Pepeliaev Group’s key projects in 2022


As is our custom, we are publishing a large-scale report at the end of the year about Pepeliaev Group's key projects in different branches of the law and sectors of economy.

Dispute resolution

Represented the client in disputes to have unilateral withdrawals from a contract invalidated

Since the end of 2021, our lawyers have successfully represented a general contractor that is participating in the implementation of a major innovative project to build three gravity type processing lines to manufacture liquefied natural gas.  

The first dispute was initiated under a claim of an equipment supplier seeking to have the client’s unilateral withdrawal from the contract invalidated.  The lawyers’ task was to have the Russian state court leave the claim unconsidered because the contract contained an arbitration clause. The lawyers managed to accomplish the specified task despite the claimant’s objections as to whether the clause was valid and could be enforced.  

Simultaneously, our lawyers represented the client in another case in which the client was involved as a third party.  The second dispute was also completed effectively and successfully.  Pepeliaev Group’s lawyers managed to have the claims dismissed in the first instance court and to defend the client’s interests in the court of appeal.

Our lawyers helped the client to terminate the relationship under a purchase order with a contacting party that supplied equipment of inferior quality.

Provided support in a court dispute to recover losses caused by a fire

Our lawyers represented in court a company affected by a fire that had almost completely destroyed the client’s building which it used in production and leased out.  The company filed a claim against the owner of the building where the fire had occurred to recover the losses. These included the cost of the premises that were destroyed, the cost of the equipment that was located in such premises and lost profit (income in the form of rent payments that was never received).

A number of important issues were to be resolved as part of the dispute: Is there a way to recover losses from the owner of the building in which the fire broke out in the event that the owner is not at fault for the fire having occurred? Court practice in relation to this issue is contradictory. What volume of evidence should there be in order to confirm the losses and their amount involving the cost of the building and of the equipment that has been destroyed, including evidence of the fact that the equipment claimed was located inside the premises during the fire? Is there a way to recover lost profit in the form of the rent payments for the three subsequent years which were never received, when short-term contracts (for 1 year) were concluded with the tenants? In an overwhelming majority of cases which constitute the case law, lost profit is recovered until the expiration date of the last concluded contract. However, such contracts were extended on multiple occasions and if lost profit is recovered in accordance with such approach, this will not restore the violated rights of the client.

As a result, we won the case on its merits in first instance court and in the court of appeal.

A settlement agreement was concluded in a dispute involving potential losses of RUB 300 million

Our lawyers represented the client (a major manufacturer of dairy products) in courts of all instances.  The case was that the buyer unilaterally withdrew from a supply contract with no grounds for doing so. The client recognised such withdrawal as invalid.  The buyer’s unlawful withdrawal from the contract and failure to perform it have resulted in the client incurring losses in the form of lost profit owing to a lack of orders. Also, under the terms and conditions of the contract, the buyer was liable to pay a fine for a failure to achieve the annual volume of purchases.

Our lawyers managed to have a settlement agreement concluded in the first instance court.  Previously, the first related intangible claim had been won, which persuaded the opponent to enter into a settlement agreement.  

The project was complicated because traditionally, in judicial practice, efforts to recover lost profit encounter a conservative approach from courts when they assess evidence and acknowledge the losses. In this case, the approach used to calculate lost profit was to make a comparison with the same period of the previous year.

Represented a leading fast food restaurant chain in lease disputes

Our lawyers successfully defended the client (the world’s leading fast-food outlet) in Russian commercial courts.  Early this year the client faced a whole series of cases to terminate lease agreements owing to the client changing the trade name and trademark.  In all the disputes our lawyers managed to prove and form practice that the client’s change of its brand and suspension of activity in shopping malls had not caused any damage to the landlords.

It was critical for the client to form positive practice for subsequent negotiations with multiple landlords which intended to terminate lease contracts with the client in the spring of the same year.  The project was complicated because in Russia practice is only starting to form in relation to international companies leaving Russia and/or changing their brands.  


Tax law & tax disputes

Drafted an expert opinion for the High Court of Justice (EWHC)

The EWHC engaged a Senior Partner at Pepeliaev Group Rustem Ahmetshin as an expert in connection with a petition of the lawyers of a Swiss oil trading company, which was the defendant in a dispute to recover losses.  Rustem drafted an extensive expert opinion on tax issues that directly affect the amount of losses and reasons for them to arise.

The project is significant and unique owing to the amount of losses claimed (USD 1.9 billion), the duration and complexity of the dispute which requires the taking account of legislation of several jurisdictions in order to be settled, the complexity of the task set, i.e., to determine tax consequences of transactions that were concluded more than 10 years ago, and the assessment of their effect on the subject matter of the dispute.  In addition, we needed to examine the EWHC’s procedural rules on how to appoint experts and prepare expert opinions, to conduct multiple consultations with the lawyers of the company in order to obtain documents in the case and understand the substance of the dispute.     

Successfully defended a foreign holding company that enjoyed benefits under a DTT

Our team represented a subsidiary of a foreign holding company for which a field tax audit was scheduled with a view to assessing additional tax on interest paid to a related party, which was a Netherlands company.   The position of the tax authorities was that the beneficial owner of the interest was a company in an offshore jurisdiction, and, therefore, the DTT with the Netherlands that was still in effect in the audited period could not apply.  This position was officially expressed in a demand that adjusted tax returns be submitted and additional tax be paid at the rate of 20%.  After the company refused to do so, a field tax audit was scheduled.       

Our lawyers prepared extensive explanations and written evidence to refute the tax authority’s position.  The above concerned both the legal attributes of a beneficial owner of income, and facts (the status of the Netherlands company, its history and purpose, its personnel and the competence of such personnel, etc.)  Our team’s task was to advise the client on subsequent requests of the tax authority and to act as attorneys for the witnesses summoned for an interrogation.  As a result, the tax audit did not identify any violations.

The results of the project confirmed that financial and holding companies, including those from “suspicious” jurisdictions, essentially can enjoy benefits under DTTs as beneficial owners of income from Russia. 

Successfully defended a foreign company in a VAT dispute

Our lawyers represented an Austrian company that supplied services to a Russian customer.  Before beginning the work, it received a 100% advance payment from which the customer withheld VAT and transferred it to the state budget.  Subsequently, the company registered with the tax authorities as a permanent establishment and started paying all taxes independently.  After completing the work, it calculated VAT and paid it to the state budget in accordance with the law.  The tax authority refused to deduct VAT withheld when advance payments were received referring to the Tax Code not providing directly for such deduction.  As a result, VAT was paid twice on the same cost of work. 

Our lawyers provided comprehensive legal support to the Austrian company in filing tax returns, providing explanations to the tax authority and at meetings with its representatives as well as at all the stages of the decision of the tax authority being challenged through administrative and court proceedings. 

The first instance court supported the tax authority, but we managed to have this decision dismissed by the court of appeal.  This case was not examined by the cassation court.  The tax authority agreed to return VAT for the disputed period and other periods.

The project is significant and unique because we had to overcome the lack of regulation with respect to the VAT payment procedure in the circumstances that foreign companies often face.  The company’s position was built on the general principles of calculating VAT as an indirect tax, and of understanding its legal and economic nature. 

This dispute sets a precedent, since commencing work after an advance payment has been received is usual practice, including for foreign companies.   Payment of double VAT (i.e. 40% of the cost of work) makes any similar project manifestly unprofitable.

Successfully supported a court dispute in three instances

Our lawyers defended the world’s major manufacturer of precious metals, to which the tax authority denied deductions of VAT paid under the supplier’s VAT invoices.  The tax authority’s claims related to the purchasing of gold that was involved in a “scheme”. The scheme was as follows: banks transferred gold bars to entities controlled by the supplier under loan agreements without VAT being calculated and paid. The supplier purchased the gold from entities it controlled and subsequently supplied it to our client including VAT in its invoices.

The first instance court recognised the tax authority’s decision as unlawful, determining that the “scheme” was created and controlled by entities - the banks and the supplier - that were not related to the taxpayer. However, the court of appeal dismissed the decision of the first instance court and specified that the taxpayer's independent liability for obtaining an unjustified tax benefit consisted specifically of being involved in and controlling a tax avoidance scheme. The cassation court upheld the resolution of the court of appeal.

