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Pepeliaev Group’s key projects in 2024

14.01.2025
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. 

Tax Law

Analysed the tax risks and tax potential of the group’s companies and developed a tax calculator

A team from the tax practice performed a comprehensive analysis of the tax risks and tax potential of companies that form one of the largest groups in Russia. 

Within the scope of this project our lawyers analysed the report, internal company documents, contract documentation, and special features of the group’s companies’ business activity. They conducted multiple interviews with employees; formed a report containing cards of the tax potential and tax risks; prepared a proposal for restructuring the group taking account of the tax payments performed, risks and potential; prepared proposals to re-distribute financial flows; and prepared a tax calculator to be used in the process of budgeting as well as forecasting financial flows.

In addition, our lawyers provided recommendations on some controversial situations which had remained unresolved over an extended period of time.

The tax calculator that we have developed is a unique instrument that the client had never used previously. This is a universal solution which can be used for budgeting and forecasting financial flows of group companies, taking into consideration the tax accounting and bookkeeping of such group companies and the industry-related specifics of their activities.

Providing “turn-key” support to a client adopting tax monitoring

A team from the practice group is supporting a major mineral extraction company in adopting tax monitoring from 2025 in terms of building the risk management and internal control system (RM&ICS), preparing and approving the necessary forms at the stage of their adoption, as well as reporting forms for Q1 2025.

The objectives of our lawyers in this project include:
  • assessing the current level of the RM&ICS, drafting a road map towards adopting tax monitoring from 2025;
  • developing and obtaining approvals with respect to the model of organising the RM&ICS taking into account the current organisational structure and availability of resources;
  • conducting an audit of tax and accounting reports, identifying tax risks, and compiling a register of these risks;
    • the company’s risks determined for the purposes of tax monitoring;
    • risks inherent in individual transactions and operations;
    • corporate control procedures required for tax monitoring;
    • assessing the level of organisation of the internal control system;
    • information about arranging for internal control in the company;
    • a matrix of risks and control procedures.
  • developing the policy on the RM&ICS for tax monitoring purposes, the methodology of managing tax risks, the methodology of controlling procedures, and the methodology of monitoring, assessing and improving the RM&ICS;
  • analysing the Internal Regulations (IR) prepared by the client that govern the RM&ICS;
  • developing regulations on the procedure for conducting an internal audit;
  • updating compulsory forms for adopting tax monitoring.

Developed internal regulations of the risk management and internal control system

A team from the practice has prepared unified internal regulations of the risk management and internal control system in the head and subsidiary organisations of a major mining company.

Our lawyers analysed the current elements of managing risks in general and of tax risks, in particular, elements of internal control in general and internal tax control, in particular. The specialists of the practice developed a draft of detailed regulations on the management system for tax risks and internal control for tax monitoring purposes, including sections devoted to general provisions, the control environment, organisational structure, managing tax risks (with methodological and procedural approaches), internal tax control (with methodological and procedural approaches), and the monitoring, assessment and enhancement of the RM&ICS. Our lawyers’ tasks included analysing the specifics of the activities of subsidiaries, and devising separate approaches to the level of risk materiality and other risk parameters.

As a result, the client received a working document constructor that can be used by any company that joins tax monitoring.

On behalf of VimpelCom PJSC, we won a tax dispute that lasted many years and reached the Constitutional Court

Rustem Ahmetshin, a senior partner at Pepeliaev Group, and senior associate Alexander Kuznetsov represented VimpelCom PJSC in a dispute with the Russian Federal Tax Service which lasted for over four years and ended in November 2024.

In this case, the company was challenging a decision of the Federal Tax Service to schedule a tax audit because the deadline had expired for an audit to be held. It was important for the client to protect the stability and definite nature of its tax status with respect to a period that was already closed for tax audits. The definite nature of the tax status means not only profit being safe from tax claims, but also a liberation of internal resources for other tasks and the transparency (and confirmation of good-faith behaviour) for investors, banks and contracting parties.

At first, commercial courts of all levels disagreed with the company and the Supreme Court ruled that the Order of the Federal Tax Service underlying the scheduling of the audit was lawful. The company then applied to the Russian Constitutional Court. Here, it was held that the provision of the Russian Tax Code at issue in the case contradicted the Russian Constitution, so the case was sent for review (see Resolution No. 41-P dated 14 July 2023).

The review lasted for almost a year. The first instance court ruled against the company, but the Ninth State Commercial Court of Appeal set aside the lower court’s decision and upheld the client’s claim. The court of cassation dismissed an appeal filed by the Federal Tax Service.

The lawyers of Rustem Ahmetshin’s practice group and Rustem himself provided full legal support in the project at all levels, including preparing lawsuits, complaints and other procedural documents. They participated in the court hearings of the commercial courts and Supreme Court, prepared an extensive appeal to the Constitutional court and continued representing the interests of the company in the commercial courts during the review of the case.

The specific feature of this case is that in order to protect the interests of the client all legal tools were used, including applications to the Supreme Court and Constitutional Court. We note that the rules of the Tax Code have been held to be unconstitutional only 15 times in the 25 years that the Tax Code has existed.

The project is unique because it was a decision of the Central Department of the Federal Tax Service, rather than just of a local tax authority, that was held to be unlawful. To the best of our knowledge, this is an unprecedented situation.

Finally, this project is important for the legal system in general. It raises to the constitutional level the issue of compliance with the deadlines for scheduling audits and highlights the fact that these issues must be thoroughly regulated in legislation, given that they directly affect the stability of the taxpayer’s tax status and, ultimately, the stability of business.

Provided legal support when the outcome of a tax audit was appealed out of court

The team of the tax practice represented the interests of an owner of major shopping centres. Tax claims were raised against the client over two breaches that were classified as deliberate misconduct: the unlawful deduction of the loss after the merger of a loss-making company and the unlawful deduction of VAT in relationships with a suspicious business partner. The task set before our lawyers was not to allow for the breaches to be classified as deliberate and to justify that the merger of the loss-making company did not have a tax-related objective and, consequently, the loss was deducted in line with the law. Had the results of the audit been held to be just, the client would have borne considerable losses. In addition, it was of the utmost importance to shield the management of the company from personal risks arising from the breaches being classified as deliberate.

The specialists of the practice prepared detailed objections to the audit report, represented the interests of companies during the review of the audit materials, advised the client during additional measures of tax control and participated in the interviews of witnesses.

As a result, both the tasks were resolved: the claims relating to the losses from the merged company were not included in the ultimate decision of the tax authority, while the second offence was classified as unintentional and the fine it entailed was reduced severalfold.

Analysed the tax implications of the termination of lease agreements

A team from our tax practice advised a major airline on the tax implications of the termination of international aircraft lease agreements. Russian airlines found themselves in a unique political and legal situation when international private law institutions have come into conflict with Russian legislation and the special regulation of relationships with hostile countries. This conflict could have resulted in a dramatic increase of expenses on maintaining aircraft, which in the modern financial conditions would have threatened the business of many airlines.

Our lawyers prepared an opinion on a number of key tax issues. The conclusions were confirmed by an opinion from a leading R&D institution.

Successfully challenged the results of a tax audit out of court

Lawyers from the the tax practice represented a large machine building enterprise in a project involving an out-of-court appeal of the results of a field tax audit. Further to the field tax audit more than RUB 1.6 billion was additionally assessed to the enterprise, which put the plant under the threat of bankruptcy. The reason for the claims was that, in the tax authority's opinion, expenses on outsourcing labour resources from external providers, which were identified as showing signs of bad-faith conduct, were unjustified, as was the VAT attributable to them.

Our lawyers developed a position and prepared more than 170 pages of objections to the audit report, while also representing the company during multiple examinations of the audit materials and during additional measures of tax control. 

