Presentation at the IBA 2016 Washington Annual Conference. Monday. Navigating sanctions in a changing world

1. YAROSLAV KULIK
PARTNER, ART DE LEX LAW FIRM
CHAIR, GOVERNMENT PROCUREMENT SUBCOMMITTEE
WASHINGTON D.C., 19 SEPTEMBER 2016
NAVIGATING SANCTIONS IN
A CHANGING WORLD: RUSSIAN VIEW
ANNUAL CONFERENCE OF THE INTERNATIONAL BAR ASSOCIATION

2. EXPERIENCE OF RUSSIAN LAW
FIRMS IN COUNSELING ON
SANCTIONS MATTERS
PRESENTATION OF SURVEY RESULTS CONDUCTED BY A PRESENTER
AMONG THE RUSSIAN LAW FIRMS IN SEPTEMBER 2016
22

3. 2
DID RUSSIAN LAW FIRMS ESTABLISH
SPECIAL DIVISIONS DEALING WITH
SANCTIONS MATTERS?
3
50 50
Yes No
NOTE: Hereinafter percentage among firms who advise on sanctions matters
50

4. 2
INDUSTRY SECTORS OF ADVISING (1)
OIL AND GAS
BANKING AND FINANCE
MACHINERY PRODUCTION
AIRCRAFT CONSTRUCTION
TELECOMMUNICATIONS
DEFENSE INDUSTRY
4

5. 2
INDUSTRY SECTORS OF ADVISING (2)
LOGISTICS
FOOD INDUSTRY
CONSTRUCTION
MEDICAL DEVICES AND EQUIPMENT
MICROELECTRONICS
PUBLIC PROCUREMENTS
5

6. 2
DO RUSSIAN LAW FIRMS CONDUCT
COURT OR ARBITRATION CASES?
6
20
80
Yes No
80

7. 2
TYPICAL COURT OR ARBITRATION CASES
INVOLVING SANCTIONS-RELATED MATTERS
7
DISPUTES BETWEEN RUSSIAN
BANKS AND THEIR CLIENTS ARISING
OUT OF PERFORMANCE (NON-
PERFORMANCE) OF A BANK
ACCOUNT AGREEMENT
CONTRACTUAL DISPUTES ARISING
OUT OF NON-PERFORMANCE OF
OBLIGATIONS DUE TO SANCTIONS
(TERMINATION OF CONTRACTS,
PENALTIES AND DAMAGES
RECOVERY, ETC.)

8. 2
SANCTIONS AS A FORCE-MAJEURE
IN PRACTICE OF RUSSIAN COURTS
WORKS
DOESN’T
WORK
8
IF SANCTIONS ARE
MENTIONED IN FORCE-
MAJEURE CLAUSE
IF CONTRACT DOES NOT
CONTAIN CLAUSES RELATED
TO SANCTIONS
NOTE: A CERTIFICATE ISSUED BY A CHAMBER OF
COMMERCE AND INDUSTRY MAY BE REQUIRED TO
PROVE THE FORCE-MAJEURE EVENT

9. 2
SANCTIONS-RELATED REPS, WARRANTIES
AND INDEMNITIES UNDER RUSSIAN LAW
SINCE 1 JUNE 2015 THE CIVIL CODE
ALLOWS PARTIES TO USE IN CONTRACTS
LEGAL INSTRUMENTS SIMILAR TO
REPRESENTATIONS, WARRANTIES AND
INDEMNITIES IN COMMON LAW
9

10. 2
DO RUSSIAN LAW FIRMS ADVISE ON
TRANSACTIONS ASSOCIATED WITH
SANCTIONS MATTERS?
10
90
10
Yes No
90

11. 2
TYPES OF TRANSACTIONS (1)
ESTABLISHING JOINT VENTURES WITH FOREIGN PARTNERS
ACQUISITIONS OF SHARES/INTEREST IN SHARE CAPITAL
PLACEMENT OF SECURITIES DENOMINATED IN USD OR EUR
ATTRACTING FINANCING FROM US OR EU
11

12. 2
TYPES OF TRANSACTIONS (2)
SUPPLY OF GOODS
FIELDS DEVELOPMENT
CONSTRUCTION INVESTMENT AGREEMENTS
DOING BUSINESS IN CRIMEA
12

13. 2
SIEMENS TURBINES STORY: SUPPLY TO A
THIRD PARTY ON “NEUTRAL” TERRITORY
13
vs
A JV OF SIEMENS AND POWER MACHINES TO
SUPPLY TURBINES TO A POWER PLANT ON
RUSSIA’S TAMAN PENINSULA. THERE MAY BE
SOME DOUBTS ABOUT AWARENESS OF SIEMENS
WITH RESPECT TO THE FINAL DESTINATION OF
TURBINES. WHAT ARE THE RISKS FOR SIEMENS TO
BREACH THE EU SANCTIONS?
?

14. 2
DO RUSSIAN LAW FIRMS ADVISE ON
DEVELOPING COMPLIANCE PROGRAMS?
14
20
80
Yes No
80

15. 2
HOW CAN YOU DESCRIBE THE CURRENT
SITUATION FOR YOUR RUSSIAN CLIENTS?
1
• CLIENTS CREATE SCHEMES BASED ON USING COMPANIES NON-AFFILIATED WITH
SANCTIONED ENTITY OR ENTITIES
2
• SANCTIONS SIGNIFICANTLY COMPLICATE DOING BUSINESS FOR CLIENTS
3
• CLIENTS FOCUS ON DOMESTIC MARKET (INCLUDING IMPORTS PHASE OUT) AND
PARTNERS FROM COUNTRIES WHO DID NOT IMPOSE SANCTIONS
4
• BIG COMPANIES CAUGHT THE MOMENT AND HAVE SUCCESSFULLY RESTRUCTURED
CONTRACTS AND TRANSACTIONS. SMALL COMPANIES FACE CONFLICT SITUATIONS
5
• CLIENTS LOOK FOR NEW FORUMS FOR DISPUTE RESOLUTION (E.G. IN HON-KONG)
6
• BIG TURN TO THE EAST HAS NOT YET TOOK PLACE
15

16. THANK YOU FOR YOUR ATTENTION!
kulik@artdelex.ru
+7 (495) 937-71-23
WE THANK ALRUD, FBK LEGAL, KIAP, LIDINGS, LINIYA PRAVA,
MURANOV, CHERNYAKOV & PARTNERS, NEKTOROV, SAVELIEV &
PARTNERS, PEN & PAPER, YUST, AND OTHER RUSSIAN LAW
FIRMS FOR PARTICIPATING IN OUR SURVEY