 147^th to 145^th place out of 183 economies). That rank in category Starting Business has improved by 18 points (from 136^th to 118^th place out of 183 economies).[1]

Below is a brief overview of the key business deregulation measures pending or enacted within the past several months.

I. Enacted Deregulation Measures

- Cancellation of Licenses for Certain Types of Economic Activity:

The list of business activities subject to licensing was shortened by 24 positions, removing inter alia:

• cargo carriage services (except for dangerous cargoes) by air, river, sea, motor, and railway transport;

• pesticide and agricultural chemicals production (plant growth regulators only);

• design, production, use, operation, certification tests, subject-oriented research, expert examination, importation/exportation of crypt systems and crypt-based information protection systems; and

• design, production, and certification tests of holographic protection elements.

Relevant amendments were introduced to a number of Laws by the Law “On Amendments to Certain Legislative Acts of Ukraine Restricting State Regulation of Business Activities” No. 2608-VI dated 19 October 2011 and enacted on 16 November 2010.

- A Single Notification for Registration as a Single Payer of Contributions to State Funds:

As of 1 January 2011 the Pension Fund issues a single notification regarding registration of the legal entity as a single contributions payer, based on the information it receives from the Single State Registry of Legal Entities and Individuals-Entrepreneurs (“Single State Registry”) upon incorporation of a legal entity.

Before this measure was enacted, a newly incorporated legal entity had to be registered with four separate State Funds, have four notifications of registration therewith, and pay contributions and report to the:

1) Pension Fund;

2) State Fund for Social Insurance Against Unemployment;

3) State Fund for Social Insurance Against Temporary Loss of the Ability to Work; and

4) State Fund of Ukraine for Social Insurance Against Job Accidents and Professional Diseases.

This measure was introduced by the Law “On Collecting and Accounting of the Single Contribution to Mandatory State Social Insurance” No. 2464-VI dated 8 July 2010 and by subsequent Regulations of the Pension Fund Board No. 21-6 dated 27 September 2010.

- Cancellation of Special Permits of the Ministry of Internal Affairs for Corporate Seals:

The long-standing requirement that a special permit had to be obtained from the Ministry of Internal Affairs in order to manufacture, replace or destroy every corporate seal was abolished. This welcome measure will save businesses up to 400 UAH and up to one week of time per corporate seal.  

This new rule became effective starting 21 February 2011 and was enacted by Cabinet of Ministers' Resolution No. 1216 On Amendments to Permits System Regulations dated 29 December 2010, and by subsequent Order of the Ministry of Internal Affairs Order No. 5 dated 11 January 2011 On Cancellation of the Ministry of Internal Affairs Order No. 7 dated 11 January 1999.

Moreover, the Government intends to abolish the mandatory requirement for corporate seals in general (see section II below), which will certainly facilitate and modernize business operations.

- Cancellation of State Registration Certificates for Legal Entities and Individuals-Entrepreneurs:

The State Registration Certificate was a mandatory document confirming the existence of a legal entity and attesting its registration (incorporation). Following cancellation of this document, Legal Entities and Individuals-Entrepreneurs will attest their existence by an excerpt from the Single State Registry (earlier this document attested the company's existence at the relevant date and was valid only for 30 days), which can be obtained via State Registrar Offices and no longer has an expiration term.

This measure was enacted by Law “On Amendments to Certain Legislative Acts of Ukraine Cancelling the State Registration Certificate of Legal Entity and Individual-Entrepreneur” No.3205-VI and is effective as of 7 May 2011.

- Introducing Electronic State Registration of Legal Entities and Individuals-Entrepreneurs:

Electronic registration will become available for State registration (incorporation) of Legal Entities and Individuals - Entrepreneurs, as well as for reservation of names of Legal Entities.

This measure takes effect as of 14 August 2011 and was included in the Law “On Amendments to the Law of Ukraine “On the State Registration of Legal Entities and Individuals - Entrepreneurs Concerning Electronic Registration” No. 2609-V adopted on 19 October 2010.  

See RULG Legal Alert dated 23 November 2010 for more details http://www.rulg.com/leg_alerts.asp

- Registration of Legal Entities Based on a Model Charter:

According to this measure, an option to use a Model Charter will become available during incorporation of a Legal Entity. At the same time, the founders of a Legal Entity will still have an option to develop their own original Charter. This measure would simplify the incorporation process for those founders who opt to use a Model Charter, but certainly such Model Charter might not be suitable for every business. The Model Charter will be approved by the Cabinet of Ministers.  