The project was complex owing to the negative practice in such cases that could be overcome only by scrupulous work with a large volume of information supported by calculations. As a consequence, this allowed for the tax authority to be convinced to withdraw its claims with respect to the “relatively good-faith” contracting parties in relation to which a justified position had been prepared. As a result, we achieved both objectives put before us and the ultimate amount additionally assessed was reduced seven-fold.

Provided tax advice relating to the contractual structure being modified inside the group

The lawyers of the practice advised a company managing a hotel of a major global network that decided to change the contractual structure inside the group with a view to more effectively distributing functions, assets and the tax burden. The client required a detailed analysis of the tax implications for the forthcoming 2-3 year period.

Our lawyers prepared an opinion in which they described the tax and other consequences that could have stopped the work of the hotel if they had not been taken into account.

The project was especially complex in view of its comprehensive nature: it was required to analyse not only tax legislation, but also the rules governing other aspects of hotel operations (restaurant, bar, contractual relationships with utility services, suppliers and other persons). As a result, the client decided to implement the project.

Appealed a refusal to return tax withheld in excess

The lawyers of the practice have successfully appealed the refusal of the tax inspectorate to return withholding tax paid in excess in the interests of a branch office of a foreign company. The inspectorate referred to it being impossible to return the tax in a manner other than to an account of type “C”, but such an account had not been opened for the branch office and there were no legal grounds for opening one. An account of type “C”, however, had been opened to another related party, a representative of the branch office under a power of attorney, and the company asked that the funds be credited there.

When the inspectorate refused to do so, our lawyers prepared a complaint to the Russian Federal Tax Service, which was upheld. As a result, the funds were credited to the account of a representative of the branch office and were subsequently used for mutual settlements in the territory of Russia.

Successfully protected the client in a tax dispute in which more than RUB 650 million was additionally assessed to it

The lawyers of the practice area represented the client in the court of cassation (the first round); as well as when the case was considered anew in the first-instance court, court of appeal and court of cassation (the second round). The tax inspectorate accused the company of deliberately setting up a tax avoidance scheme under which all real estate which it was using in its business activity was owned by individuals (the actual beneficial owners of the business) and was rented to the company, which carries out the operational activity.

The main part of the company’s expenses is comprised of rental payments for the use of property. During the audited period, individual entrepreneurs applied a simplified taxation system. The tax authority also referred to lease payments being made formally because individual entrepreneurs were granting interest-bearing loans to the taxpayer and thereby “returning” the monetary funds they received from the company. The tax authority, therefore, disallowed the deduction of the entire amount of the rental payments and loan interest for the purposes of profit tax.

During the first round, the courts of the first instance and court of appeal sided with the tax authority. The client turned to us at the stage of the cassation appeal after it had filed that appeal.
Our lawyers’ work in the court of cassation resulted in the judgments handed down against the taxpayer being cancelled and the case being sent for a new trial.

In the second round, we succeeded in proving that the tax authority had refused the deduction of the taxpayer’s expenses without a valid reason. In the case at hand, the tax authority’s claims against the taxpayer could be justified only if the price of the transactions between the company and the individual entrepreneurs differed several times from the market price. Further, nether during the tax audit, nor during the pre-trial proceedings or the court proceedings had the tax authority checked whether the prices used in the above transactions corresponded to the market level. During the second round, the judgments were awarded in favour of the client. The taxes paid, along with default interest and fines (more than RUB 650 million) were returned to the client and more than RUB 210 million was paid in interest on the amounts charged in excess.

In this project we managed to suspend the practice of tax authorities ignoring: the right of ownership and the freedom to dispose of one’s property as guaranteed by the Russian Constitution; the consequences which are established by the Russian Tax Code and court practice of prices that were used under the transactions being inconsistent with market prices; and the personal nature of a tax obligation and liability for violating same.

Pepeliaev Group’s lawyers protected a client’s interests before the Supreme Court in a dispute concerning mineral extraction tax on the extraction of gold concentrates

The team of Pepeliaev Group’s tax practice successfully protected the interests of Kosvinsky Kamen CJSC before the Russian Supreme Court in a dispute concerning the taxation of the extraction of concentrates and other intermediate materials containing gold, platinum and other precious metals.

The essence of the case, which was handled by Pepeliaev Group’s experts starting from the first cassation stage (when it was considered by the circuit court), is as follows.

From 1 January 2021, mineral extraction tax in relation to solid minerals has been calculated taking into account the special rent coefficient (КRENT). Whereas the general value of this coefficient is 1, for certain minerals the rent coefficient is set at 3.5. As a result, the tax assessed on such minerals is increased by 3.5 times.

For concentrates and other intermediate materials containing gold and/or silver, the rent coefficient is set at 1. The taxpayer had applied this coefficient since it extracts a mineral that is a concentrate containing several precious metals, gold being one of them.

In its decision further to an inspection, the tax authority proceeded otherwise: it nominally (according to the value shares) divided into two parts a single mineral (non-divisible when extracted), which is a concentrate containing several precious metals. With regard to gold, it applied the royalty coefficient of 1, whereas with regard to platinum and metals of the platinum group, it used the multiplying royalty coefficient of 3.5. Accordingly, an increased amount of mineral extraction tax was assessed on this part of the single mineral extracted. The courts of three instances agreed with this approach of the tax authority.

The groundless application of the coefficient to the extraction of the gold and platinum concentrate resulted in an amount of tax which in many cases makes extraction loss-making.

Pepeliaev Group’s lawyers drafted a cassation appeal to the Supreme Court against these judicial acts. This appeal touches upon important legal issues relevant both to the mining industries as well as to the development of tax law in general, for instance:

  • the priority of a literal interpretation of the provisions of tax law;
  • the content and significance of the factual elements of the tax and the procedure for how they are established by law;
  • the need to account for the purposes of changes being made to the Russian Tax Code and the economic rationale of mineral extraction tax.

After considering the appeal in a court hearing, the Supreme Court’s Board for Economic Disputes reversed the decisions of the lower courts and invalidated the decision of the tax authority.

The tax authority, however, disagreed with the Board for Economic Disputes and filed a supervisory appeal. When the arguments of the appeal were examined, no grounds were identified for a supervisory review. The conclusions of the Board for Economic Disputes were upheld, so the tax authority was denied having the supervisory review referred to be examined in a hearing of the Supreme Court’s Praesidium (Ruling No. 102-PEK24 dated 20 May 2024).

As a result, the client was able to retain its business and continue conducting full-fledged production activity. In addition, drawing attention to the problem of taxation of the extraction of minerals that contain various precious metals was ultimately instrumental in amendments being made to tax legislation. In accordance with Federal Law No. 259-FZ dated 8 August 2024, starting from 1 January 2024 increased taxation was cancelled for minerals containing any precious metals.

Analysed and optimised documents relating to the promotion of pharmaceutical products

Further to the client’s request, the lawyers of the practice area analysed a vast volume of various documents on services involving the promotion of pharmaceutical products on the Russian market and compared their content with the court practice and position of the tax authorities on whether such services are subject to VAT. The team's goal was to provide recommendations to the client on how to optimise the documents and their wording with a view to mitigating VAT risks (in terms of such services being classified as marketing, information or consulting services).

The project allowed for the tax risks to be mitigated with respect to the company’s subsequent activity of promoting pharmaceutical products on the market.

Put together a justification for tax preferences to be used for IT companies

The team of Pepeliaev Group’s telecommunications group provided legal support to the client by conducting a check as to whether it could use IT-company preferences connected with reduced tax rates being applied. Another task within the scope of the project was to make sure that the client kept tax and financial accounts properly, bearing in mind the specific aspects of the company’s industry and the evolving practice of courts and administrate bodies.
Whereas, starting from 2025 the moratorium on tax audits of IT companies is ceasing to have effect, it is important to prepare for a potential audit beforehand, with an understanding that the state will pay particular attention to the IT industry.