The Russian Supreme Court determined that the court of appeal had committed substantial procedural violations.  In addition, it specified that the first instance court also did not check the tax inspectorate's arguments and the company’s objections that were significant for resolving the dispute.  In this connection, the Russian Supreme Court dismissed the court judgements issued in this case and referred the case for a retrial.

When the case was being retried, the tax authority provided multiple new documents that the courts examined not only on their merits, but also in terms of whether they were relevant and admissible.  The courts of the three instances passed all decisions in favour of Pepeliaev Group’s client.

Challenged the results of a field tax audit

Pepeliaev Group’s lawyers supported a project that involved challenging a decision of the tax authority in court.  The dispute concerned application of double tax treaties with respect to a deduction in Russia of tax paid abroad.  We won the case in three instances. The project is unique because for the dispute to be settled, we needed to determine how the provisions of Russian legislation and those of foreign legislation correlate in order to determine both the contents of such regulations and the rule which should prevail. 

Advised on whether property should be classified as movable or immovable

Our lawyers advised a group of companies that used various legal approaches to classifying one type of property as movable or immovable, which resulted in various tax consequences.  Our lawyers helped the client to understand which legal approach to classifying specialised property may be used, taking into account the characteristics of such property, its purpose, how it is recorded in accounting reports, how it is actually operated, etc. 

If property is classified as movable, this may release the company from the obligation to pay property tax, and if property is classified as immovable, this, on the contrary, creates an obligation to pay the relevant tax.  In addition, companies should use a uniform approach in order to avoid claims from the tax authorities.  Our lawyers provided recommendations in particular on accounting issues and assessed the tax risks relating to a change in the approach that one of the companies used.               

The project is important owing to the issue being topical of the correct classification of property as movable or immovable. 

Built an internal control system for a company to switch to tax monitoring

Our team advised the client on building an internal control system for a company to switch to tax monitoring. 

As part of the project our lawyers diagnosed the company’s internal control system based on five criteria (the control environment, risk management system, control procedures, information systems and monitoring and assessment of the internal control system).  Moreover, we assessed how well the system was organised in terms of the requirements of the Russian Federal Tax Service and provided recommendations on how to enhance it not only with a view to entering into tax monitoring, but also for long-term corporate purposes.  

The short-term objectives and related tasks to build a risk management and internal control system were achieved and accomplished with the involvement of our specialists as part of the project's implementation.  The company successfully entered into tax monitoring and will become a participant of tax monitoring starting from 2023.

Our specialists formed a methodology with respect to the risk management and internal control system and built a global organisational structure by distributing functions and powers of business units and employees.

We prepared all of the necessary regulatory framework for the risk management and internal control system to function efficiently, developed guidelines, registers of risks and control procedures, prepared internal control system reports that are necessary for a switch to tax monitoring and on the first reporting days after the switch.

At the final stage of the project, reports were digitalised on the basis of Mail Ru’s Data Mart.

Tax monitoring projects are always complex and significant, since they involve analysing all of the aspects of the company's activity: the risk management and internal control system, tax and accounting, IT infrastructure, etc.  The quality of building the internal control system and its efficiency directly affect the level of the tax authorities’ trust in the taxpayer as a participant of tax monitoring.  When the tax authority made a decision that the company could enter into tax monitoring it agreed with the taxpayer’s assessment of the internal control system.

Provided support in entry into tax monitoring and developed a risk management mechanism for a company’s shareholder

Our lawyers supported a project that involved building in the client’s company a risk management and internal control system for entry into tax monitoring.  Simultaneously, the task was accomplished of building such a system as a management instrument for the shareholder. 

Our specialists diagnosed the company’s internal control system based on five criteria, proposed how to enhance and improve it in the future, formed a methodology, prepared internal control system reports (which included developing registers of tax risks and control procedures) and digitalised the reports on the basis of Mail Ru’s Data Mart.          

As part of the second task relating to the development of a management tool for the shareholder, our specialists compared methodological approaches within different production enterprises managed by the same shareholder, proposed a uniform approach and developed relevant internal regulations that are necessary for such approach to be implemented, built an organisational structure that allows the shareholder to control and assess the performance of the relevant business units, assessed the effect of tax risks specified in the register of tax risks on significant corporate figures, etc.

Thus, our specialists provided support to the company at the stage when it entered into tax monitoring and helped it to create an efficient management mechanism for the shareholder. 

Built a system for working with contracting parties for a large group of companies

Our lawyers helped the client to form a system for working with contracting parties (the “SWCP”) as part of the risk management and internal control system for a group of companies, several of which are participants of tax monitoring.  As part of the project, our specialists diagnosed the SWCP, analysed more than 70 internal regulations governing the SWCP to some extent, systematised the specified documents in accordance with the areas of regulation/phases of working with contracting parties at various stages, made a register of control procedures carried out at each stage for participants of tax monitoring to submit it to the tax authority, proposed and prepared amendments to internal regulations that significantly improved the efficiency of working with contracting parties and reduced tax risks, put forward proposals with regard to automation and conducted a corporate training event once the project was complete.

This project is significant both for internal purposes and for the purposes of interaction with the tax authorities.  The tax authorities assess the internal control system of the participants of tax monitoring, among other things, in terms of the quality of the system for working with contracting parties.  If efficient control procedures are in place, the level of trust in the taxpayer significantly increases.  For internal purposes the improvement of the SWCP that was performed facilitated the adjustment of internal business processes and controls. 


Intellectual property and trademarks

Developed metrics and criteria for the assessment of results of intellectual activity

At the request of the client who had a significant portfolio of patented inventions, our lawyers developed metrics and criteria for the assessment of potential effects of the solutions to be patented, the results and efficiency of using patented items in the Russian jurisdiction.  In addition, as requested by the client, our proposals with respect to the metrics and criteria were based on an analysis of the best Russian and international practices and took into account the specifics of the assessment both at the stage when inventions, utility models, and industrial designs are patented and at the stage when inventions, utility models, and industrial designs are used.

As an example, our specialists used leading Russian and foreign companies with high achievements in the area of creating and managing rights to intellectual property items, which included State Atomic Energy Corporation Rosatom, PJSC MTS, LLC Yandex, Huawei Technologies, Apple Inc., Toyota Motor, Samsung Electronics, etc. 

The project was important for the client because the metrics and criteria we proposed were based on the most efficient practices of leading Russian and foreign companies.  In addition, taking account of business needs, one group of metrics and criteria may be used at the stage when items are patented, since they may point to risks: for example, the result obtained is weak in terms of its subsequent protection.  Another group will allow the efficiency to be assessed of using the item after a period of time passes from its registration: for example, when a more efficient competing item (one’s own or another party’s) emerges.  The metrics and criteria that we have developed may be used, provided that they have been adjusted to some extent, in various areas of activity (financial, construction, etc.).  They can and should be provided for by internal regulations. 

Advised a client in connection with issues caused by parallel import of its goods

Our team advised a company that faced the issue of the parallel import into Russia of goods bearing the trademark it owned, which is well known to Russian consumers.  In addition, resale prices for such goods were lower than the prices for the goods the client sells itself.  Our lawyers prepared an opinion containing a description of the procedure for the client’s trademark to be included in the Customs Registers of Intellectual Property of the Russian Federation and of the EAEU member states and of the actions of the customs authorities when the release of goods is suspended. The opinion answers a number of ancillary questions, including those relating to possible liability for an unjustified suspension of the release of goods.     

Moreover, our specialists provided clarifications regarding the liability of the rightholder of the trademark and prevention of the import of counterfeit goods, as well as types of liability of persons importing counterfeit goods. 

The specific aspect of the project lay in there being practically no administrative or judicial practice relating to the parallel import of goods.      

Entering the client’s trademarks into the Customs Registers of Intellectual Property is vital for the client’s business, since this will allow the import to be prevented of counterfeit goods into Russia.  The project is significant for the legal system because it demonstrates prudence of the existing legal regulation of the Customs Registers of Intellectual Property, of the activities of the customs authorities and of the established liability for the violation of exclusive rights to trademarks.  The work we performed allowed the client to mitigate its risks. In addition, the risk has been substantially mitigated of inferior products entering the market that undermine the client’s brand.       

Supported the introduction of a new vaccine into the domestic and foreign markets

Our company is supporting a client, which is a Russian company that supports scientific research, in the introduction into the Russian and international markets of a new vaccine. The new vaccine is an innovative and unique product which is a result of the latest developments of Russian scientists.