This measure is introduced in the Law “On Amendments to Certain Legislative Acts of Ukraine Introducing the State Registration of Legal Entities on the Basis of a Model Charter”, which was adopted by the Parliament on 21 April 2011 and signed by the President. This Law introduces amendments to the Commercial Code, Civil Code, Law “On State Registration of Legal Entities and Individuals-Entrepreneurs”, and Law “On Economic Societies”. The Law will be enacted three months after official publication thereof.

- Abolishing Minimal Authorized Capital for Limited Liability Companies and Simplification of Certain State Registration Procedures:

The new measures include:

• 
  cancelling the minimal Authorized Capital for Limited Liability Companies;
• 
  defining the procedure for notifying creditors regarding decrease of the Limited Liability Company's Authorized Capital (creditors shall be notified by a letter within 30 days after the relevant decision is made); and
• 
  filing with the State Registrars simple copies instead of notarized copies or notarized originals of certain documents in order to introduce amendments to the Single State Registry.

These measures were introduced by the Law “On Amendments to Certain Legislative Acts of Ukraine Simplifying the Entrepreneurship Initiation Procedure”, which was adopted by the Parliament on 21 April 2011 and signed by the President. The Law will be enacted 10 days after official publication thereof.

- Introducing Electronic Customs Declarations:

On 5 April 2011 the State Customs Agency started a pilot project of accepting electronic declarations. The introduction of this procedure will accelerate the processes of customs control and clearance and will harmonize these processes with the international standards of electronic data exchange concerning customs clearance of goods, as well as reduce to a minimum the interaction with the customs officer thus preventing corruption.

The conditions for electronic declarations are approved by order № 216 of the State Customs Agency dated 17 March 2011. The Order simplifies the procedure of admitting enterprises to the electronic declarations, conducting its Register, and it provides for inclusion of customs brokers into the Register.

II. Pending Deregulation Measures

- Simplification of Termination (Liquidation) of a Legal Entity or Individual-Entrepreneur:

Ukraine has a very burdensome regime for liquidation of a business (Legal Entities or Individuals-Entrepreneurs) that requires a pre-liquidation audit by tax authorities. In practice, businesses have to wait for months and sometimes years for such audits.  

The new rules for termination (liquidation) of a Legal Entity or Individual Entrepreneur include:

• 
  the defined timeframe for relevant tax and Pension Fund authorities to notify the State Registrar about possibility or impossibility to start the pre-liquidation audit or their objections to the liquidation; and
• 
  if no objections are received by relevant State Registrar within defined timeframe, a principle of tacit consent to state registration of entity's termination is introduced.

The above rules are stipulated in the Bill “On Amendments to Certain Legislative Acts of Ukraine Simplifying the Procedures for Terminating Legal Entities and Individuals-Entrepreneurs”, which was adopted by the Parliament as a basis, and after the second reading on 12 May 2011 was sent for further development to be followed by repeated consideration in the second reading.

- Cancellation of a Corporate Seal as a Mandatory Attribute:

Ukraine has an archaic requirement for a corporate seal as a mandatory attribute of every legal entity. In order to be valid, most of the documents, including contracts, need to be attested by the corporate seal. Abolishing these requirements would be a welcoming development considerably simplifying and modernizing business operations.

The following bills pending at the Parliament provide for abolishing mandatory requirement for a corporate seal and would make it optional:   

• 
  Bill “On Amendments to Certain Legislative Acts of Ukraine Establishing the Principle of carrying out Business Activities by Private Law Subjects Without Using Seals” initiated by the Cabinet of Ministers, which was registered with the Parliament, considered, but rejected and sent for further development due to conflicts with existing legislation.
• 
  An alternative Bill with the same name, but slightly different content, initiated by a People's Deputy who represents the Party of Regions, which was not considered yet.

- Reducing Number of Documents required for Customs Clearance:

The Government plans to reduce by 70 % (from 65 to 20) the quantity of the permits necessary for customs clearance, in particular - sanitary-and-hygienic conclusions, phyto- and veterinary inspection certificates, etc. To clear cargoes, applicants should present to customs only the documents that are the basis for clearing goods through customs and for charging taxes. These measures are planned to take effect in the summer of 2011.

An Interagency working group (composed of representatives of the State Customs Agency and the State Committee on Industrial and Regulatory Policy and Entrepreneurship) will conduct the work on the reduction of the number of documents to be presented for the customs clearance, suggest relevant proposals and elaborate changes to legal acts.