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Customs law and foreign trade regulation

Successfully challenged the customs authority’s decisions in court

Pepeliaev Group’s team from the customs law and foreign trade regulation practice provided legal support to a major manufacturer of confectionery products when a customs audit was carried out and during the subsequent court appeal against the customs office’s decisions. 

Further to the audit, the customs authority included licence payments for the use of the trademarks in the customs value of ingredients and components.

Our lawyers prepared objections to the audit report and participated in challenging the decisions in court. The first instance court held the decisions of the customs to be unlawful, but the court of appeal quashed the judgment and fully denied the company’s claims. Owing to the efforts of our lawyers, the court of cassation cancelled the resolution of the appeal and referred the case for a new trial.

Developed a legal position to the effect that it is not permissible to include dividends in the customs value

The lawyers of the practice provided legal support to Russian production enterprises of one of the world’s largest manufacturers of food products during audits conducted by customs authorities in relation to including dividends in the customs value. The task of our lawyers was to check documents and information the client had prepared in response to customs offices’ requests, adjust them and develop a legal position to confirm that dividends paid by the companies should not be included in the customs value of imported goods. Otherwise the amounts of additional payments would be so considerable that they would affect the margin rate of the companies.

Owing to the efforts of our lawyers, all the audits were completed without claims being raised, which is a very rare occurrence in the current practice of supervisory authorities.

That this result was attained in three audits conducted by three different customs offices with respect to three companies with different circumstances of conducting business attests to the fact that our lawyers have significant expertise in the field of dividends being included in the customs value and that they have developed such a legal position that has become convincing even for customs offices.

Successfully protected the interests of a client in a case involving royalties being included in the customs value

The lawyers of the practice represented in court one of the largest wine making companies in Russia, Agro-industrial Firm Fanagoria, in connection with royalties paid by the company for the use of trademarks being included in the customs value of imported natural corks used for capping wine and souvenir products. With the involvement of another consultant who had drawn an incorrect conclusion that the criterion of relevance had been met, the company lost in the first instance court, but won the court of appeal and court of cassation. Our team joined the case on a pro bono basis at the stage of the customs office’s complaint being transferred to the Russian Supreme Court’s Judicial Board for Economic Disputes, which in most situations results in the cancellation of judgments handed down at lower levels in favour of the party that has filed an appeal with the Supreme Court.

The lawyers of Pepeliaev Group convinced the client and its external consultants that the legal position they had developed was insufficiently strong and would most likely result in the claims of the company being rejected. The client agreed to file the response that our specialists had prepared and instructed Alexander Kosov to represent its interests in court.

As a result, the Russian Supreme Court’s Judicial Board for Economic Disputes cancelled not only the judgments issued in favour of the company, but also the judgment issued in favour of the customs authority and referred the case for a new trial. Taking account of the legal position of the Russian Supreme Court’s Judicial Board for Economic Disputes, during the review of the case, the courts will most likely reduce the amount of additional assessments to a minimum. In fact, taking account of the interest charged for customs payments collected in excess, which is payable in favour of the company, this will allow the company to have reimbursed all the expenses it has incurred.

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Currency regulation

Advised on issues of the sequence of offsets between a parent company and a Russian subsidiary

The team of our currency regulation practice advised a major IT company on issues of the sequence of offsets between the parent company and the Russian subsidiary.

The project was complex because a part of the obligations could fall under the permission-based procedure for performing currency transactions approved by the Russian President's Decrees.

Our lawyers carried out a comprehensive legal analysis of the options for the client’s intended actions from the perspective of the risks of violating currency legislation (including the Russian President's counter-sanctions Decrees which contain currency restrictions) as well as tax risks. In addition, we prepared an application to the Russian Ministry of Economic Development and the client was provided with recommendations based on the analysis that we had conducted.

Support from our lawyers helped prevent potential mistakes of the client caused by a non-obvious interpretation of the legal rules. Therefore, the company avoided potentially large fines for violating currency and tax legislation.

Analysed risks connected with direct investments abroad

The team from our practice group advised a large international manufacturer of food products on issues of direct investments in foreign production assets in friendly states.

Our lawyers advised the client on the current rules of currency legislation taking account of the Russian President’s Decrees in relation to the procedure for paying for shares and other assets in friendly states. We provided the client with recommendations for proving the equivalent nature of business activity and actual nature of the planned currency transactions to avoid complaints from currency control authorities.

The experience we obtained is relevant for any Russian company wishing to develop a network of operating subsidiaries abroad.

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Banking and Finance Law

Provided legal support in a transaction with respect to assigning a portfolio of mortgage loans

The team from our practice group provided comprehensive legal support to a major international bank in a transaction that involved an assignment of a portfolio of mortgage loans. 

At the first stage, our experts prepared an opinion on whether mortgage loans could be assigned to an organisation that was not licensed to perform banking transactions, researched whether it was possible to obtain consent for the transaction from the Russian Federal Antimonopoly Service and advised the client on related issues. Further, the lawyers of the practice area developed contractual documents for the transaction, negotiated with the parties to the transaction and obtained approvals with respect to the documents from the business partner.

It was important for the client to have legal services supplied to it on a ‘turnkey’ basis. The lawyers of Pepeliaev Group showed considerable expertise in this project and provided legal support through the full cycle of the transaction: from participation in determining its terms and conditions to closing.

Advised a major Russian bank on the issue of opening its subdivision in China

The lawyers of the practice area prepared an opinion for a major Russian bank in connection with the opening of its subdivision in China. The opinion had to be submitted to the authorised body in the PRC to obtain its consent.

Considering that there is a huge demand for bank transfers between Russia and China, the opening of a subdivision in the PRC is an important step not only for the bank itself, but also for the national interests of Russia and its economic security. This should, to a considerable degree, facilitate the resolution of existing difficulties in settlements with Chinese contracting parties.

Advised a large investment company on issues of currency regulation and anti-sanctions restrictions

The teams from Pepeliaev Group’s currency and banking practice groups are advising a major investment company on currency regulation and Russian anti-sanctions restrictions in relation to a number of transactions that are aimed at dividing an investment portfolio and performing the relevant mutual settlements.

Prior to 2022, the investment portfolio of a major international fund was formed out of investments in private Russian companies in various sectors of the economy. In connection with the necessary permissions being obtained for the restructuring of the investment portfolio and it being divided into Russian and international business, our lawyers are advising the client on currency aspects as well as on anti-sanctions restrictions in relation to entering into and performing transactions.

Our profound expertise in how currency and anti-sanctions regulation intersect allows our experts to identify and mitigate to good effect the possible legal risks of the company and its management connected with the the investment portfolio being restructured.

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Bankruptcy and anti-crisis protection of business

Protected clients in a dispute under which the client was facing secondary liability of over RUB 3 billion.

The team of our Bankruptcy and Anti-Crisis Protection of Business Practice has successfully protected the interests of six clients (individuals and foreign companies) in a dispute concerning secondary liability amounting to more than RUB 3 billion. We succeeded in having the first level and the appellate courts set aside the claims in their entirety against five clients and reduce the amount of liability by more than 25 times for the former owner of the debtor.

This result has become possible owing to the comprehensive protection of the clients’ interests not only in this litigation, but also in many other separate disputes in a bankruptcy case of a large IT company. In several court trials to challenge transactions, we succeeded in having settlement agreements concluded. Our meticulous analysis of the debtor's business activity and of how it was affected by the global economy, together with the legal position we had prepared, enabled us to preserve our clients’ assets and their business reputation.

Defended a bank's senior manager in a dispute concerning secondary liability for RUB 2.6 billion

The team from our bankruptcy and anti-crisis protection of business practice was successful in defending a bank’s senior manager against secondary liability amounting to RUB 2.6 billion. Our adversarial process in the first instance court against the Deposit Insurance Agency and the majority creditor lasted for 8 years. Finally, the outcome was that we managed to prove the client and the credit institution’s anti-crisis team to have acted lawfully while he held his position.

