Draft bill proposes to give exclusive jurisdiction to the Russian courts to determine claims against sanctioned entities
On 16 July 2019 certain deputies of the Russian State Duma introduced bill No. 754380-7, which would make disputes arising from claims against Russian sanctioned persons subject to the exclusive jurisdiction of the Russian courts. The bill also provides that where proceedings have been commenced in a foreign court or arbitration tribunal, a sanctioned person may file a petition with a Russian court for termination of such foreign proceedings, in which case the relevant claim may be resolved by a Russian court.
In accordance with the bill, sanctioned persons will also be eligible to unilaterally amend agreements providing for submission of disputes to a foreign court or arbitration tribunal, if they become subject to sanctions limiting representation of their interests in foreign courts or tribunals. In this event, the relevant agreements may be unilaterally amended so as to provide for submission of disputes to a Russian court or arbitration institution.
If passed in its current form, the above provisions of the bill would retroactively apply to:
- proceedings which have not been finally resolved; and
- agreements entered into, prior to the date when the bill comes into force.
The definition used in the bill to cover Russian sanctioned persons is a “person subject to restrictive measures.” Under the draft bill:
- persons include, inter alia, Russian citizens, Russian legal entities and foreign companies beneficially owned by Russian persons; and
- measures are defined broadly as any measures imposed by, inter alia, a foreign state or union and restricting:
- such person’s (i) rights in respect of assets located abroad, (ii) exercise of rights and claims located abroad or denominated in a foreign currency, or (iii) transactions in a foreign currency; or
- other persons’ rights to enter into transactions with such person or its assets.
The bill is yet to be considered by the State Duma in its first reading, and the chances of the bill successfully passing into law cannot be evaluated at this early stage.
The bill received a positive response from the Committee of the State Duma recommending that the bill be adopted in the first reading. However, the Committee noted that certain provisions of the bill are of doubtful validity in terms of principles of international law. The Legal Department of the State Duma has not made any comments on the provisions of the bill. The Head of the Council of the Federation’s Constitutional Committee expressed his support for the bill, stating that this measure is necessary to protect sanctioned persons’ interests. The positive feedback from the State Duma’s committees cannot, however, be treated as evidence that the bill will be adopted or will not be changed significantly during the various stages of the review process.