The reduction of the number of documents for the customs control only means that these documents are no longer necessary for the customs clearance. The regulatory documents that are still necessary for sales of imported goods in the territory of Ukraine can be obtained after the customs clearance.

- Introducing Electronic Public Procurement:

The Antimonopoly Committee of Ukraine (the “AMCU”) plans to introduce electronic public procurement in Ukraine.

According to the AMCU, the electronic system provides for a possibility of reducing corruption by excluding the human factor. The tender participant is not identified to the customer, and only at the latest stage the participant is revealed and the winner is determined. Specific terms of the introduction of the electronic public procurement system have not been determined yet. Besides, there may be a problem with application of electronic signatures, which are not yet widely used in Ukraine.

Bill № 8310 on amendments to the Law of Ukraine “On Realization of Public Procurement”, which introduces electronic public procurement (state purchases), was registered in the Parliament. The Bill follows the trend discussed by the Heads of antimonopoly bodies of the CIS countries at a special meeting of an Interstate Council of Antimonopoly Policy, which took place within the framework of the VII All-Russian forum-exhibition STATE ORDER-2011 on 23 – 25 March 2011 in Moscow. The Council decided to create a working group on the implementation of the electronic public procurement and summarize recommendations on antimonopoly policy and legislative improvements in the sphere of the state purchases for the CIS countries.

---

[1] www.doingbusiness.org data as of 18 May 2011

Welcome to the Russia/Eurasia Committee Newsletter

Welcome to the ABA Section of International Law Russia/Eurasia Committee Newsletter. Our Newsletter brings you timely, in-depth articles to complement the news we deliver to you in our biweekly Eurasian Law Breaking News (http://eurasian-law-breaking-news.blogspot.com/).

Our Newsletter counts on you for its content. We publish it whenever we have articles to publish. This way, your contributions reach our readers quickly. The more you contribute, the more frequently we publish. And we welcome timely articles that have been published elsewhere.

Also send us your news and announcements. We would like for member news to be a part of our Newsletter.

This issue features an article by Randy Bregman that offers his observations of the presidential elections in Kazakhstan in early April. Mr. Bregman has also contributed a brief country profile of Kazakhstan.

Mr. Bregman is a partner in the New York office of Salans LLP, where he heads the U.S. desk of Salans' CIS practice. Dividing his time between New York and Washington, D.C., Mr. Bregman's practice encompasses international transactions and CIS trade and investment.

Mr. Bregman has focused his practice on the CIS for over 30 years, part of the time based in Moscow where he lived from 1991 to 1995. He has significant experience in corporate and M&A matters and advises Russian and Western clients in a diverse range of industries including banking and finance, oil, pharmaceuticals, telecommunications and consumer goods.

This issue also features a selective bibliography prepared by Shaun Hargadine, a member of the class of 2013 at Florida Coastal School of Law. Mr. Hargadine and other law student members of the Committee are planning to contribute a bibliography to our Newsletter regularly.

Finally, with its preliminary summary of the session topics, this issue reminds you to plan now to attend the Third Annual Conference on the Resolution of CIS-Related Disputes, which will be held in Moscow on September 12, 2011. The preceding conferences have been excellent and well-attended. You will not want to miss this year’s conference.

We hope you will enjoy this issue of the Russia/Eurasia Committee Newsletter.

Dmitri Evseev, Co-Chair

Christopher Kelley, Co-Chair

Kazakhstan Country Profile

Randy Bregman

Kazakhstan is the largest country in Central Asia and the ninth largest in the world.  In area, it is bigger than all of Western Europe.  It is transcontinental, being part of both Europe and Asia and has shared borders with Russia, China, Kyrgyzstan, Turkmenistan and Uzbekistan.  Geographically, it is landlocked.

Kazakhstan's population is only 16.4 million people and thus has a low population density.  Nevertheless, it is the dominant country in Central Asia based a successful effort by the government to develop its economy around extensive hydrocarbon and other raw material resources.

Sixty-three percent of the population is Kazakh, 24% is Russian and the balance mostly other Turkic and Central Asian peoples.  The official language is Kazakh, though Russian has equal authority and is the most common language in business and in daily life.  There is freedom of religion.  About 2/3 of the people consider themselves Muslim, the rest mostly Christian.

Historically, the Kazakh people developed from nomadic tribes of Scythian and Turkic origin.  Kazakhstan became part of the Russian Empire in the mid-19th Century and then part of the Soviet Union after the Civil War.  On December 16, 1991, it declared itself an independent country.  Nursultan Nazarbayev, the General Secretary of the Kazakh Communist Party at the time of the collapse of the Soviet Union, became President of Kazakhstan, a post he still holds.