The trademarks were planned to be enforced both through registration under domestic procedures and through international registration.  For the medicine to be labelled, registration of three trademarks was planned.  

With respect to the trademarks registered under the international procedure, the expert examination by domestic authorities is still ongoing in several countries.   The registration process was not easy. Several countries granted a provisional refusal of legal protection, which was grounded in the trademarks having unenforceable elements.  With the help of local patent attorneys we managed to obtain legal protection, sometimes through reducing the list of goods for which protection was requested.      

The expert examination of such goods is ongoing in 5 countries that are not included in the Madrid (international) system.  The timeframes in such countries substantially exceed the timeframes under the Madrid system.

This project is unique because when it was being implemented we needed to devise an approach to the registration of the trademark that would allow the legal protection to extend in the most effective way to the jurisdictions that the client was interested in.  As a result, the trademark was granted legal protection in most countries of the Madrid system.  Moreover, that legal protection can be granted to trademarks which include unenforceable elements based on the evidence of distinctive capacity makes it possible for us to achieve a change for the better in the legal system and in approaches to the examination of applications, as well as for us to represent the interests of our clients more efficiently. Finally, the implementation of this project allowed the client to arrange within a fairly short time international legal protection of the trademark for an important development.

Administrative law defence of business

Successfully represented the client in the commercial court

Our lawyers defended the client from which an original specification for technical product Chlorantraniliprole was claimed through court proceedings to be provided to an expert organisation. The specified product is a chemical that is an active ingredient of pesticides.  The company that we defended is the originator.  This was the first dispute of its kind in our practice.

We won the dispute in the first instance court, and the claimant refused to contest the court decision.

Won a dispute in the commercial court; the court decision was not subsequently appealed 

The lawyers of the practice represented in court a major international bank in a case that involved administrative liability being imposed.  The court bailiff accused our client of non-compliance with the bailiff’s resolution to recover monetary funds from the debtor in a period when the commercial court had introduced the supervision procedure with respect to the debtor. 

The general legislative provisions on enforcement proceedings were applicable in the case taking into account the special regulation of bankruptcy legislation.  The court bailiff specifically disregarded the above special regulation.

As a result our lawyers won the dispute in the first instance and the decision was not appealed.

Had an impressive amount of an excess fine refunded 

Our lawyers successfully defended the client in a dispute with the tax authority.  As a result, the court took the side of the client and recognised as unlawful a refusal to refund an administrative fine of RUB 30 million that was imposed in excess.

The tax authority insisted that it was not obliged to refund the fine, since the resolution to impose it had been performed. However, this happened after circumstances arose that obliged the tax authority to terminate the performance of the resolution.  The above circumstances related to the law being amended and the obligation being voided for the non-performance of which the punishment was initially appointed. 

Antitrust regulation

Prepared a reply on behalf of the client to a request of the FAS of Russia's Novosibirsk Department

Pepeliaev Group’s specialists helped the client to form a clear reply to the antitrust authority’s enquiry relating to a substantial increase in prices for office paper that included a number of issues relating to pricing and to the strategy of the company’s conduct on the market. A reply to the enquiry of the antitrust authority was prepared on the basis of a detailed analysis of the client’s business activity. As a result, regardless of the public response to an increase in prices for paper, no case was initiated with respect to the client.

A sharp increase in the cost of the price for office paper in Russia drew keen interest from the antitrust authority, which started to audit companies as to whether their actions contained elements of an antitrust offence.  The correctly drawn up reply allowed the client to avoid further audits. The antitrust authority identified no violations in the client’s activity and focused on actual violators of antitrust legislation.

Analysed the mechanisms of control of distributors’ maximum prices 

Our lawyers checked whether the mechanisms of control over distributors’ maximum prices that our client had developed contained any possible antitrust risks.  As a result, we prepared a legal opinion and proposed a number of recommendations on how to reduce the risks we identified.           

The above allowed the client to more efficiently monitor the maximum prices for its products when currency exchange rates are unstable and to mitigate the risks of antitrust legislation being violated. 

Supported the client in connection with a request from the prosecutor’s office

The practice's lawyers supported a major manufacturer of cleaning machinery as part of the proceedings relating to a possible violation of antitrust legislation.   The client received a request to provide a list of documents and information when the prosecutor's office reviewed the arguments in communications that legislation on protecting competition and entrepreneurs’ rights had been violated.

The communications were filed by a group of persons with which the company had previously refused to cooperate.  Nevertheless, owing to the client’s market share such actions could be classified as a violation of antitrust legislation in the form of abuse of a dominant position.

Within limited timeframes our specialists analysed the request and prepared a report in which they provided an exhaustive description of the reasons for the client to refuse to continue cooperation with specific companies. 

The prudent response to the request from the prosecutor’s office allowed the client to avoid negative consequences relating to a criminal case being initiated and law enforcement authorities conducting an audit.       

Provided legal support to a foreign fishing company in connection with a new federal law

The lawyers of the practice supported the client in connection with the coming into force of Federal Law No. 339-FZ dated 2 July 2021 “On amending the Federal  Law 'On fishing and preserving marine biological resources' and the Federal Law 'On the procedure for making foreign investments in business entities of strategic importance for ensuring national defence and state security'".  The client needed either to obtain approval from the antitrust authority and from the Government Commission for the Control of Foreign Investments of the control it obtained over a Russian company, or to dispose of part of the shares to meet the criterion for a foreign investor to be allowed to own such shares without the state's approval.              

Our lawyers meticulously collected all the documents and information necessary for notifying the antitrust authority about the disposal of the shares.  Our team also filed the notification and supported the process of it being examined.  The FAS Russia took the notification into account.          

Since the new federal law came into force recently, no procedure has yet formed for notifying the antitrust authority about the foreign investor’s disposal of the shares.  Our lawyers were among the first to successfully file the relevant notification with the FAS Russia under the new procedure.                                            


Banking and Finance Practice

Provided legal support to the bank as part of the termination of its activity in Russia

Pepeliaev Group’s lawyers provided legal support to a major Cyprus bank with a view to assessing the possibility of and the procedure for the termination of the activity of its Moscow and St Petersburg representative offices.  Our team was requested to provide assistance with respect to regulatory, employment, tax and civil-law issues and to prepare the necessary documents in connection with the decisions made.

In addition to the advice, our lawyers also helped the client to prepare documents to be filed with the Bank of Russia.    

Our specialists helped the client to avoid regulatory risks and the risks of disputes with employees of the representative offices and contracting parties when the decision was made to terminate the activity in accordance with current Russian legislation.

Drafted objections to tax audit reports      

The lawyers of the Banking Practice represented the client when examining objections and interacting with the tax authority.  As a result, our specialists achieved an unprecedented reduction in the amount of a fine further to the tax authority’s decision by justifying the need for the amount of liability to be reduced 16 times owing to mitigating circumstances.

Current Russian legislation provides for significant fines for credit institutions for each case when a notification is delayed about the clients opening/closing electronic means of payment, which in the event of a technical failure in the system with a large number of users automatically results in astronomical amounts of fines being recovered by the tax authorities.  Our lawyers helped the client to save RUB 3 billion.

Advised a major coal mining holding company on banking issues

Our lawyers advised the client on issues of a possible restructuring of credit obligations and hedging transactions relating to interest options in connection with the unprecedented situation and volatility of rates on the Russian market.  The advice was provided with respect to an amount of several million roubles. 

Supported the restructuring of a major Russian non-state pension fund

Our lawyers advised a major Russian non-state pension fund on issues of a proposed restructuring of the ownership of another fund. Our team’s advice included regulatory, tax and corporate aspects, as well as issues of obtaining approval of the restructuring from the Bank of Russia.

Our specialists thoroughly analysed the potential risks and developed a plan of measures to reduce time expenditures in order to avoid undesirable claims from Russian state authorities, as well as financial losses and reputational damage.

Anti-sanctions regulation of investments in Russian portfolio companies

Since March 2022 Pepeliaev Group’s lawyers have provided on an ongoing basis a leading private investment fund and its portfolio companies with comprehensive legal support on various restrictive measures that are being introduced with respect to transactions and settlements with non-residents from “hostile” states.

