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.