The cornerstone of this dispute was the issue of whether there were grounds for the client, as acting chairman of the management, to take measures to prevent the credit institution from becoming bankrupt. We carried out a detailed economic, financial and legal analysis of the bank's activities and the status of its borrowers, as well as substantiated the differentiation of risk between structural units. This allowed us to justify that our client had acted in good faith and that his business decisions had been lawful.

Restructured obligations in a financial transaction of foreign companies, taking account of sanctions and bankruptcy risks

Our lawyers prepared a comprehensive legal opinion with an assessment of the property and criminal law risks for the management, members, group companies and beneficiaries in connection with a planned transaction, taking account of the sanctions aspects. The transaction value was RUB 12 billion.

An approach evolved in this project that made it possible for the international group of companies to continue the Russian part of business in the conditions of sanctions and to restructure its obligations to a foreign bank. 

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Intellectual property and trademarks

Successfully protected the right of Elizaveta Glinka’s heir to use her pseudonym Doctor Liza

The team of Pepeliaev Group’s Intellectual Property and Trademarks Practice successfully protected the interests of Elizaveta Glinka’s heir in a dispute with the “Spravedlivaya Pomoshch Doktora Lizy” Foundation (referred to below using the English translation “Doctor Liza Fair Aid” Foundation) over the right to use her pseudonym “Doctor Liza”. 

In 2023, the “Doctor Liza” trademark was registered in the name of the “Doctor Liza Fair Aid” Foundation with respect to services connected with charitable activities. However, the experts conducting the review carried out during the application failed to take account of the fact that the “Doctor Liza Fair Aid” Foundation had not submitted the consent required by law to the use of a well-known individual’s name. Such consent is given either by the well-known individual himself or herself, or by such individual’s heirs. The “Doctor Liza Fair Aid” Foundation had not requested the consent of the heirs. In this connection, the heir and widower of Elizaveta Glinka filed an objection against legal protection being granted to the trademark.

At the same time, Elizaveta Glinka's widower is the chairman of the board of the “Doctor Liza” Foundation that was founded by late Mrs Glinka herself. That the law provided for the need for the interest in the independent use of the designation “Doctor Liza” to be verified and, accordingly, for an objection to be filed was evidenced, among other things, by the fact that the “Doctor Liza” Foundation, which bears its late founder's name, had submitted an application to register its own “Doctor Liza” trademark in the “Doctor Liza” Foundation's name. Disregarding these circumstances, the Russian patent authority Rospatent in its decision refused to uphold the objection.

Having disagreed with the decision of Rospatent, Mrs Glinka's heir applied to the IP Court. The lawyers of our firm's IP practice under the supervision of Valentina Orlova developed a legal position, then prepared and filed with the IP Court a statement of claim from Mrs Glinka's heir seeking to have the decision of Rospatent invalidated.

The “Doctor Liza Fair Aid” Foundation accused Elizaveta Glinka's heir of an abuse of a right, pointing out that, had the “Doctor Liza Fair Aid” Foundation applied to Mrs Glinka's heir for a letter of consent, a disproportionately large amount of compensation would have been requested for providing it. The “Doctor Liza Fair Aid” Foundation also stated that Mrs Glinka's heir had not objected to the Foundation being renamed from “Spravedlivaya Pomoshch” (the “Fair Aid” Foundation ) to “Spravedlivaya Pomoshch Doktora Lizy” (the “Doctor Liza Fair Aid” Foundation).

However, the above arguments were refuted by the fact that the “Doctor Liza Fair Aid” Foundation had not sought the heir’s consent at all, while the statements about disproportionately large compensation being required were entirely speculative and unsupported. In addition, unlike a trademark, the fact of a non-profit organisation being renamed does not entail the exclusive right to use the “Doctor Liza” designation; in particular, it confers no right to prohibit Mrs Glinka's heir himself from using the designation in question.

In its decision dated 15 November 2024, the IP Court upheld the claim of Mrs Glinka's heir, set aside Rospatent's decision, invalidated the grant of legal protection to the trademark and imposed an obligation on Rospatent to make an entry to this effect in the Russian State Register of Trademarks and Service Marks.

Thus, Pepeliaev Group's lawyers helped Mrs Glinka's heir to win the court case and to protect his right to use the pseudonym “Doctor Liza”.

Had the verbal designation BAIKAL recognised as a trademark well-known in Russia with respect to carbonated soft drinks

The team of the IP and trademarks practice of Pepeliaev Group, acting in the interests of BAIKAL LLC, managed to ensure that the verbal designation BAIKAL was recognised as a well-known trademark in Russia with respect to carbonated soft drinks.

In itself, the designation BAIKAL has been continuously used for the labelling of soft drinks since the 1970s and is well-known to several generations of Russian consumers. Baikal LLC has been using this designation since the 1990s. Starting from 2011, Baikal LLC has been using on the labels of carbonated soft drinks trademarks united by the verbal element BAIKAL, which consumers perceive as versions of the verbal designation BAIKAL.

To enhance the legal protection of the designation BAIKAL and ensure that potential counterfeits are combated in the most effective way, Baikal LLC applied to our patent attorneys with a request to obtain legal protection of the verbal designation BAIKAL as a trademark that is well-known in Russia. The team of the practice under the management of partner Valentina Orlova closely cooperated with employees of the client in analysing documents of the company to identify sufficient evidence that it widely and actively uses the designation BAIKAL. We further carried out a sociological poll to find out to what extent Russian consumers were familiar with the verbal designation BAIKAL.

Further to the comprehensive analysis, we prepared and filed with Rospatent an application for the word designation BAIKAL to be recognised as a well-known Russian trademark. The list of appendices to the application, alone, occupied several pages and included hundreds of items.

The commission of Rospatent decided to grant the application and to recognise the word designation BAIKAL as a trademark that is well-known in Russia with respect to carbonated soft drinks. Rospatent, however, did not approve the decision of the commission and pointed out that the commission had not analysed and assessed with sufficient completeness the evidence provided by BAIKAL LLC. In this regard, a repeat examination of the application was scheduled.

During the repeat review of the appeal our lawyers again drew the attention of Rospatent’s commission to virtually every piece of evidence contained in the annex to the application and supporting the legal position. For the second time, they justified why legal protection of the word designation BAIKAL had to be granted to Baikal LLC. Further to the repeat examination of the application and a more thorough study of all evidence the commission decided to uphold the statement of claim and to recognise the word designation BAIKAL as a trademark that is well-known in Russia with respect to carbonated soft drinks.

Therefore, the patent attorneys of Pepeliaev Group’s IP practice successfully solved the task set before them and performed the instructions of the client.

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Corporate law

Full-fledged restructuring of the business of a large group of companies

The team of our corporate practice provided support for a comprehensive project involving a restructuring of the business of a group of companies. The main difficulty was the historic diversity and the business's structure, which was split into branches. The task of our lawyers was to study the structure, business processes, financial flows, and internal and external connections of companies of the group, before developing the optimal structure for a reorganisation to preserve to the maximum degree the positive aspects of the group’s business while eliminating the shortcomings that it entailed. 

During our work on the project, professionals from various of our practice groups were drafted in, including the tax, corporate and digital practices, among others. As a result, our lawyers developed a 5-year roadmap for restructuring, which described all actions required to be performed with a view to switching to a new structure.

Obtained approval from the Government Commission for intra-group transactions with respect to purchasing a Russian company

The team of our practice group represented the interests of the client in a project that involved obtaining the approval of the sub-commission of the Government Commission on Monitoring Foreign Investment in Russia with respect to intra-group transactions involving the purchase of the shares of Russian business entities.
Our lawyers advised the client on the legal and tax aspects of the intra-group restructuring: the shares of limited liability companies that were held by companies from unfriendly states were being sold to a company from a friendly state. Our specialists prepared the transaction documents and supported the client right up until the transaction was completed and the asset was transferred.