Kazakhstan Presidential Elections: A Step Forward?

Randy Bregman        

On April 3, I served on a team of eight independent observers, put together by the International Tax and Investment Center (ITIC), to monitor the Presidential elections in Kazakhstan.   The team, which consisted of economic, academic and legal specialists in developing countries and, in particular, post-Soviet countries, was asked to examine how the process of democratization was unfolding in Kazakhstan by talking with political parties, civil society organizations and media agencies, visiting a number of polling stations and taking part in the vote count.  We did not conduct a thorough, poll-by-poll study of compliance with election procedures as did the Organization for Security and Cooperation in Europe (OSCE).  Rather, we engaged in discussions with poll officials and voters at 65 polls in four cities to try to understand whether the election process was working fairly, in general, and to get an in-person sense of the thoughts and attitudes of the voters.

 Our overall conclusion from the polls we observed was that the polling process was well-organized, that the officials and observers at each poll were well-trained and knowledgeable about the procedures and the laws and regulations, and were helpful to the voters.  Further, we noted that the great majority of the citizenry was enthusiastic about voting and proud to be part of the democratic evolution in Kazakhstan. 

The purpose of this article is to describe my personal experiences.  I have been active and engaged as a lawyer, participating in the Gorbachev reforms during the last days of the Soviet Union and in the development of a new legal regime in various post-Soviet jurisdictions.   As the managing partner of a Western law office in Moscow in the early 1990s and a participant in a large number of business transactions in Russia, Ukraine, Kazakhstan and Azerbaijan, I had the opportunity to see not only the creation of new legal systems but also the creation of a middle class which takes part in civic and social activities not imagined during the days of the USSR.  And as a member of the Board of the Eurasia Foundation, I have seen energetic citizens set up democratic institutions in localities throughout the region.

In my view, the Kazakhstan presidential election marks a step forward, not a step backward, in the evolution toward democracy.   This view, I realize, is likely to be controversial and, in some ways, counter-intuitive.  There was, in reality, only one real candidate, the incumbent President Nazarbayev.   I am not commenting here on the cancelled referendum or the constitutionality of the early elections he set up, which, although criticized for opportunism, do not appear to have been irregular.   Nor am I apologizing for the corruption in and the human rights violations of the Kazakhstani government that have marred and sidetracked a direct path to a free and open economy and society.

Rather, my purpose here is to look at this election as a potential turning point in Kazakhstan  history and, as one of our team members stated, a dry run for real, competitive parliamentary elections in the near future.

First, I observed polling stations that worked.   The long lines moved steadily.   There appeared to be no coercion or fraud.  The heads of the polling stations quickly intervened when there were questions of proper registration and resolved the issues in a professional manner consistent with the law.   Voting secrecy was maintained.   

Second, we arbitrarily selected one poll each to observe the counting.   We were permitted to see each ballot as it was counted.  And when we asked, pursuant to the election law, to be able to count the ballots ourselves, we were encouraged.  In fact, at the poll where I counted, we found a one-vote discrepancy in their count and ours.  They re-counted and determined that we were correct.  They promptly called in the correction to the elections headquarters.    

Third, and perhaps most encouraging, both the poll officials and the voters were excited about participating in this process.   I asked many people how they felt about voting in what was essentially a one-person election.   Several responded by asking if I, as an American, would have voted against George Washington.

To them, Nazarbayev is the founder of Kazakhstan.   During the Soviet period, Kazakhstan was a poor republic used by the Soviet leadership to be the locus of dangerous weapons-development programs and experimental and risky economic experimentation such as the Virgin Lands program.   When Nazarbayev became President in 1992 as the Soviet Union was collapsing, he effectively led a program of nation-building.  With help of course from the fact that oil is plentiful in Kazakhstan and its area of the Caspian Sea, his administration organized the development of a modern economy and increased individual incomes significantly.  He built in a very short period of time a new capital city at Astana, more centrally located than the previous capital, Almaty.   He encouraged use of the Kazakh and English languages, alongside the Russian language.  And his team promoted knowledge of and pride in a Kazakh history and culture, peaceful and ecologically sensitive.          