Our lawyers’ advice extends to a whole range of issues relating to restrictive measures with respect to transferring monetary funds, currency operations, concluding and performing financial transactions, transactions with securities, the distribution of profits and payment of dividends, restructuring corporate membership of portfolio companies, redomiciliation, preparing requests to various regulatory bodies, etc.

The profound expertise of our team with respect to anti-sanction restrictions and regulation in various branches of law and industries allows clients to avoid the risk of such restrictions being violated by using other legal means to resolve any issues.

Advised an international financial institution in connection with new regulation

Our lawyers provided comprehensive legal support to an international financial institution in connection with the procedure being changed for issuers of securities listed on the Russian securities market to disclose information. Russian legislation being amended required the procedures to be promptly adjusted for the client to collect information and prepare documents to be disclosed to the public in accordance with the new requirements. 

The scope of the advice included a wide range of issues from analysing the changed requirements for international financial institutions to drafting documents to be published (in particular, the Issuer’s Report) in accordance with the new standards.

This project was complicated because the regulatory burden has substantially increased for international financial institutions.  This required our specialists to make significant efforts to promptly bring the client’s documents into line with the new requirements.

Bankruptcy and anti-crisis protection of business

Provided anti-crisis support for the activity of a Russian subsidiary of a global manufacturer of household chemicals

Our lawyers implemented a project that involved providing anti-crisis support for the activity of a Russian subsidiary of an international holding company in connection with the application of sanctions and counter-sanctions.  

Our specialists prepared:

  • 7 legal opinions dedicated to the assessment of the company’s financial state, the risks of liability of the Russian management and possible guarantees of the business owners in connection with decisions that the company members had made;

  • an anti-crisis plan with a projected financial model and a short-term assessment of the scenario for the development of the economic situation;

  • 3 corporate agreements with the founders of the Russian company with respect to the financing of the reorganisation, the guarantees of the management and compensation for the potential risks of the management’s civil-law liability.         

As part of the project we have formed:

  • new approaches to the rehabilitation of a business when no financing can be obtained from the foreign members of a company; 

  • practical recommendations and a contractual base with respect to managing the risks of liability of persons controlling the Russian company; 

  • practical recommendations with respect to the specific aspects of business and internal debt restructuring in the conditions of sanctions and anti-sanctions legislation.

Settled intra-group legal relationships within an international company

Pepeliaev Group’s lawyers implemented a complex project that involved analysing the bankruptcy, corporate, tax, financial and sanctions aspects of settling an intra-group debt, potential reorganisation and liquidation, as well as supporting relevant transactions. 

The project was complicated owing to the specifics of the activity of leasing companies which cannot be terminated without terminating contractual relationships with lessees, as well as of the risks grounded in the toughening of anti-sanctions legislation and a dramatic change in the legislation regulating international settlements. 

We have formed new approaches to settling intra-group legal relationships of international companies and to the restructuring of business under conditions where sanctions and counter-sanctions are in force.      

Our Bankruptcy Practice won in the Russian Constitutional Court

Pepeliaev Group’s lawyers drafted an appeal on behalf of PJSC T Plus based on which the Russian Constitutional Court recognised as unconstitutional the provisions of article 134(1) para 2 of the Federal Law “On insolvency (bankruptcy)”.  In court practice, the application of the above provisions resulted in uncertainty when circumstances were determined that affect the order of priority of current expenses on the payment for power resources to the supplier. 

This applies to circumstances in which the termination of the energy supply or a decrease in its volume under an agreement concluded before a bankruptcy case was initiated can create a real threat of a technological and/or environmental catastrophe or result in deaths among the public.

The Russian Constitutional Court acknowledged that in such circumstances, payment for power resources to the supplier is supposed to be made as a priority as compared with other creditors under current payments. 

The problem that has been considered by the Constitutional Court is encountered on a vast scale and affects the interests of most utility companies. “The resolution of the Russian Constitutional Court will allow the balance of interests to be restored and protection to be granted to creditors that have to “cooperate” with the bankrupt for the purpose of protecting people, and of ensuring safety of production and the environment”, Partner Yulia Litovtseva points out.

It is recommended that the Russian State Duma adopt in the first reading a draft law to amend the provisions of articles 126 and 134 of the Law on insolvency (bankruptcy) in pursuance of Resolution No. 4-P of the Russian Constitutional Court dated 1 February 2022.

Defended the client in a dispute involving a transaction being invalidated and secondary liability being imposed

Our lawyers defended in two court instances the client as a trustee in a dispute on the invalidity of a trust management agreement.  Following a 3-year examination of the dispute in the first instance court and 40 court hearings, we managed to have the invalidation of the client’s agreement denied and to consolidate our success in the court of appeal. The outcome was that assets of the client worth a total of around RUB 8 billion were saved.

Not only did we succeed in proving the arm's-length nature of the terms and conditions of a complex agreement, but we also formed a precedent-setting position that transactions may not be contested that have been agreed with the legal predecessor of the majority creditor.

Successfully protected the client from secondary liability in bankruptcy cases involving 4 management companies

In as many as 4 bankruptcy cases of management companies the electric power supplier filed claims against our client, which is a major regional management company, for secondary liability to be imposed on it.  According to the claimant, the client delayed initiating the bankruptcy of its subsidiary managing companies and caused harm to the creditors by performing transactions and distorting accounting reports.

After several years of opposition, the courts agreed with all of the arguments of our lawyers and refused to impose liability on the client.  This allowed us to preserve the client's assets of more than RUB 3 billion and to protect the business reputation of an inter-regional group of companies in the utilities sector.

“We achieved such a result owing to an in-depth analysis of the nuances of the activity of management companies and immense work our practice team has carried out," comments Leonid Barkov, Head of the Practice Group.   "We successfully defended our client in more than 50 court hearings coming closer step-by-step to the result we needed.”

Anti-corruption compliance

Performed a comprehensive compliance audit of a company

Our lawyers conducted a comprehensive compliance audit of a company in the area of tax and corporate law, intellectual property and anti-corruption aspects.  Our specialists also provided relevant recommendations on how to mitigate the risks borne by the company’s management and beneficial owners that relate to the requirements of Russian and international anti-corruption and criminal legislation. Our integrated approach allowed us to identify related and cross-sector risks of the company and to devise general recommendations on how to overcome and mitigate them.  

Developed a new anti-corruption policy of a major international company

Our lawyers developed a new policy to fight corrupt activities, implement ethical conduct and prevent corporate fraud, which met the requirements of current Russian legislation and the client’s internal regulations. As part of the project our specialists also prepared a Resolution to organise a Corruption and Bad-Faith Conduct Hotline in order to implement the initial stage of a compliance investigation.  The policy involves the best Russian and international practices in terms of anti-corruption provisions and requirements, including the requirements for companies to take anti-corruption measures in accordance with article 13.3 of Federal Law No. 273-FZ “On combating corruption” dated 25 December 2008, as well as the FCPA, UKBA and other applicable provisions and recommendations.  When implementing the project we managed to perform a comprehensive analysis of anti-corruption risks borne when business decisions are made and to create a reliable system for preventing and identifying such risks.       


Land law, real estate and construction

Provided support when the client purchased warehouse complexes 

Our lawyers provided legal support to the client in purchasing two warehouse complexes, one of which was being built and the other one was planned.  Our lawyers were requested to: perform due diligence of rights and encumbrances in relation to the item to be purchased, prepare/agree with the buyer contractual documents which included sale and purchase agreements for a future asset, an easement and servicing agreement, and security and supporting documents.

In addition, our specialists provided support for acceptance, which included checking compliance with the purchase conditions and drafting/agreeing a transfer and acceptance certificate and supporting documents. It took a long time to implement the project, which included assessing the assets to be purchased at the stage of construction and after construction was completed, as well as accepting the assets afterwards.   

Prepared a methodology for classifying items as movable or immovable property 

Based on the legislative requirements as well as on administrative and judicial practice, Pepeliaev Group’s specialists developed a multi-stage methodology for classifying property under construction as well as existing property as movable or immovable property. The client is a Russian business unit of a global mining company that involves a mining and processing plant and a material and technical procurement base.

The methodology is an analytical development and is applicable for tax purposes.  The methodology will allow the client’s employees, who are experts in various fields (financial, technical, legal, etc.), to book various items of the property of a major production and mining entity.    

Provided comprehensive legal support in connection with the client’s plant being moved

Over several years, our practice team has provided comprehensive legal support to the client, which is a major foreign concern and manufacturer of electro-technical products, in connection with its plant being moved outside of a Russian city. 