Lately the team of the corporate practice has been advising foreign owners of businesses on the issues involved in the sale of a Russian business and having transactions approved by the Government Commission, the making of investments and structuring of personal ownership in companies.

Provided support in a transaction involving the purchase of a tennis club

The team from our practice group provided legal support to the client in connection with the purchase of an elite tennis club. Our lawyers advised the client on practical ways of purchasing shares in a company with the loan obligations of the company itself and its former owner being restructured and with the tax structuring of the parties' relationship. They put together the necessary documents and supported the transaction right up until it was completed and the assets were transferred.

Our lawyers often advise the owners of businesses on various issues of corporate governance, investments and structuring the personal ownership of the companies.
In this project, our specialists advised the owner of the business on investments in what constituted a non-core asset for him and also supported the transaction itself.

Successfully protected a client in a complex corporate dispute

The lawyers from our St Petersburg corporate practice have successfully defended the interests of a public enterprise, a large regional producer of bread and pastries, in a dispute with its former shareholders who sought to challenge a resolution of the enterprise’s supervisory board regarding how the redemption price of shares had been established.

Our arguments convinced the judges that it was correct to apply a consistent approach to the rules for how shares are valued during redemption. Our team has won the case in courts of three levels, with the claims of former shareholders being dismissed in full.

Also, we have managed to prevent a precedent being established which could have had rather dire consequences for the company, both from financial perspective (up to the bankruptcy and liquidation of the enterprise had numerous claims of its former employees been upheld) and from the perspective of engaging the company’s internal resources. 

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Land Law, Real Estate and Construction

Provided legal support in an investment project involving the construction of an industrial complex

Throughout many years, the team from our real estate and construction practice has been providing legal support to one of the world’s largest manufacturers of foodstuffs.

The current matter is connected with the implementation of an investment project that involves constructing a manufacturing facility.

From the very beginning, our lawyers have been carrying out due diligence of land plots, structuring the project, and drafting documents for the transactions involving the acquisition of land plots and for construction. Throughout the last year we have continued to provide further multifaceted legal support for this project. Among other things, our lawyers developed or amended 15 contracts, including mortgages, as well as contracts for the acquisition of infrastructure facilities, such as access to automobile roads, water removal and electric power supply facilities.
An investment project of this scale is extremely rare for the Russian market in the current circumstances.

Provided legal support at our Chinese client’s side in the context of the construction of a plant in Primorye Territory

Teams from our real estate practice and tax law practice provided legal support to our client, a major Chinese construction company, in the context of a plant construction project in Primorye Territory.

Our lawyers developed the structure of relationships with the client’s client (in which our client was an EPC contractor) for the construction of a plant in the Bolshoy Kamen Priority Development Area in Primorye Territory.
This project is extremely important from the standpoint of developing the general Turn to the East trend and of protecting the interests of Chinese companies in the context of the implementation of large-scale projects within Russia.

Advised the client in a dispute with its client for a total amount of over RUB 26 billion

The real Estate and Construction Practice advised a major Chinese construction group in the context of its dispute with its client, one of the largest Chinese oil and gas companies. The dispute was connected with the recovery of losses in view of certain items being removed from the scope of work and work being suspended at the facility, a Russian gas and chemical complex.

Our lawyers made a herculean effort, which took more than 4 months, to revise the existing relationships relating to construction under the project in order to find a solution for the conflict and offer mutual concessions. Our client’s claims against its business partner came to over RUB 26 billion.

As part of our work, the project manager on the side of Pepeliaev Group visited the client's head office in Beijing to discuss the positions of the parties and develop a strategy to resolve the dispute, as well as to defend this strategy before the Board of Directors. 

Provided support in the construction of a major social and business centre in St Petersburg

The Real Estate Practice in St Petersburg provided support to the client in the process of entering into an investment agreement (an agreement for the sale and purchase of a future item) with the developer, including providing recommendations to amend a number of material terms and conditions of the agreement.

This project is also of interest because an archaeological heritage site is located within the land plot where the construction is planned. In view of this, our lawyers checked the permission documents for the construction of the facility from the standpoint of whether they complied with the rules concerning the protection of archaeological heritage and provided recommendations to the client on how to minimise the possible risks connected with the protective zone of the site. 

The team of Pepeliaev Group’s St Petersburg office helped a Client to protect, before the Russian Supreme Court, its right to a preferential lease rate (Case No. A56-50173-2022)

The client was paying a fixed amount established by the local administration to lease a land plot which initially belonged to its legal predecessor based on its right to use the land plot for an indefinite period. Having had this right reissued as a right to lease, the client expected that the annual lease payment would be equal to 2% of the cadastral value of the land plot. The Russian Federal Agency for State Property Management refused to amend the lease agreement. In response, the client filed a lawsuit with the court seeking to have the lease rate reviewed and to recover unjust enrichment.

The trial court and court of appeal upheld the client’s claims, but the court of cassation quashed the decisions of the lower-level courts, referring to the absence of grounds for the lease payments to be calculated using a preferential procedure.

The case was transferred to the Russian Supreme Court's Judicial Board for Economic Disputes, which sided with our client and upheld our arguments that the lease payments for state-owned land plots should be determined based on the principles of equality, a prohibition on ungrounded preferences, and the prevention of a deterioration in land users’ economic situation when title to land is reissued.

With reference to articles 19(1) and 36(3) of the Russian Constitution as well as to the above principles, the Russian Supreme Court applied the preferential rate for lease payments to the agreement which had been entered into before the Russian Land Code was brought into effect. At the same time, the law bringing the Land Code into effect set the preferential rate at not more than 2% of the cadastral value for cases when the right of permanent use (i.e. for an indefinite period) is reissued.

We succeeded in convincing the court that the preferential rate should be applied regardless of whether the right was reissued before or after the Russian Land Code came into force.  Had the preferential rate not been applied in this dispute, this would have caused ungrounded inequality of business entities.

As a result, our client was able to have returned the excess lease payment it had made in the amount of over RUB 67 million.

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Antitrust Law

Successfully protected the client's interests before the Russian Federal Antimonopoly Service in a case concerning the sale of ‘halal’ products

Lawyers of the Antimonopoly Practice represented a client against whom the Antimonopoly Service had initiated a case in connection with the sale of products labelled as ‘halal’. The antimonopoly authority believed that these actions constituted bad-faith competition because they were misleading consumers.
However, the client was using this labelling on lawful grounds: the client had passed a voluntary certification procedure and based on the results of it, a competent authority acknowledged that the products corresponded to ‘halal’ standards and could be labelled with this conformity mark. 

Our lawyers needed to prove that the client’s actions were lawful, were not causing damage to its competitors, were not misleading consumers and that investigating whether any products are harmful and whether they are ‘halal’ in nature falls outside the  antimonopoly authority’s jurisdiction.

Pepeliaev Group's team developed a defence strategy which included, among other items, obtaining additional evidence (expert opinions and results of a sociological survey) and prepared explanations proving that antimonopoly legislation had not been violated. Our lawyers also represented the client at meetings of the Commission of the Administration of the Federal Antimonopoly Service.

Labelling products with the ‘halal’ mark means placing on them a conformity mark of a voluntary certification system. There are many such systems in Russia and legislation is weak in regulating the operation of them. However, gaps in legislation should not enable the antimonopoly authority to exceed its jurisdiction and classify as bad-faith competition actions which are permitted by industry-specific legislation. In view of this, the project is indeed important for businesses and the legal system in general.

Conducted a comprehensive audit to reduce the client's antimonopoly risks

The lawyers of our practice conducted an audit of the operations of a major Russian producer of fertilisers to identify possible antimonopoly risks. In the context of this project, our lawyers conducted a comprehensive audit of the company's operations: they delved into business processes, analysed the client's primary internal documents, its agreements with contracting parties, principles of pricing and of selecting distributors, and interviewed key personnel.