Most frequently, the voters expressed support for Nazarbayev's leadership as a force for stability in a region fraught with violence and uncertainty.  Compared to neighbors Kyrgyzstan and Uzbekistan, Kazakhstan society has little ethnic tension  despite being home to comparatively large minorities.  It has institutions which are step by step becoming transparent and stable.  Compared with Belarus, the leadership maintains its power without resort as a matter of course to heavy-handed violence and repression.   And it has managed to re-establish its Muslim heritage without the disruptions and threats of radical Islam.   Looking at the dynamic political situation across the regions of Central Asia and Caucasus, the Middle East and North Africa, Kazakhstan does not seem on the verge of revolt by the victims of poorly-managed economies or by those alienated from the political process.    

I asked older people how they compared this election to those during the Soviet period.  In one way or another, each explained that voting in Soviet elections was required, was not considered a civil right but rather an administrative obligation.  But, increasingly in modern Kazakhstan, each felt that he or she had not only the right to vote but also each voter had a responsibility for choosing its political leaders.       

 Again, to be clear, this election was not competitive.  The outcome was known before the voting started; there was in reality only one candidate.  

Nevertheless, it is my opinion that the framework is being put in place for a free and fair election when a new parliament is scheduled to be voted on in 2012.  And the citizens of Kazakhstan appear to play an active role in that process of choosing their future leaders.  The President has expressed his strong desire to see a multi-party legislature.  He has indicated that he wants his legacy not as a founder of an elite-based dynasty but rather as the founder of a political democracy with competition and political checks and balances.   

All of this is, of course, just words for now.  No one can guarantee that the President will be willing and able to keep to his word.  But there is no doubt in my mind that the conditions for serious and real movement toward democracy exist.  And that is a critical step forward in a country that matters.

Selective Bibliography

This bibliography contains a selection of recently published law related articles that have a particular focus on a country or countries within the Russia/Eurasian region. It was prepared by Shaun Hargadine, a law student at Florida Coastal School of Law.

News Articles

Polish Official Defends Government's "Two-Track" Policy Towards Belarus, BBC Monitoring Europe – Political Supplied by BBC Worldwide Monitoring Feb. 17, 2011. Abstract: A discussion of Poland’s responses and reactions to legal and political developments in Belarus. The Union of Poles in Belarus and the circumstances relating to the EU sanctions against Belarus are given particular emphasis.

Sophia Kishkovsky, Despite Tangled History, Latvia Now Woos Russians, The Int’l Herald Tribune Feb. 18, 2011. Abstract: Latvia hopes a new law will encourage investment from Russia. A law allowing property ownership by non-EU members is expected to boost investment in Latvia.

Yuri Korchev, Peculiarities of Recognition of International Arbitral Awards in CIS Countries, 15 No. 2 IBA Arb. News 55, (Sept. 2010). Abstract: Discussion of the possible challenges facing the enforcement of arbitral awards in Ukraine.

Markian Malskyy et al., The Arbitrability of Shareholder Disputes, 15 No. 1 IBA Arb. News 148, (Mar. 2010). Abstract: Recommendations by the Presidium of the Highest Commercial Court of Ukrainehave created an atmosphere that puts the validity and enforceability of shareholder agreements into question.

Law Review and Law Journal Articles

Vanessa A. Baird & Debra Javeline, The Effects of National and Local Funding on Judicial Performance: Perceptions of Russia's Lawyers, 44 Law & Soc'y Rev. 331, (Jun. 2010). Abstract: Using original data from surveys of more than 1,800 randomly sampled lawyers in 12 Russian cities, this article discusses the influence of government funding on judicial performance. Particularly, this article discusses the effects of national government funding, local government funding, and diversified political power on judicial performance in Russia.

Esprit Eugster, Evolution and Enforcement of Intellectual Property Law in Russia, 9 Wash. U. Global Stud. L. Rev. 131, (2010). Abstract: This article discusses how lax enforcement of intellectual property rights and legislation may burden Russia’s emergence as a solid international market. Additionally, this article outlines the attitudes and environments for intellectual property from the Czarist regimes to the post-soviet and current governments.

David Thomas Kronenfeld, Kaliningrad in the Twenty-First Century--Independence, Semi-Autonomy, Or Continued Second-Class Citizenship?, 9 Wash. U. Global Stud. L. Rev. 153, (2010). Abstract: This article discusses how Russian apathy towards Kaliningrad could lead to an independence movement. Additionally, this article makes the case for granting semi-autonomy in both the political and economic arenas by discussing the development of Kaliningrad’s history into the modern circumstances.

Elizabeth K. Tomasovic, Robbed of Reproductive Justice: The Necessity of a Global Initiative to Provide Redress to Roma Women Coercively Sterilized in Eastern Europe, 41 Colum. Human Rights L. Rev. 765, (2010). Abstract: This article discusses the sensitive subject of women obtaining justice for improper violation of their reproductive rights. Additionally, this article details the obstacles for effective legal redress, including evidence, civil procedure, statutes of limitations, public opinion as well as domestic laws that facilitate the proactive.

