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Legal review of judicial practice - the company's relationship with "unfriendly" countries

Ms. Olga Grigorieva
General Director

Russian companies have begun to use a following argument to win a dispute against an LLC with foreign capital: that LLC is a resident of an “unfriendly” country.

The opinion of lawyers and attorneys who state this argument: “It will be impossible to collect a debt from them without interim measures, because foreign companies are leaving the Russian market en masse.”


1) Application of interim measures due to possible withdrawal from the Russian market

A Russian company collected more than 45 million rubles from a company with foreign capital. and asked the court to seize this amount on the accounts of the defendant as an interim measure.

Rationale for the motion: although formally the defendant is a Russian legal entity, it is controlled by foreign companies and citizens from “unfriendly” countries. Its two participants are an Italian and a German company. In addition, the director, as well as all key personnel of the respondent, are Italian citizens.

The plaintiff pointed out that the defendant is fully controlled by residents of “unfriendly” countries.

According to the plaintiff, there is a high risk of not receiving money from the foreign counterparty, as European companies leave the Russian market en masse. The court agreed with the plaintiff’s arguments about foreign corporate control and the defendant’s possible refusal to work in Russia, as a result of which it imposed provisional measures – the court seized the accounts.

Decision of the Arbitration Court of the Omsk District dated March 16, 2022 No. А46-3889/2021


2) Suspension of execution of a judicial act in case of refusal of contracts in Russia

The Russian company lost the dispute in the amount of more than 7 million rubles in two instances. The defendant appealed against the judicial acts in cassation and asked to suspend the execution of the decision of the first instance. The Russian company stated that, although the plaintiff was registered in Russia, it was part of a group of companies controlled by a German organization.

The court agreed with the defendant’s argument that a unilateral renunciation of obligations in Russia would lead the plaintiff to bankruptcy. Thus, if the defendant pays the plaintiff money, and the decision is then canceled by the cassation instance, it will be difficult or even impossible to reverse the execution. Therefore, the cassation instance agreed to suspend the execution of the judicial act.

Decision of the Arbitration Court of the Moscow District dated March 11, 2022 No. A40-149699 / 2021


3) Refusal to protect exclusive rights

A foreign company, the copyright holder for the children’s animated series, filed a lawsuit against a Russian self-employed businessman. He violated the exclusive rights to the trademarks of the company. The court did not investigate the actual circumstances referred to by the copyright holder and immediately dismissed his claim with reference to the abuse of the right. According to the court, it is unacceptable and dishonest to demand payment amid the anti-Russian sanctions.

The court ignored the fact that the copyright holder filed a lawsuit back in September 2021.

Decision of the Arbitration Court of the Kirov Region dated March 3, 2022 in case No. А28-11930/2021


Our team will be happy to answer all questions on this topic, as well as analyze transactions and other risks associated with legal disputes.