Based on the audit results, we prepared a report which described the main antimonopoly risks of the Company, the degrees of them and offered recommendations on how to mitigate such risks. This document will help the client to identify the areas of its economic activities where risks of antimonopoly violations are the highest and to take all necessary measures to reduce them.

Owing to our experts' assistance, the client will be able to avoid potential antimonopoly proceedings and multi-million dollars of fines.

Conducted a mock audit of the Russian Federal Antimonopoly Service to prepare personnel for real audits

The practice conducted a mock audit by the Russian Federal Antimonopoly Service at the request of one of the world’s largest pharmaceutical companies. Its purpose was to check the personnel as regards the knowledge of rules and standards of conduct in the case of an unscheduled audit by the Russian Federal Antimonopoly Service.

Based on the results of the mock audit, our lawyers organised a training session for the client’s personnel where they analysed the mistakes that had been made and gave detailed explanations of what conduct is lawful and appropriate during an audit.

Knowledge of the right way to act during an audit by the antimonopoly authority and a clear understanding of where the line lies between exercising your rights and preventing an audit can help you to survive it with minimal adverse consequences.
Owing to the training, the client received a full picture of how a real audit of an antimonopoly authority is conducted and an opportunity to minimise the possible risks connected with improper actions of its personnel during such an audit.

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Dispute Resolution and Mediation

Had a concession agreement in healthcare classified as lawful

The practice's team represented a private clinic in courts of all levels in a lawsuit filed by the prosecutor’s office seeking to have a concession agreement declared void for the construction of a medical institution. In the opinion of the Prosecutor’s Office, the concession agreement violated a number of statutory requirements (including, among others, requirements of civil and budgetary laws, and laws regarding concession agreements and compulsory medical insurance), infringed the public interests of the region, and had been concluded in manifest violation of public order and with the abuse of a right.

The project was made considerably more complicated because concession agreements are a relatively recent instrument. For many issues neither statutory regulation, nor relevant case law is available. In view of the above, it was crucial to safeguard the agreement that had been concluded and to confirm that its terms and conditions, which are standard and commonly used for such agreements, comply with the law. In particular, it remained unclear what part of the expenses could be assigned to the concession grantor. It was also important to protect concession grantors’ right to select the method of financing for the projects being implemented: public private partnership instruments that include concessions or a public contract under Law No. 44-FZ.

Ultimately, our lawyers proved that the selection of a concession agreement was economically justified for the project to be implemented in the healthcare sector, taking into account the specific details of each instrument. The successful outcome of this dispute will make it possible for the instrument of concession agreements to develop further, particularly in the healthcare sector.

Protected a major international bank in a case concerning the compulsory conversion of depositary receipts

Our practice represented the interests of a major international bank in a case over the obligation to perform the conversion of depositary receipts using the compulsory procedure established by special law No. 114-FZ. In this project, corporate law matters were considered, as well as certain matters of how the securities market operates.
The extraordinary nature of the procedure greatly increased the risks of companies whose securities could be obtained by holders of depositary receipts. In order to balance the interests of holders of securities and of corporations, the law established an increased standard of proof. Conversion can be lawfully denied even when the depository has reasonable doubts that the documents submitted are true, complete and sufficient.
Our lawyers’ legal support made it possible to prevent securities of major Russian corporations from being obtained by persons who had not proven their rights to them, thus maintaining the increased standard of proof that securities belonged to persons whose assets were blocked.

Protected the interests of a Russian retailer before the International Commercial Arbitration Court at the Russian Chamber of Commerce and Industry

Our practice represented a major Russian retailer before the International Commercial Arbitration Court at the Russian Chamber of Commerce and Industry in a dispute with a contractor that had filed a claim to recover from the client the cost of the manufactured equipment, the cost of the storage of it and other expenses connected with it being impossible to supply the equipment.

Our lawyers succeeded in having these claims set aside in full. The arbitrators fully agreed with our lawyers’ position concerning the claim and stated in the award that the client had a right to suspend the payments in the conditions of uncertainty caused by sanctions concerning whether the supply of equipment would be possible and was acting lawfully. Therefore, the conditions for the recovery of payment have not been met and the payment for the installation of the equipment has the nature of an advance payment, and the recovery of it may not be enforced under the applicable law.

The arbitrators imposed all expenses connected with the equipment on the contracting party and acknowledged that no grounds existed to recover them from the client.

The teams of Pepeliaev Group’s Dispute Resolution and Mediation and Criminal Law Defence of Business practices have defended a client in the Supreme Court

The teams of Pepeliaev Group’s Dispute Resolution and Mediation and Criminal Law Defence of Business practices jointly represented a client's interests before the Supreme Court in a case based on a claim from the Prosecutor's Office. The dispute began when monetary funds were not returned under several loan agreements which two individuals had entered into, which prompted our client to apply to the court. However, when the case was being considered, the borrower’s representative provided oral explanations to the regional Prosecutor's Office that the loan agreements were a sham; the defendant “recalled” a share sale and purchase agreement concluded with a company which, as he insisted, was affiliated with the claimant. Having artificially linked these agreements, the borrower's representative referred in court to the fact that, by entering into the loan agreements, the defendant was allegedly pursuing the goal of avoiding the payment of personal income tax, having intentionally concluded the share sale and purchase agreement at a price he knew to be too low.

As a result, the case was joined by the Russian Federal Financial Monitoring Service, the tax authority and the regional Prosecutor’s Office, which had filed independent claims to have the loan agreements classified as invalid and as sham transactions aimed only at the borrower avoiding paying personal income tax. This was despite the fact that, by then, the timeframe had expired by which the Russian public purse could claw back the tax. The Russian Federal Financial Monitoring Service also pointed to certain “suspicious elements”, such as the loan agreements having the same duration, interest being linked to the Bank of Russia's key rate and the parties to the agreements being registered in different regions of Russia.

The courts of lower levels upheld the claim of the Prosecutor's Office, invalidated the agreements and set aside the claim to recover the debt under the loan agreements. As a result of these court judgments, the borrower succeeded in avoiding having dozens of millions of roubles collected from it and Pepeliaev Group's client, the lender, was in fact blamed for acting as an accomplice in the borrower's tax evasion scheme.

Pepeliaev Group’s lawyers prepared an appeal to the Supreme Court which addressed important issues of substantive and procedural law. Our team succeeded in persuading the Supreme Court's Judicial Board for Civil Law Cases to take an interest in this case by emphasising that the courts of lower levels had failed to analyse what the will of both parties to the transaction was actually aimed at and whether the loan agreements were in fact linked to the share sale and purchase agreement. Instead, those courts had been satisfied with oral explanations from the defendant's representative about some abstract scheme.

As a result, a stop was put to the borrower's avoiding repaying the debt by citing an alleged tax avoidance scheme and to the agreements being a sham, and the Supreme Court has referred the case to be reconsidered by the court of first instance. 
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Employment Law

Successfully protected the client's interests in a dispute with a confrontational employee in a protected category

Pepeliaev Group's Employment and Migration Law Practice represented an independent Russian investment group in a litigation with an employee who had been dismissed for absence without leave. The employee was acting in a confrontational manner and had low performance figures, but, at the same time, he fell within a protected category. Our lawyers provided support during the dismissal of this employee for absence without leave and then defended the company in a court dispute.

The lawyers of the practice collected material evidence of the employee’s breach and convinced the court to request a range of other evidence from third-party sources. As a result, at the very first hearing, the employee proposed an amicable settlement on conditions that were favourable for the company. This was in contrast with the employee's previous behaviour when he was refusing to settle the matter amicably and when dismissal by agreement of the parties was being discussed, he insisted that a severance allowance be paid to him equal to his salary for several years.
Owing to the amicable agreement being concluded, the client eliminated that risk that this employee would be reinstated to work and significantly reduced the expenses on being represented in court.