Ira Lindsay, A Troubled Path to Private Property: Agricultural Land Law in Russia, 16 Colum. J. Eur. L. 261, (2010). Abstract: This Article explores the role of property law in post-Soviet Russian agriculture and explores the effect of land market development in rural Russia. Additionally, this article focuses on the implications for the effects of land privatization on agriculture, the barriers to efficient land markets, and the effect of property law on economic development.

Rima Tkatova, Central Asian States and International Law: Between Post-Soviet Culture And Eurasian Civilization, 9 Chinese J. Int'l L. 205, (Mar. 2010). Abstract: This article discusses the near future of the geopolitical tendencies of the Central Asian nations. Additionally, this article emphasizes the effects of both international law, both in practice and doctrine, of the relations of the Central Asian states with each other as well as with the worldwide international community.

Kathryn Hendley, Coping With Uncertainty: The Role of Contracts in Russian Industry During the Transition to the Market, 30 Nw. J. Int'l L. & Bus. 417, (2010). Abstract: This article is an indepth discussion of the evolution of contracts in Russia. Additionally, this article illustrates the timeline and evolution of the role on contracts starting with the Soviet era. Particular emphasis is put on the trust in contracts and the level of confidence in contract enforcement.

Galina Dontsova et al., Key Changes to the Customs Union of Russia, Belarus, Kazakhstan, 21 JITAX 34, (2010). Abstract: This article provides a discussion of the Customs Codes of The Customs Union of Russia, Belarus, and Kazakhstan. Additionally, this article discusses how the customs agreement will likely define a transitional period as opposed to a new era of harmonized rules for regulating trade.

Kathryn Hendley, Mobilizing Law in Contemporary Russia: The Evolution of Disputes Over Home Repair Projects, 58 Am. J. Comp. L. 631, (2010). Abstract: This article discusses the perception of law in everyday Russian citizens and their reluctance to commence legal action. Emphasis is put on the evidence that the belief of individual citizens that substantive law would block their claims emerged as a more important explanatory variable than a lack of trust in judicial institutions due to corruption.

Tod Leaven & Christopher Dodge, The United States Cyber Command: International Restrictions vs. Manifest Destiny, 12 N.C. J.L. & Tech. On. 1, (2010). Abstract: This article evaluates the possibility on an international cyber-warfare treaty. This article includes a discussion of the cyber-attacks on Estonia in 2007.

Elizabeth R. Sheyn, A Foothold For Real Democracy in Eastern Europe: How Instituting Jury Trials in Ukraine Can Bring About Meaningful Governmental and Juridical Reforms and Can Help Spread These Reforms Across Eastern Europe, 43 Vand. J. Transnat'l L. 649, (May 2010). Abstract: This article makes the case for instituting jury trials in Ukraine in order to combat corruption and deficiency in the judicial system. The article highlights the fact that even though Ukraine’s Constitution guarantees a trial by jury Ukraine has never had a criminal or civil jury trial.

Kenneth J. Vandevelde, A Unified Theory of Fair and Equitable Treatment, 43 N.Y.U. J. Int'l L. & Pol. 43, (2010). Abstract: This article discusses the problem of defining fair and equitable treatment in bilateral investment treaties. This article provides analysis on court decisions involving the interpretation of the treaties languages, including cases involving Romania and The Czech Republic.

Cynthia Alkon, Plea Bargaining as a Legal Transplant: A Good Idea for Troubled Criminal Justice Systems?, 19 Transnat'l L. & Contemp. Probs. 355, (2010). Abstract: This article discusses the practice of plea bargaining in troubled criminal justice systems. This articles demonstrates the concern that the informal method associated with plea bargaining leaves open the possibility of human rights violations going unpunished, or punished inadequately.

Lee Baker, The Unintended Consequences of U.S. Export Restrictions on Software and Online Services for American Foreign Policy and Human Rights, 23 Harv. J. Law & Tec 537, (2010). Abstract: This article discusses how sanctions are counterproductive to certain goals that the sanctions are aimed to produce. Focus is put on access to ICT’s and other online forums which provide a voice for dissidents and human rights activists who seek the same goals as the sanctions. Examples are given from both Ukraine and Moldova.