Our lawyers were involved in active work to revise contractual documents as part of the transaction between the client and a local developer through which the project was implemented When performing the work we faced multiple complex issues relating to the construction of the main buildings of the restored plant and infrastructure facilities.  Our lawyers faced complex town-planning and land-law aspects and issues relating to the registration of immovable property, etc.  One of the most important aspects of work was advising with respect to compliance with new requirements of Russian legislation on obtaining the approval of state authorities with respect to foreign investors’ transactions with immovable property. 

Owing to the recent political events, the Russian legislature has approved a number of regulations limiting a foreign investor’s ability to dispose of assets and introducing an obligation to obtain approval for such transactions.  Since the relevant regulation was adopted as promptly as possible, some practical aspects of obtaining permissions from authorised bodies still remain unregulated.   Our specialists used all their knowledge, skills and experience in order to provide high-quality legal support to the client amid legal uncertainty.  The necessary approval of the transaction was successfully obtained from the sub-commission of the Russian Ministry of Finance.  The relevant experience can be treated as unique without exaggeration.

Provided comprehensive legal support in a project to upgrade a production facility

The practice's lawyers supported a project to upgrade the existing production of seeds in Stavropol Territory.  Our specialists carried out comprehensive structuring of an investment project between the client and its partner (both in terms of civil law and tax law).  Our team devised options for financing the project taking into account the tax consequences, and advised the client on complex issues relating to the construction of production facilities, as well as on individual corporate aspects. Subsequently, we drafted the transactional agreements. We were also requested to provide support for a challenge of the cadastral value of the land plots involved in the project. As a result of such challenge, the cadastral value was decreased by 60%.       

This project may be called complex and multifaceted for a good reason. Our tasks included literally all the legal issues that may arise in connection with the implementation of such a large-scale project: starting from corporate structuring to ‘technical’ recommendations to the client (based on court practice) on how to construct individual production facilities (in order to unambiguously determine whether in terms of their legal nature such facilities were movable/immovable property in nature). The project team included 10 specialists from various practice areas of Pepeliaev Group. 

Legal protection of information

Performed a comprehensive analysis of the processing of personal data of military medical professionals

The practice team advised the client, whose pharmaceutical business relates, among other things, to interaction with medical professionals of military treatment facilities and the processing of their personal data.  As part of its operation, the client needs to perform a cross-border transfer of personal data of the parent company’s medical professionals.  Our lawyers carried out a comprehensive analysis of aspects of the processing of personal data of the medical professionals taking into account the latest changes in the Federal Law “On personal data”. 

According to the amendments to the Federal Law “On personal data”, the Russian Federal Service for Supervision in the Sphere of Communications, Information Technology, and the Mass Media may limit or completely prohibit the cross-border transfer of personal data with a view to ensuring national security.  The recommendations of Pepeliaev Group’s specialists allowed the client to make necessary decisions to change the processes for collecting and processing personal data of medical professionals with a view to mitigating the risk of the cross-border transfer of such data being limited or prohibited.  In addition, our specialists’ clarifications regarding the general requirements for the processing of personal data of medical professionals in Russia allowed the client to prevent the risk of administrative fines being imposed for the relevant violations.

Performed an audit and optimisation of the processing and cross-border transfer of personal data

Our lawyers carried out an internal audit of the processing of personal data of Russian nationals, in particular, of the cross-border transfer of personal data within the client’s company. The tasks our specialists had to accomplish were as follows:

  • to analyse the current processing and cross-border transfer of personal data of candidates for employment, employees and contracting parties;

  • to determine the cases when the client should obtain written consent for Russian nationals to the cross-border transfer of personal data;

  • to assess whether Russian legislation on personal data applies to foreign companies when they obtain access to the personal data of Russian nationals; 

  • to determine whether the client should file a data processing notification with the Russian Federal Service for Supervision in the Sphere of Communications, Information Technology, and the Mass Media in order to be included in the register of operators;

  • to make sure that the client complies with the requirement for the localisation of databases in Russia. 

The audit we conducted allowed the client to optimise the processing and cross-border transfer of personal data of the client’s employees, candidates for employment and contracting parties inside a single IT infrastructure of an international holding company.  The optimisation of processes will reduce the risk of current Russian legislation on personal data being violated.

Provided legal support when the database localisation operator in Russia was urgently substituted

After SAP, which ensured storage of the client’s personal data in Russia, left the Russian market, the client needed to find as soon as possible an IT solution for compliance with the requirement for the localisation of databases in Russia. 

Our lawyers provided clarifications to the client regarding the requirements of Russian legislation with respect to the storage of personal data, including whether such data can be accessed remotely from a foreign state, and a legal assessment of whether the new IT solution met the requirements of Russian legislation.  

In addition, we performed a legal assessment of the IT solution the client was considering as to whether it met the requirement for the localisation of databases in Russia, and prepared recommendations concerning documents to confirm that the requirement is met in the event that the Russian Federal Service for Supervision in the Sphere of Communications, Information Technology, and the Mass Media conducts an audit. 

If the client had violated the localisation requirement, it would have been subject to an administrative fine of up to RUB 6 million.  Our recommendations allowed the client to mitigate the risk of liability and ensure the continuity of HR processes relating to the processing of personal data of the employees of a Russian legal entity inside a group of companies.

Digital Group

Successfully implemented a project in the area of Legal Design

The client instructed Pepeliaev Group to carry out Legal Design of the following documents: a user agreement, an anti-corruption policy, a code of ethics, and a policy for the processing and protection of personal data.  The scope of Legal Design services involves analysing documents and selecting the relevant visualisation form and tools, preparing options (references) of visual design, visual design of documents in accordance with the approved option, adding key words to the contents of the text, etc.  The involvement of lawyers in the implementation of Legal Design projects ensures that the developed solutions fully comply with Russian legislation and are of high quality.  When providing Legal Design services our specialists take into account the best global practices. 

Supported the client as part of remote electronic interaction with the tax authority

Pepeliaev Group’s specialists provided legal support to the client owing to the expiration of the validity period of the electronic signature of its general director of the company and head of a branch.   The main difficulty was that the positions of the general director and of the head of the branch were held by the same individual (a US national) who works remotely in another country and is unable to come to Russia to have his electronic signature reissued.  Our specialists were requested to ensure that the client could sign tax returns in electronic form after the expiration of the electronic signature of the general director (the head of the branch) without him being obliged to come to Russia in person.

The project was implemented when a large-scale reform was being carried out of legislation in the area of electronic signatures and electronic document management, which involved the procedure being changed for the electronic signature of the general director to be obtained, and terminating, on a mandatory basis, electronic signatures issued under old rules.

Provided comprehensive support to a major IT company included in the list of companies to “land” in Russia

Our lawyers are providing comprehensive legal support to a major IT company in business development issues in Russia.  The legal advice involves, among other things, the issues of compliance with the law on the “landing” of foreign IT companies, legislation on e-commerce, the protection of personal data, advertising and TMT.  Since the client is directly involved in advertising business in Russia, it was also concerned about the coming into force of amendments to the Federal Law “On advertising” with respect to establishing a Unified Register of Internet Advertising.

For the client, which is one of the small number of companies included in the list of companies to “land” in Russia and which has a multimillion audience in Russia, bringing its activity into line with Russian legislation is of paramount importance, first of all in terms of its image.  Non-compliance with the requirements for “landing” may result in advertising or search results being prohibited, payments being limited, and the client’s service being partially or fully blocked in Russia.

Customs law and foreign trade regulation

Obtained a refund of excess customs payments of over RUB 121 million

The team from the practice defended the client in a project that involved challenging the Moscow and Smolensk customs offices’ refusal to refund excess customs payments. The refund was connected with a retroactive change of the rate of a royalty paid for the use of a trademark. 

The project was complicated as the client claimed a refund of customs payments paid in excess with respect to goods that were imported not only before the relevant supplemental agreement was registered with the Russian Federal Intellectual Property Service (abbreviated in Russian as “Rospatent”), but also before such supplemental agreement was signed. Moreover, the client does not maintain shipment-based stock accounting which prevented us from comparing royalty payments and the relevant shipments. In addition, we discovered only one similar court case that had reached the Judicial Panel for Economic Disputes of the Russian Supreme Court, when the ruling went against the importer.