Successfully defended a client in a precedent-setting dispute with an employee

Our practice represented in court a major producer of confectionery products in a complicated lawsuit with an employee. After his dismissal, a highly paid employee filed a claim against the company that a regional coefficient be applied to payments he had received for 7.5 years of work and to interest for the delay in payment, for a total amount of more than RUB 4 million. The company was located in St Petersburg and had not specifically mentioned the regional coefficient in the employment agreement, even though in fact it was applying it.
In order to have the limitation period reinstated, the employee deleted his corporate emails before the dismissal so that they could not be restored and alleged that he had not been receiving the payment slips throughout the entire time of his work in the company.

Our lawyers offered the client a strategy for objecting to the claimant’s arguments and prepared objections to the claim. As a result, the first instance court took into account and included in its judgment all our arguments and dismissed the employee's claims in their entirety.

This lawsuit had a precedent-setting nature because, had the employee's claim been upheld, other employees could have filed similar claims.

Handling simultaneously several complicated litigations with a confrontational employee

The practice was providing support to a high-tech IT company in several court disputes with a confrontational employee over attempts to challenge more than ten disciplinary sanctions and the salary. On a day-by-day basis our lawyers were elaborating a strategy of contacting the confrontational employee, were helping to solve matters connected with the employee's refusing to perform his work duties and causing different problems for the company.

As a result, we succeeded in having the courts’ approach overturned at the cassation level and, afterwards, in multi-stage negotiations, our lawyers managed to have the extended conflict successfully resolved. The company and the employee concluded an amicable agreement which closed all the employee's lawsuits, and an agreement was signed to terminate the employment agreement. This eliminated any possibility of further claims against the employer and provided for instruments to protect the employer in the future.

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Pharmaceuticals and Healthcare

Efficiently restructured the business of a European pharmaceutical company

Pepeliaev Group’s Pharmaceuticals and Healthcare practice has completed a successful project of providing legal support in the business restructuring of a European pharmaceutical group of companies in Russia. Our lawyers drafted a packaged legal memo regarding the potential options for restructuring the business taking into account regulatory, currency, customs and tax risks. 

As a result, the company decided to implement one of the proposed options and our lawyers developed a roadmap for the restructuring, prepared the necessary set of documents including template supply agreements, warehouse storage agreements, bonus agreements and so on, as well as a draft commercial policy and other internal regulations.

Provided legal support for bonus programmes and a discount policy to be implemented

The lawyers of the practice provided legal support to a large international pharmaceutical company under a project to implement and subsequently adjust bonus programmes under which medicines are supplied within the scope of the procurement segment and those that are used in the commercial segment (pharmacy chains). The tasks posed to our lawyers also included providing legal support when the discount policy was implemented. The policy made provision for the particular regulatory aspects associated with the industry-specific pricing regulation of vital and essential medicines. Our lawyers were also asked to adjust the policy and the contractual model of how to do business with pharmacy chains.

Under the project, our lawyers drafted the following documents: a bonus and discount policies, the terms and conditions of various bonus and discount programmes relating to the company’s medicines, draft bonus agreements, as well as other documents pertaining to similar campaigns being implemented.

Provided legal support in relation to transactions between a number of pharmaceutical and med-tech companies

The lawyers of the practice provided legal support in relation to transactions aimed at expanding the product portfolio of clients that were large Russian pharmaceutical and med-tech companies when they were acquiring rights to products in the Russian Federation. The subject matter of the transactions with regard to which legal support was provided included dietary supplements, medicines and medical devices. The rights were acquired through assets (including technical and registration documentation pertaining to production) and membership interests being bought out in companies that possessed the necessary assets in Russia. Within the scope of the projects, the lawyers of the practice conducted due diligence of the assets, drafted contracts, including framework/master agreements pertaining to the transactions, participated in negotiations and improved transaction documents. They also prepared certain short-form legal memos with regard to matters concerning how the transactions were entered into on particular terms and also relating to specific aspects of how the concluded contracts were to be performed (including subject to specific regulatory matters, from the re-registration of products to the prices for such products, among other things).

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The environment

Safeguarded the interests of a mining company in a major dispute with the prosecutor’s office for the environment

A team from our Siberian Office represented the interests of a large Siberian mining company in the court of appeal. Within the framework of the dispute, the prosecutor’s office for the environment demanded that RUB 827 million be collected from the client in connection with the production of coal on an agricultural land plot. 

The company insisted that it was producing coal on lawful grounds under a licence and a lease agreement, that it had an approved plan for the remediation of the land and that it had undertaken every effort possible to convert the land plot from agricultural into industrial land. However, for reasons beyond the client’s control which owed to the fact that the municipality did not have any land-use planning scheme in place, the process had dragged on for 5 years.

Had the amounts of the claims been recovered, this could have led to the enterprise going bankrupt. However, thanks to the efforts of our lawyers, the court of appeal held that the above arguments were well-grounded and set aside in full the decision of the first-level court. The court also dismissed the claims of the prosecutor’s office.

The project is unique since the prosecutor’s office can assert similar claims against any mining enterprise that carries out its operations in accordance with the law, which negates the legal significance of permits issued by state authorities and violates the principle of stability in the general course of business. Our victory demonstrates the high level of our lawyers' professionalism and their in-depth understanding of environmental and land legislation.

Provided legal support to a Chinese company to develop a coalmine

The team of Pepeliaev Group’s Environmental Practice provided full-fledged legal support to the Chinese party to a Russian-Chinese joint venture which had been set up to develop, construct and operate a coalmine in Zabaykalye.

Our lawyers performed a comprehensive audit of the special-purpose company’s activity in terms of whether it was complying with environmental legislation. They provided relevant recommendations and drafted separate guidelines that contained an overview of Russian environmental regulation, including issues of whether the enterprise was liable in the field of the environment. 

This project has special importance for developing bilateral relationships since the coal deposit which is being mined has been included in the roadmap for strengthening Russian-Chinese cooperation.

Successfully represented a client in a court dispute with a water service company

The practice's team represented the client in a dispute with a water service company over the recovery of a payment for discharging pollutants where the allowable concentration had been exceeded and over the payment for the detrimental effect to the centralised water-discharge system, with the total amount being over RUB 30 million.

Owing to the efforts of our lawyers, the decision of the first-instance court was set aside and the claims were dismissed in full. The courts of appeal and cassation agreed with the defendant’s arguments that the sampling of wastewater of the user had been conducted with gross violations which affected the reliability of the results of the examination.

In addition to the unfounded claims of the water service company being excluded based on the outcome of the case, the client had a precedent-setting court decision handed down, which will be relevant if similar disputes are considered between same parties with regard to the payment for other periods. Moreover, the court judgment which was adopted under the case might be of use to other users who may encounter similar violations of the procedure on the part of water discharge companies and, primarily, where samples are taken other than from the control well which has been approved in the water discharge agreement.

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The natural resources and energy sectors

Provided legal support when the functions of a general contractor were transferred under a project to construct infrastructure at a gas deposit

Pepeliaev Group's team supported the client in relation to how the functions of the general contractor should have been transferred within the scope of a project under which infrastructure was built at a gas deposit located on the Russian continental shelf. The project required the structuring of the above transfer of functions and subsequent legal support to meet a tight deadline. 

Our lawyers provided integrated legal support under the project, starting from devising a concept for the transfer of a contractor agreement to a new general contractor to drafting and adjusting the general agreement for the transfer of functions, as well as the agreement for the transfer of subcontractor agreements and the transfer of materials.

The project provided for over 200 subcontractor agreements to be transferred which were at different stages of being performed. It also required tax and financial accounting services to be provided in connection with the above transfer.

Provided legal support in a tax dispute over gas being classified which was produced together with oil

A team from our tax practice provided legal support to a client that sought to challenge a tax audit report. The point at issue was that the company, when it produces oil, also extracts associated gas, which, under the Russian Tax Code, should be taxed at a 0% rate. However, the tax authority believed that the goal of the production was gas rather than oil. In that case, the gas is not associated gas and is subject to the general tax rate.