Douglas Townsend & Daniel A. Witt, New Tax Code in Kazakhstan, 21 JITAX 60, (Mar. 2010). Abstract: This article is a general discussion of the new tax code enacted in Kazakhstan. The overview includes business tax as well as a discussion of the tax administration.

Roza Pati, States' Positive Obligations With Respect to Human Trafficking: The European Court of Human Rights Breaks New Ground in Rantsev v. Cyprus And Russia, 29 B.U. Int'l L.J. 79, (2010). Abstract: This article is a detailed discussion of the ruling in a court case detailing nation’s obligations in human trafficking. This article provides and in-depth analysis of The European Court of Human Rights ruling in Rantsev v. Cyprus & Russia.

Elliot Glusker, Arbitration Hurdles Facing Foreign Investors in Russia: Analysis of Present

Issues and Implications, 10 Pepp. Disp. Resol. L.J. 595, (2010). Abstract: This article discusses the obstacles in international arbitration conducted in Russian tribunals. It further evaluates the influence of relevant government institutions that play a role in dispute resolution. The analysis includes commercial law, jurisdiction, enforcement, and corruption.

Victoria Ptashnik & Nikita Nota, Ways of Challenging Decisions of the Ukrainian Antimonopoly Authorities, 6 No. 1 Competition L. Int'l 45, (Apr. 2010). Abstract: This article discusses the efficiency and effectiveness of antimonopoly entities in the Ukrainian government. This article details the process for appealing or challenging antimonopoly rulings by the authorities.

The Third Annual Conference on the Resolution of CIS-Related Disputes

Moscow, Russian Federation

September 12, 2011

Please make plans now to attend the Third Annual Conference on the Resolution of CIS-Related Disputes, which will be held in Moscow on September 12, 2011. You will receive more information from the ABA Section of International Law soon. The following is a preliminary summary of the Conference’s sessions.

PLENARY SESSION –

The Battle Against “Legal Nihilism”: Dispatches from the Frontlines

President Medvedev has called for an end to "legal nihilism," declaring that “we should take steps to help the courts gain their proper place in our system of values.” What are these steps? Are they working? How pervasive is judicial corruption in reality? How accurate are perceptions of the problem? As a practical matter, what can litigants do to protect themselves against suspected corruption, collusive litigation or fabrication of evidence? A panel of experienced Russian litigators and other experts will offer their perspectives on these issues and share hard-earned lessons on ensuring a fair hearing for their clients.

CONCURRENT SESSION #1 –

International Insolvency Proceedings in an Uncertain Financial World: Harmonizing the Rights and Obligations of Multinational Debtors and Creditors

Issues such as enforcement of bankruptcy judgments, liability of principals and priority of positions have been dealt with quite differently by courts in the U.S, England and Russia. In an age when international insolvency laws seek comity, divergent opinions from local courts interpreting the same agreements may have a significant impact on international commercial transactions and capital markets. The panel, comprised of leading judges and attorneys who have direct experience in these cases, will examine the issues created by contrary decisions being rendered by the courts of England and the United States, their interrelationship with developing Russian insolvency law and practice and their impact upon Russian investors, debtors and creditors who may participate in foreign bankruptcy proceedings or seek to enforce their rights in Russia.

Resolving Ethical and Professional Responsibility Dilemmas in International Disputes: A Primer for Russian Lawyers

International disputes often force Russian lawyers to face ethical rules imposed by western jurisdictions. While these rules are essential to maintaining the fairness and integrity of the adjudication proceedings, they may be unusual and difficult to comply with. To add to the confusion, it is far from clear which rules apply in multi-jurisdictional cases.

For instance, which country’s code of ethics should govern, say, a lawyer based in London and licensed to practice law in both New York and England, who is advocating before an arbitration tribunal seated in Moscow, where the arbitrators hale from Russia, England and Germany, opposing counsel is licensed in Germany, the substantive law governing the dispute is English, and one of the parties is Russian and the other is German? Would the advocates' conduct be governed by the rules of their respective home jurisdiction(s)? If so, is this fair? What if the professional rules of England, the U.S., and Germany differ with respect to such issues as preparing witnesses to testify, contacting employees of an adverse corporate party, bringing adverse legal authority to the attention of the tribunal, attorney-client privilege, ex parte communications with the tribunal, dealing with experts and other issues? Does this create an unlevel playing field? To what extent should the rules of the venue govern conduct? If there are no rules of conduct applied generally to all of the lawyers in the case, what implications does this have for the proceedings and the prospects for rendering proper justice?

The panel focuses on several real-life situations presented in a lively multimedia format with international experts addressing these and other ethical issues which increasingly arise in the world of cross-border dispute resolution.