Our lawyers won the case in three instances. The Russian Supreme Court refused to refer the customs office's appeal for consideration.  As a result the client managed to have excess customs payments of more than RUB 121 million refunded.

Won a case on the deduction of transportation expenses in three court instances when it was retried after the Russian Supreme Court dismissed the cassation resolution issued in favour of the client

The practice's lawyers provided legal support to a client for which the Tver customs office disallowed the deduction of transportation expenses on transporting goods across the customs territory of the Union. In the customs office’s opinion, in order to confirm transportation deductions, the importer should provide documents that are not at its disposal owing to contractual relationships and customary business practices. Moreover, only the cost of the carrier’s services can be deducted, which means that the forwarder’s remuneration cannot.          

These decisions are caused by large-scale audits of importers launched in May 2018 at the initiative of the Central Customs Administration. The audits apply to both current supplies and to goods that have previously been imported. This question was raised by business delegates to the Russian Federal Customs Service and the Russian Finance Ministry in different forums. Further to an instruction of the Executive Office of the Russian Government, the Russian Ministry of Finance provided clarifications regarding the above matter that failed to draw a line under the problem. The court practice on such disputes has been contradictory.

Our lawyers managed to win the case in the first instance court. However, the customs office provided to the court of appeal the carriers’ letters that it received further to requests forwarded after the case had been examined in court.  Regardless of the procedural offence, the court of appeal dismissed the court decision and set aside the claimant’s claim.  In the cassation court our lawyers proved that the evidence the customs office had provided with procedural violations did not refute, but on the contrary, confirmed our arguments.  As a result, the cassation court dismissed the resolution of the court of appeal and upheld the decision of the first instance court.  The customs office’s appeal was referred to the Russian Supreme Court's Judicial Panel which dismissed all of the decisions of the lower courts and referred the case for retrial.  Subsequently, the practice's team won the case in three court instances and the judge of the Supreme Court issued a ruling to set aside the customs office’s new appeal. The legal positions set out in the Supreme Court’s first ruling signposted the direction of the future court practice.

Provided comprehensive support to a client in courts and carried out subsequent legislative drafting

The practice's lawyers represented the client in courts of general jurisdiction as they considered administrative cases initiated by the Murmansk customs office and in state commercial courts as they considered the client's claim to have a decision of the Murmansk customs office invalidated.

Based on the results of the customs audit, six administrative cases were initiated. Fines in such cases are calculated based on the cost of the goods (from 50% to 200%), which in this case is the cost of a vessel. Export duties were recovered on exported fuel. A criminal case was initiated under article 226.1 of the Russian Criminal Code (smuggling strategic resources (oil products)).

Our lawyers contested in the commercial court the decision to recover the import customs duties.  Courts of three levels agreed with the company’s position that the fuel was a part of supplies and could be exported to supply the primary vessel without being declared to the customs authority.     

Under the first administrative case, the judge imposed a fine of 50% of the cost of the vessel, which was more than RUB 43 million.  The remaining five cases were terminated on the grounds that the violations were minor. Our lawyers prepared a petition to the General Prosecutor’s Office for a protest to be lodged. This protest was lodged by the Murmansk transport prosecutor. As a result, the Murmansk Regional Court dismissed, further to the client’s appeal, the resolution to impose a fine and also terminated the case on the grounds that the violations were minor.

In view of the results achieved, the criminal case was terminated. A conflict between the rules of customs legislation and of legislation on the state border giving rise to customs risks as well as risks of administrative and criminal liability for ship owners was resolved in this case in favour of the client.            

This project is unique because the position of the Murmansk customs office was based on a reference to the existence of a legal conflict (that the rules of the law on the state border that regulate the arrivals and departures of vessels based on a permission for multiple crossings of the border without undergoing customs control contradict the Customs Code of the Eurasian Economic Union). The customs office was using this reference to ignore the rules of a current federal law and permission documents issued by the Border Service of the Russian Federal Security Service. Also, the customs office had received a written position of the Russian Federal Customs Service which also referred to this conflict and to the priority of the rules of the Customs Code. However, the client received clarifications from two other customs bodies which upheld its position rather than that of the Murmansk customs office and of the Russian Federal Customs Service.

Further, the positions of the courts were inconsistent.

The results of the project are important for ship owner companies, because almost all of them use similar permissions of the State Border Service.

This project triggered the drafting of amendments to the Customs Code for the legal gaps to be closed that give rise to such risks.  The amendments we have drawn up were approved by all Russian state authorities, the Eurasian Economic Commission and all of the EAEU member states and were included in the Protocol of amendments to the Customs Code.

Successfully provided legal support to a client in a dispute with the tax authority

The practice's lawyers defended the client, which, according to the customs office, had erroneously classified oil products manufactured and shipped.  For the purposes of calculating excise duty on petroleum feedstock the taxpayer must determine the types of oil products based on the codes of the Commodity Classification for Foreign Trade which, in spite of the fact that petroleum feedstock is not exported, must also be determined by the taxpayer.  In view of the physical and chemical parameters, some products cannot be classified as liquid fuel. Therefore, the client classified them as lubricating oils.  However, in the tax inspectorate’s opinion, they should have been classified as residue.  As a result, the amount of excise duty to be deducted and refunded substantially reduced.  In addition to a recovery of debt and a penalty, the client could face liability under article 122(1) of the Russian Tax Code.  Our lawyers prepared objections to the Audit Reports, including diagrams showing the algorithm for classifying the goods, arranged for an expert opinion to be obtained, prepared a request to the Russian Ministry of Finance and participated in the examination of the objections by the tax inspectorate. As a result, the tax inspectorate agreed that the client had classified the products correctly.              

The project was complicated because the contested goods were not exported; therefore, customs declarations could not be used as evidence.  Employees of the customs office are not experts in classifying goods under the Commodity Classification for Foreign Trade.  Moreover, according to information that the tax inspectorate provided, all remaining oil companies classify similar products in accordance with the code of the Commodity Classification for Foreign Trade that relates to residue.  


Employment and migration law

Provided legal support on a wide range of issues of employment law   

The team of our employment law practice provided legal support to the client on a wide range of issues concerning working hours, requests from state authorities, dismissals, etc., as well as issues that arise in complex non-standard situations and in the event of potential conflicts with employees.  Our lawyers advised the client on subsequent actions to restructure its business in Russia, and on drawing up and describing various strategies, their consequences and risks.  A specific feature of this project was that the client’s activity related not only to office work, but also to remote work and work on production sites.  In view of the above, we had to take into account both the company’s general policies and rules, and also specific aspects of the labour of various categories of employees in different regions of Russia. 

Provided comprehensive advice to a client (a global corporation) on issues of employment law

The practice's lawyers supported the client in various issues and tasks, which included imposing disciplinary sanctions on employees, organising the payment of bonuses and compensations, settling conflicts, advising on various regulations and provisions relating to business trips.  In addition, our specialists provided regular legal support on issues relating to the pandemic.  Moreover, the practice team provided assistance in a global restructuring of a group of companies, including in connection with a lay-off of personnel in the Russian jurisdiction, and provided advice on “anti-COVID” regulation and remote work.             

Providing such in-depth support requires us to understand the client’s business processes, to promptly respond to the requests arising and to have a high level of expertise.  This work is specific, since, among other things, we advise the client’s foreign specialists who are located in the EU.  In this connection, in this project we familiarise the client’s representatives with various legal tools used in Russia taking into account specific aspects of the local regulation.

Defended a major pharmaceutical company in an employment dispute

The practice's lawyers represented the client in a dispute with an employee who believed that his redundancy was unlawful.  Over the past two years most decisions in such disputes have been made in favour of employees, specifically in the cassation court. However, our specialists managed to defend the company’s interests at all stages.  With a view to defending our position, we engaged an expert who provided an expert opinion on the substance of a position which was introduced shortly after the claimant had been dismissed and which the claimant believed to be similar to his position. 

The case was significant, since the company continued operating with the initially conceived HR structure, did not allow the toxic employee to be reinstated and prevented disputes with other employees, avoiding substantial related material expenses.  The project required not only profound knowledge of employment law and of administrative and judicial practice, but also of specific aspects of the activity of pharmaceutical companies.

Provided emergency support to employees of clients amid partial mobilisation

After partial mobilisation was announced in Russia, our lawyers prepared in record time overviews and themed webinars for clients which were conducted taking into account the industry where companies specialised.  In September and October we held 2-3 webinars a day.  

