Nikolay Pokryshkin speaks at the Forbes Federal Legal Forum

On 18 September, KK&P Partner Nikolay Pokryshkin spoke at the session entitled Business in the Face of Sanctions: the Boundaries of a Legal Personality, which was dedicated to the issue of the limits of liability of foreign companies’ affiliates based on a decision of the Russian Supreme Court in a case involving Citibank.

The main topic of the session was a discussion on the risks for large foreign companies in Russia and options for Russian businesses to protect their interests.

Having extensive experience representing the interests of major foreign banks in disputes arising out of an inability to fulfil obligations due to sanctions, Nikolay noted the dual approach of Russian courts toward foreign entities in sanctions disputes. While lower courts tend to favour the interests of Russian entities, in the case of cassation and the Russian Supreme Court they tend to also consider the position of foreign companies and their subsidiaries in Russia.

Nikolay also emphasised that sanctions and force majeure mechanisms are effective in cases where the dispute is between Russian parties without foreign participation. However, they are completely ignored in disputes between Russian state-owned companies and foreign entities. According to Nikolay, the Russian Supreme Court is attempting to harmonise the approaches of lower courts but has yet to completely eliminate the discrepancies.

Despite the lack of consistency in practice, Nikolay believes that invoking sanctions in court is possible, but that success depends on the composition of the parties. Force majeure, sanctions clauses (regarding the suspension of proceedings), and compulsory contract amendment may be taken into account by the court, whereas mechanisms for terminating obligations under the Russian Civil Code and termination itself often remain futile.

The Federal Legal Forum is an annual Forbes magazine conference for the legal community on trends and tendencies in the economy, legislation and regulation, and the foreign and domestic policy of Russia, which have a significant impact on the development of the Russian legal market, and on significant cases and court proceedings.