CONCURRENT SESSION #2 –

Shareholder rights: Protecting Minorities and Joint Venture Partners

Effective protection of shareholder rights (particularly those of minority shareholders and joint venture partners) plays an essential role in attracting investment. Businesses today have an ever wider choice of where to invest and how to structure their investments. When exercising this choice a particularly important factor is the level of shareholder protection available in any given jurisdiction and under any particular structure or choice of law.

Russia has passed significant changes to its company law recently designed to increase the protection afforded to shareholders of Russian companies, including amendments in 2009 to its Federal Laws On Joint Stock Companies and On Limited Liability Companies which recognize shareholder agreements in those companies.

A panel of leading international experts will analyze the corporate climate in which businesses in Russia now operate and how this compares with other relevant jurisdictions, including England, Cyprus and The Netherlands.

The issues covered in this session will include the validity and scope of shareholder agreements; the right to participate in corporate decision making; the right to receive corporate information; the right to receive dividends; pre-emption rights; forced acquisitions and sales of shares; unfair prejudice claims; derivative actions and (in the Russian context) the impact of the Federal Law on Foreign Investment in Strategic Industries on the foregoing.

State and State Entities as Parties to Arbitration

States and state-owned enterprises are active players in international trade and finance and feature prominently in the caseloads of many arbitral institutions. Their significance is highlighted by the ICC's recent creation of a Task Force on Arbitration Involving States or State Entities. Many claims involving state parties have monstrously high stakes and are connected to strategic industries or public-private partnerships for infrastructure projects. Others involve more routine commercial matters. Regardless, the practitioner facing a dispute with a public sector party must be aware of the potential traps and plan accordingly. An expert panel will address some of the major issues, including immunity and vicarious liability of states for economic activities of state entities, the conduct of arbitration proceedings involving such parties, determining the identity of states and state entities, binding a government through an arbitration clause signed by a public institution or state-owned corporation, and other such matters.

CONCURRENT SESSION #3 –

Third-Party Funding of Litigation and Arbitration: The Future of Global Dispute Resolution or Ethical Quagmire?

Third-party funding of litigation and arbitration involves the financing of legal disputes by entities which are neither party to nor necessarily even related to the dispute itself. While the principal interest of such providers of funding generally is the purely mercenary and capitalist objective of financial profit, the availability of financing has begun to allow for the prosecution and defense of significant disputes by parties which otherwise would not have had the resources to proceed. Third-party funding therefore may become a powerful and innovative mechanism for reducing or avoiding the legal fees, expenses, arbitrator fees and other costs generally associated with international litigation and arbitrations which have become the focus of clients and attorneys around the world.

This panel, comprised of leading experts on third-party funding, will examine the growth and impact of funding of litigation and arbitration by third parties and the opportunities and risks to clients and potential funders in the CIS and around the globe, as well as the availability of alternative mechanisms such as contingent and conditional fee agreements. The program also will include a thorough consideration of the ethical obligations of lawyers, including confidentiality and privilege, professional independence and splitting of fees, which has led the American Bar Association to create a working group to report on the potential ethical issues and the United Kingdom to commission a government-sponsored report, released in early 2010, on the costs of civil litigation.

Making an Informed Choice of Law Decision in Cross-Border Transactions

Dispute resolution and choice of law clauses are typically an afterthought in corporate deal-making, but drastically affect the options available to the parties when a conflict arises. In particular, the choice of applicable substantive law (i.e. the law of the contract) is a crucial matter, but is often decided reflexively without an in-depth examination of the consequences.

This panel, composed of dispute resolution specialists from different jurisdictions, intends to look behind basic stereotypes to address the true implications of choosing English law, New York law, Swiss law or Russian law for the interpretation and enforcement of a contract.

The discussion may also examine the interplay between the choices of substantive law and procedural rules in dispute resolution, although procedural rules of different jurisdictions and arbitral institutions will not be a focus of the session. In order to promote a healthy debate, the panelists and the audience members will be asked to consider how companies in different circumstances might gain from or be harmed by a particular choice of legal regime.

PLENARY SESSION –

Fresh Off the Press! An Open Mike Debate about Hot Topics in Litigation and Arbitration

The moderators will engage the audience in an interactive discussion about some of the most recent developments in litigation and arbitration in Russia and the CIS. The debate will conclude with electronic voting on some of the most critical questions that emerge during the course of the day. Don’t miss your chance to contribute, support, disagree, vote, and make a difference.