There were so many requests that needed an immediate response that our team also launched a hotline on partial mobilisation for clients’ employees.

The above measures allowed us not only to provide tangible assistance (to develop a plan of actions for the company and its employees), but also to reduce the tension within our clients’ companies.   


Life Sciences

Analysed requirements for the packaging and labelling of hygiene products in 9 jurisdictions

The practice lawyers conducted a legal analysis of mandatory requirements for the packaging and labelling of more than 30 various types of goods (including personal protective equipment, children’s cosmetics, perfume and beauty products, medical devices, etc.) in 9 jurisdictions and prepared a checklist for the company’s employees.  This work was aimed at mitigating risks relating to claims with respect to the packaging and labelling of goods produced and imported, including in countries where regulatory requirements are not publicly accessible.

The task was complicated, since not all countries have approved the EAEU’s technical regulations and necessarily use uniform interstate quality standards.  A legally verified checklist allowed the client a) to mitigate the risks relating to possible claims from customs and other supervisory bodies (including in the areas of healthcare, the protection of consumer rights, sanitary safety, etc.) and therefore, to reduce the amount of unplanned losses, thus increasing the business's profitability; b) to build the best production and logistics processes, minimise expenses on re-labelling, applying stickers, etc., optimise the processes of declaring the products’ quality in the jurisdictions.

Provided legal support in localising the production of a medicine in Russia 

Our lawyers supported a project that involved localising the production in Russia of a medicine from the list of vital and essential medicines.  Our team was to: draft an opinion on the legal and tax risks relating to various contractual models for the transfer of rights to the product and organising contract manufacturing; analyse contracts for the acquisition of rights to the product; develop a template agreement for contract manufacturing; and advise the client on how to use the agreement when documenting a specific transaction.              

The project was complicated because a) the state strictly regulates the price for the medicine and wholesale and retail mark-ups, i.e. various contractual mechanisms must be used in compliance with current sector-specific rules, including administrative practice and tax provisions; b) the model of relationships between the parties involved using the sources and materials of the customer (tolling), i.e. the medicine was to be manufactured from customer-supplied raw materials, and therefore, it was specifically relevant to set out in the agreement how liability should be allocated for the quality of the finished product.  Also, in the agreement for contract manufacturing specific focus was devoted to: a) settling issues of intellectual property, since in the manufacturing the contract site will use a manufacturing technology that meets the criteria of the enforceability of a know-how; b) mitigating the risk of the agreement being reclassified, which required the parties’ actual intentions and obligations in the manufacturing to be determined in as much detail as possible.

Examining the legal consequences of using various contractual models allowed the client to make an informed and balanced decision regarding the procedure for documenting contractual relationships with the contract site.  The implementation of this project with respect to drafting contractual documents allowed the production of the medicine to be localised in Russia with possible commercial, tax and regulatory risks being mitigated.

Provided full-fledged support for the process of changing the distribution channel of a medicine

Our specialists helped the client, which is an international pharmaceutical group of companies, to change the procedure for medicines to be supplied to Russia and the distribution scheme.  The lawyers were requested to: a) assess various options for restructuring contractual and corporate relationships in terms of legal and operational risks; b) develop a commercial policy on interaction with distributors that reflects the client’s interests and is in compliance with Russian legislation and relevant administrative, court and business practice; c) prepare intragroup contracts (for the supply of medicines and registration services; agency agreements); d) draft a template supply contract with Russian distributors.          

Our lawyers drafted a memorandum describing the procedure for a trading company to be established in Russia, while they also drafted a commercial policy and the necessary contracts.  When developing the documents we mainly focused on analysing the options for the practical implementation of proposed supply/payment scenarios in view of counter-sanctions and for mitigating the client’s tax, antitrust, regulatory and contractual risks.   

A specific feature of this project was that we needed to build business processes and form contractual and regulatory documents when both EU and Russian legislation is highly volatile.  The proposed change in the business model of presence in Russia will allow the European group of companies to continue supplying medicines to the Russian market by improving business processes and mitigating the potential costs and risks.

Prepared regular overviews of counter-sanctions and measures of support for the pharmaceutical business

When the pressure of sanctions increased and counter-sanctions and measures of support were being implemented on a regular basis, our clients needed prompt, brief, informative, objective and accurate information both about adopted laws and items of subordinate legislation, and about draft regulations that had been announced as well as relevant court practice.  In addition to the general information about the new developments being implemented, the clients also requested a brief description of the possible effect of the regulations to be adopted specifically for their business.  In view of the above, we prepare for our clients daily/ weekly/monthly overviews of counter-sanctions and measures of support that are relevant for pharmaceutical companies as well additional comments concerning the applicability and potential impact of regulations, and recommendations as to how to prepare to comply with the new requirements.       

When clients receive objective, relevant and accurate information in a convenient form, they are able to make balanced and informed management decisions and adjust the companies’ operation taking into account the provisions adopted, thus ensuring the stability of their business and mitigating risks.  



Represented the client in a high-profile dispute with the Federal Service for Supervision of Natural Resources (abbreviated in Russian as “Rosprirodnadzor”)

Our lawyers represented the client in a high-profile court case relating to whether a person subject to extended liability of manufacturers and importers (ELM) was complying with disposal standards. Regardless of the fact that the court fully supported Rosprirodnadzor’s position, this precedent became extremely important for the entire market and demonstrated the imperfection of the existing regulation where a person subject to ELM can actually be liable for non-compliance with a disposal standard without being at fault.  

A fine for inaccurate reports on compliance with disposal standards is stipulated by article 8.5.1(2) of the Russian Code of Administrative Offences and is a strict sanction in the form of double the environmental fee for the volume of waste the disposal of which, according to Rosprirodnadzor, was not confirmed by documents.  The obligation to file reports with Rosprirodnadzor is vested in the manufacturer/importer. However, in the vast majority of cases, the manufacturer and the importer do not dispose of the waste independently, but rather transfer it to a specialised disposal company.  The regulator is interested specifically in the source documents of such a contracting party. 

The manufacturer/importer itself, which is subject to administrative liability, is not involved in drafting inaccurate documents.  Moreover, the ability of the customer (who is a person subject to ELM) to somehow affect the contracting party’s activity to actually perform the services agreement concluded with it is limited by the provisions of civil law.  The specified provisions cannot ensure the level of control that the regulator obviously expects.  In addition, in such cases a person subject to ELM does not have any leverage at all to monitor whether the disposal company’s contracting parties are performing the relevant work.

As we know, a legal entity is found guilty of committing an administrative offence if it is established that such entity had an opportunity to comply with the rules and regulations for the violation of which the Russian Code of Administrative Offences provides for administrative liability, but this entity has not taken all measures within its control to comply with them. However, the courts of both instances disregarded this principle.  In accordance with the above interpretation of the provisions of the Russian Code of Administrative Offences, the manufacturer and the importer may be subject to liability without being at fault. 

This case created a significant public reaction and confused the market as to what criteria a person should be guided by in order to prove its good-faith conduct to the regulator.  Partially, the response to such lack of information manifested itself in the form of a draft law of the Russian Ministry of Natural Resources to reform the institution of extended liability of manufacturers. The draft law attempts to introduce a mechanism to verify disposal companies directly and to provide for them to bear liability if it has been identified that they provide inaccurate information about the volume of waste that has been disposed of.

Defended the client in an environmental dispute with Rosprirodnadzor

Our lawyers represented JSC Caspian Pipeline Consortium-R (“CPC-R”) in a high-profile case connected with an incident that occurred on 7 August 2021 in the oil-loading terminal of JSC CPC-R, which resulted in oil spilling into the water of the Black Sea. The incident was one of the most talked about cases and one of the largest spills of oil products in recent years. Rosprirodnadzor demanded that the client be charged more than RUB 5 billion as compensation of damage caused to the body of water.

The team of lawyers provided comprehensive legal support to the client, which included pre-trial advice; litigating on behalf of the client; and handling appeals against the judgments to hold the client liable under administrative law.

The judicial decisions in this case are notable for the courts' atypical approach to the application of a multiplying factor (KDL-coefficient) of five in the calculation of damage. Courts also applied a non-standard way of calculating the amount of oil spilled in the body of water in consequence of the incident.