Within the framework of the project, our lawyers assessed numerous technical issues of how production was carried out and even engaged some third-party experts. The project was especially challenging due to the fact that no such disputes had previously occurred in practice.

Our practice group's team drafted an appeal to the Russian Federal Tax Service and also participated in the process when the appeal was considered at the HQ of the Federal Tax Service.  During the appeal, our lawyers proved that the tax inspectorate's approach was incorrect (the case for the previous period had been lost in the commercial courts).

The question of whether gas that is extracted together with oil is classified as associated gas or as free gas is of the utmost importance for companies that produce gas at deposits which are recognised to be challenging to develop owing to their parameters. Therefore, the decision on this case also has significant importance for other mining companies.
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Protection of personal data

Advised a large developer on data processing issues

The team from our practice group conducted a comprehensive analysis of the processes concerning how personal data was processed within the group of companies of a large developer. The analysis included gathering information with the use of check-lists, conducting interviews with employees, reviewing then-effective internal by-laws and also analysing how the group was actually carrying out its activity.  

Based on the results of the above measures our lawyers prepared reports revealing that the client’s business processes did not comply with Russian legislation on personal data. Our lawyers also provided the client with hands-on recommendations for how such non-conformity could be eliminated. The specialists of the practice developed a full set of internal by-laws to regulate the processing of personal data, including notifications to be submitted to the Russian Federal Service for the Supervision of Communications, Information Technology and the Mass Media (in Russian, referred to by the abbreviation ‘Roskomnadzor’).

For a large auto maker, analysed and improved the procedures of personal data processing

Further to a request of one of the largest car brands, the practice's lawyers drafted a legal memo concerning all potential administrative fines in connection with personal data being processed in non-compliance with Russian legislation and the maximum total amount of such potential fines. In addition, our specialists analysed the client’s relationships with its dealers as to how personal data of the owners of cars was processed, and determined the nature of such relationships. They also drafted necessary clauses for the contracts that the client was then using with its dealers and drafted particular documents for future contracts.

Arranged for a procedure to check the reputation of healthcare professionals from the perspective of personal data

One of the biggest international pharmaceutical companies instructed Pepeliaev Group to arrange for a procedure to check the reputation of healthcare professionals from the perspective of legislation on personal data should the company decide to do business with them.

Our lawyers analysed the legal ground on which personal data of healthcare professionals was to be processed, including sector-based requirements that apply to pharmaceutical companies. As a result, the client received a legal memo that included a description of the following:

  • the applicable requirements of Russian legislation and clarifications on how those requirements should be applied in practice;
  • the risks associated with the procedure to check the reputation of a healthcare professional not being in line with the requirements of legislation on personal data;
  • the ways to ensure a legal ground for the processing of personal data.

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Digital group

Drafted a template agreement for a large advertising platform

The team of Pepeliaev Group’s Digital Group drafted three bilingual (in Russian and English) templates of contracts based on the client's commercial terms and conditions. Two of the templates describe the terms and conditions on which the client provides services either as a DSP or an SSP. These are what parties are referred to on the market of programmatic advertising: demand-side platforms (DSP) and supply-side platforms (SSP). The third template describes the conditions on which the client, while acting as a DPS (a demand-side platform) may order services from third parties. 

The templates were devised in compliance with the Russian Civil Code, as well as with legislation on advertising, information and personal data, and tax legislation. The client was also provided with detailed clarifications on the main provisions of the contract. The total volume of documents we drafted exceeded 150 pages.

Drafted a bilingual advertising policy for a large advertising platform

Further to the request of our client, a large advertising platform, lawyers of the practice analysed the requirements of Russian legislation regarding advertising, information and personal data. Our lawyers also delved into the issues concerning the client’s status as an SSP (i.e. a supply-side platform) from the perspective of Federal Law “On advertising”. As a result, our specialists developed for the client an advertising policy in two languages (Russian and English) which takes into account the best practices of Legal Design as well as the requirements of Russian legislation and the client’s internal corporate rules.

Advised a large Chinese manufacturer of construction machinery on how sensitive software should be used in Russia

The practice’s team provided legal support to China's largest manufacturer of construction machinery when it was entering the Russian market. The client needed to find out whether it was permissible to install software to gather information regarding the geographical location, condition and use on machinery that was to be supplied to Russia, and whether such data could be transmitted to the company's headquarters in China. Moreover, the client’s equipment may be used also at high-security facilities.

During the project, our lawyers analysed technical aspects of how the software was supposed to be used. They also determined the requirements of Russian legislation pertaining to how information, state secrets included, should be safeguarded. Consequently, the client received a detailed legal memo describing all potential risks associated with how the software could be used, as well as recommendations for how such risks could be mitigated.

If information had been unlawfully collected by way of the software being used, this could have resulted in administrative, and in some cases in criminal liability, being imposed on the client. Owing to the integrated analysis that our team conducted and the recommendations we provided, the client managed to mitigate and partially exclude the potential risks, including to its reputation.

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Anti-corruption compliance

Drafted an anti-corruption policy for a large pharmaceutical company

Pepeliaev Group's team updated the anti-corruption policy of one of the oldest pharmaceutical companies. Our lawyers brought the document into line with current Russian legislation, as well as with FCPA, the UK Bribery Act and the client's own global anti-corruption standards. If there were discrepancies between statutory instruments and the current standard, our specialists would follow the more stringent requirements. 

Moreover, the updated policy now describes in an accessible and understandable manner the requirements, restrictions and prohibitions of the specified applicable laws (both for the company and its employees), taking into account the above global anti-corruption standard of the company. The updated policy was translated into Russian and English.

Developed and implemented an anti-corruption compliance system

Our lawyers devised an integrated system of anti-corruption compliance, then implemented it in the business processes of one of the world’s biggest producers of precious metals along with products made out of them. The project consisted of three blocks of work: conducting a compliance audit, enhancing the system of internal by-laws and implementing a compliance system.

The first block of tasks that was put before our lawyers included:  (1) identifying, describing and assessing corruption risks; (2) making a list of positions that are associated with such risks; (3) devising a range of measures to eliminate and mitigate the risks; (4) forming a roadmap of corruption risks for each business process and an integrated map of business processes based on the level of exposure to risks; (5) analysing anti-corruption and corporate practices that the company was already applying; (6) devising the methodology for monitoring how efficiently the management of corruption risks was functioning, and (7) preparing an analytical memo with regard to the above issues.

The second block of work included: (1) analysing and updating the existing internal by-laws; (2) preparing drafts of new internal by-laws, and (3) improving how contractual work is done.

The third block of work comprised: (1) holding a training session on compliance issues; (2) drafting a tutorial presentation and an information leaflet on compliance issues for employees to learn the current rules.

The compliance audit of the company was performed not in one area, but in a comprehensive manner, including research and mitigation of corporate, tax, intellectual property, anti-corruption and criminal law risks. This approach allowed us to identify related and cross-sector risks of the company and to devise comprehensive recommendations on how to overcome and mitigate them.

Provided legal support of an internal anti-corruption investigation

Our lawyers provided legal support during an internal anti-corruption investigation.

The tasks put before the team included:  (1) conducting an anti-corruption check of suspected persons and counterparties; (2) preparing for and participating in an interview with current and former employees of the company in order to identify red flags and signs of unethical conduct of employees; (3) conducting forensic research with regard to analysing transactions involving the sale of products in terms of identifying economic abuses committed by employees of the company who were involved in such sales or by its contracting parties; (4) a brief description of the circumstances forming the elements of the ‘corruption articles’ of the Russian Criminal Code, and other actions covered by the concept of ‘corruption', and (5) analysing the possible risks for the company in connection with the situation that emerged.
Based on the outcome of the investigation, our lawyers prepared a legal memo setting out the violations of legislation that had been identified and the persons involved. Further, the client was provided with guidelines for how the company’s anti-corruption compliance system could be improved.

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