Entering into a settlement agreement between Norilsk-Taimyr Energy Company and the Russian Federal Agency for Fisheries

Our team advised Norilsk-Taimyr Energy Company JSC on issues of reimbursing damage to biological water resources within court proceedings against the Russian Federal Agency for Fisheries (the “Federal Agency for Fisheries”). This case became a continuation of the large-scale proceedings of Rosprirodnadzor against the Russian Federal Agency for Fisheries in connection with the leakage of diesel fuel in May 2020 into the Ambarnaya and Daldykan rivers. We were instructed to participate in preparing procedural documents and advise the client: on the content, interpretation and application of the provisions of the methodology for calculating harm, and on the mandatory requirements imposed by the current regulatory and technical documents for obtaining permissible evidence in the case, including requirements for the preparation and research of sampling documents, and requirements for persons authorised to conduct sampling and research sampling documents, as well as represent the client in court. As a result the parties managed to enter into a settlement agreement.

In this court case, the supervisory authorities applied, for the first time, new approaches to determining the amount of environmental damage that could lead to large-scale negative implications for business. Within the scope of the court proceedings against Rosprirodnadzor the court upheld most of such new approaches.  Nevertheless, within the court proceedings against the Federal Agency for Fisheries the parties agreed on the manner of and procedure for the full reimbursement ‘in kind’ of damage caused to biological water resources. The court approved the relevant settlement agreement. Thus, owing to our team’s efforts, the case against the Federal Agency for Fisheries was resolved in favour of the client. 


Energy and Natural Resources

Comprehensive advice to an oil company in connection with changes to legislation

Since 2019, our team has been advising an oil company, a joint venture between major Russian and US oil companies, which was set up to develop a group of oil fields in West Siberia, on a wide range of issues from legal due diligence of the assets (oil fields) to be acquired to regulatory matters. In the spring of 2022, a whole layer of regulation was adopted concerning subsoil use (as a strategic sector of the Russian economy) and, in particular, foreign investment in this area. Our lawyers have worked on a range of complex tasks and issues concerning licensing, sanctions, corporate and other aspects. On our part, it took the joint efforts of several of the firm's practice areas, led by Partner Natalia Stenina, who heads the firm's Environmental Group. As a result of this teamwork we worked out a way to safeguard the interests of the client in the best way possible.         

A particular challenge of the project was that the newly adopted regulation had been developed very quickly in a rapidly changing political environment. Given the tight deadlines, not all new legislation proves to be sufficiently worked through and detailed. Our lawyers have had to draw on previous experience, knowledge of the regulator's standard approaches and practice involving certain issues, as well as making forecasts as to various ways in which the new rules may be applied. 

Legal support to a member in a regional investment project in view of the changes in the rules for applying tax benefits

Our team provided support to a participant of regional investment projects. In 2021 the rules for mineral extraction tax and profit tax benefits for regional investment project participants were changed: the aggregate amount of benefits relating to these taxes was limited to the amount of capital investments performed within 5 years from such participants' entry in the register of regional investment projects. At the same time, such capital investments must be reflected in the participant’s investment declaration. The new rules allow for the status of a regional investment project participant to be withdrawn (together with all the benefits from the moment when such status was received) for a failure to make capital investments in the volume required.

In this regard our lawyers helped the client to make changes to the investment declaration to protect the capital investments that had been made and justify the tax benefits. As part of the project it was required to check whether investments may be classified as contributions of capital within regional investment projects, what the timeframes for such contributions are and how they must be documented to avoid claims of tax authorities. In addition, our specialists have developed a legal arrangement for changing preferential treatment for an individual part of a project, specifically, the arrangement for switching from regional investment project treatment to the treatment of Advanced Development Areas (ADA).

The project was complex and important because, on the one hand, the client faced a huge risk of being deprived of all benefits provided since the work started and, on the other hand, there is no practice of applying new provisions. At the same time, a unified approach is required to protect the rights of the users of subsoil who are participants of a regional investment project.  

Advised a gold mining company on issues of tax benefits

Our lawyers advised a large gold mining company in the run-up to the main investment stage and the start of the development of a gold deposit. Our team’s objectives included a comprehensive analysis of legislation on regional investment projects insofar as a specific project is concerned, as well as studying the company's current operational processes and giving recommendations on how to improve them to mitigate tax risks and put together a “defence file”. The lawyers of Pepeliaev Group have put together an extensive library of information about regional investment projects, prepared recommendations on liaising with contractors and arranging for the document management processes, as well as assisting in preparing a “defence file” to cover the questions that tax authorities may have. 


St Petersburg Office

We successfully settled in favour of a major oil processing plant a complex case involving the recovery of considerable debt from a contracting party within a bankruptcy procedure

The case concerned the bankruptcy of a major manufacturer of petrochemical equipment. Thanks to the successful strategy that our lawyers had developed, we managed to have the client’s claims for more than RUB 570 million included in the register of claims, refute the debtor's counterclaims in court, challenge the debtor’s transactions for an amount of more than RUB 2 billion, as well as attaining other meaningful results for the client in court in more than 40 individual disputes. As a result, the court dispute was settled and the debt to our client was paid.  

Comprehensive legal due diligence of two major retail networks (all in all, more than 250 properties) before they were acquired by the client

In the interests of our client, one of the largest Russian networks of hypermarkets, the lawyers of our St. Petersburg office implemented within very tight deadlines two similar projects that involved comprehensive due diligence of properties that the client was planning to acquire in the near future. In both cases we also prepared detailed recommendations on how to eliminate the defects identified in the assets prior to consummating the transactions and how to negotiate with the seller. At present, both transactions are being closed.

Successfully protected a major company of the oil and gas sector in a dispute over the unjustified collection of more than RUB 260 million in connection with a contractor agreement being terminated

The losses that were charged from our client (the defendant) were connected with its unilateral repudiation of the agreement and represented expenses that the contracting party (the claimant) had borne prior to termination. Our lawyers managed to prove that there were no grounds for losses to be compensated at the client's expense, given that the agreement had been terminated through the fault of the claimant itself (due to delayed performance), while most of the expenses were not supported by documents and were unrelated to the agreement. We protected the client from being unreasonably charged more than RUB 260 million of losses. The court dismissed the opponent’s lawsuit against our client in full.    

Supported a EUR 10 million transaction in which our client purchased a collection of contemporary art from abroad

The work of our team included preparing the sale and purchase of the collection and exclusive rights, as well as developing special guarantees and protective measures to mitigate the purchaser's civil law, tax and other risks in the current conditions. As a result, the transaction involving the acquisition of the collection, which included more than 100 works of well-known Russian artists, was successfully completed. 


Far East Office

Comprehensive legal support for a multibillion-dollar transaction

The experts of Pepeliaev Group provided legal support in a multibillion-dollar transaction where a Russian LLC was sold to and bought by a foreign company. Our lawyers advised the parties on all matters of the sale of membership interest and put together documents for the Russian notary to certify the transaction. This included advising on how to formalise documents and forms for the registration of amendments in the Unified Register of Legal Entities, assisting with the collection of necessary documents, preparing the necessary applications, as well as liaising with the Russian notary and state authorities in the process of examining the application. In the course of the performance of the transaction our lawyers interacted with various jurisdictions: Russia, India and UAE.

The project was complex owing to the large value of the transaction and the fact that preliminary agreements were signed under the laws of the UAE which affected the process of preparing the transaction in Russia.

Developed a corporate agreement between Russian and Chinese companies

The team from PG’s office provided comprehensive legal support to the client in drafting a corporate agreement between a Russian LLC and a Chinese company, as well as developing the business structure of the transaction. In addition, our lawyers advised the client on the issues of approving and entering into the corporate agreement and on negotiations with the Chinese party.

Within the project we were required to develop a plan and all the necessary documents for a Chinese investor to make investments in a Russian enterprise with the Chinese party setting a number of restrictions and conditions. The client’s main objective was to preserve the assets of the Russian company if the Chinese company fails to comply with the schedule of investments.

Advised a Korean client on doing business in the Far East

Our lawyers advised a major Korean corporation on creating a data centre in the Nadezhdinskaya advanced development territory. The project was complex in view of there being no direct legislative regulation on the subject of creating a data centre with the stated characteristics and in the interests of the Korean investor. Our experts had to offer the client specific measures for preventing various risks that were relevant to the Korean investor.                       


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