The event s organizers were legal web-portal Pravo.ru and Advocates Bureau Yug, and Yug Times Weekly was its information partner.

"The Winter Legal Week event has evolved from the Legal Forum of Southern Russia, which usually takes place in Sochi," said Yuri Pustovit, Managing Partner of Advocates Bureau Yug, "Our legal community needs to gather more often to discuss pressing issues. During winter, we meet in the mountains to show Sochi s advantages to our colleagues from different regions of Russia. This year over 130 legal professionals participated in the Forum. They came from Moscow, St. Petersburg, Rostov-on-Don, Novosibirsk and other cities. There even were participants from the United Kingdom and Israel, so the Forum has acquired an international status."

For three days, the legal experts have been discussing pressing issues, but the main topic was legal problems that business faces in 2023 and how to overcome them. The overview is as follows: the most crucial thing nowadays is to be creative and apply non-standard solutions. There are quite a number of them. One of the most famous is relocation. In the current economic and political situation, this is the essential option for Russian entrepreneurs if they want to preserve and develop businesses. Now they need additional opportunities to conduct banking operations and form logistics chains ensuring international cooperation.

It is necessary to approach the relocation issue comprehensively, said Anna Krovyakova, Managing Partner of the international consulting company FINCOM Group, "You cannot make decisions solely based on your tax preferences. It was one of the main mistakes during the first relocation. Moreover, many companies had no working financial models and workloads, no connections to their business partners, and no logistics. As practice has shown, there was no need to "rush away" anywhere in the first months. One needed to stay calm and evaluate all possibilities. When choosing a place of relocation, it is necessary to pay attention to the cost and terms of incorporating a company, bank accounts, tax burden, logistics chains, characteristics of goods concerning end users, and whether you have to travel to other countries. The best options for relocating companies nowadays are Serbia and Kyrgyzstan. These are Russia-friendly countries with no language barrier, the possibility to open a bank account in any currency and obtain a residence permit when opening a company."

Favourable environment

Thus, the lowest tax rates in Europe are the main advantage if you want to incorporate a company in Serbia. At the same time, non-residents are taxed only on income received in this country, which complies with international accounting standards. Those who consider Kyrgyzstan as a place to produce or trade after relocation should remember that there are five free economic zones here. There are several essential advantages of Kyrgyzstan, such as no tax on imported raw materials, a few inspections by supervisory authorities, and a closed and protected area. The companies incorporated in Kyrgyzstan are excused from double taxation, 10% income tax, 12%VAT, and 1-5% sales tax, depending on their activity. Moreover, the country has a favourable location between the CIS and APEC, which provides access to new markets.

Thus, the lowest tax rates in Europe are the main advantage if you want to incorporate a company in Serbia. At the same time, non-residents are taxed only on income received in this country, which complies with international accounting standards. Those who consider Kyrgyzstan as a place to produce or trade after relocation should remember that there are five free economic zones here. There are several essential advantages of Kyrgyzstan, such as no tax on imported raw materials, a few inspections by supervisory authorities, and a closed and protected area. The companies incorporated in Kyrgyzstan are excused from double taxation, 10% income tax, 12%VAT, and 1-5% sales tax, depending on their activity. Moreover, the country has a favourable location between the CIS and APEC, which provides access to new markets.

"Currently, the business and its clients are at a crossroads thinking about what they should do," said Elena Chasovskikh, Development Director of Portfolio Investments Management Company (Region Group), "Should they stay in unfriendly countries, move to friendly ones, or search in Russia for solutions to integrate into their business? Among other non-standard corporate tools, I want to point out the closed-end mutual funds and explain today s nature of such a market. These are over 5,000 funds, and over 2,000 of them are active. The market is 6.4 trillion rubles, while 5 trillion rubles are the combinations of closed-end and net asset value mutual funds. 2.7 trillion rubles include Russian stocks, bonds, investment units, promissory notes and LLCs shares in the mutual funds. These tools allow you to structure markets and invest in totally different assets. Funds may include corporate structures, debt instruments, fixed assets, production sites, real estate and any assets other than cash."

These tools help you solve many tasks. Firstly, taxation. The closed-end mutual funds do not pay an income tax on transactions and transactions with the fund s property. Their crucial quality is confidentiality: data on shareholders are not disclosed in the Unified State Registers of Legal Entities and Immovable Property, and entities within the funds become officials in the management company. At the same time, shareholders reserve their right to control by participating in the general meeting on main agendas or in the investment committee on transaction approvals. The Central Bank and a specialized depository also have regulatory control there. The closed-end mutual funds allow you to isolate assets and transform them into a security (a unit). Units are in free circulation and do not depend on shareholders or the management company. It is also possible to allocate property in kind. Only closed-end mutual funds may become the tools to protect your business in case of future sanctions, separation of Russian and foreign companies or their preservation in Russia by a foreign owner or soon-to-be relocated owner.

Avoiding sanctions

Intellectual property law is one of the main problems for Russian businesses nowadays. Due to the sanctions imposed, many Western companies stopped working with Russian customers. The restrictions cover the user software and non-user hardware. At the same time, companies from any jurisdiction can fall under secondary US sanctions because almost all the said products usually contain 25% of American components or were manufactured using US technologies. As a result, software updates, new license purchases and customer support services are now unavailable to Russian companies. They have to develop their solutions for software support or look for Russian analogues. At the same time, state authorities and governmental customers are forbidden to use foreign software at critical information infrastructure facilities.

"The most difficult thing we have encountered is that the copyright holders, with whom we have been working for many years, stop communicating and getting in touch," said Anna Voitsekhovich, Director of the Legal Risk Management Department, MTS Corporate and Legal Affairs Unit, "Even though you would like to solve all the issues, but you don t understand how to do it. How to overcome this situation? Perhaps, for Russia, it would be better to start developing its software, equipment and technologies."

Import substitution

Developing your own software products is not a quick thing. Even though Russia already has domestic analogues equal to Western ones, there are still many problems. Among them are perpetual license agreements, limited by Russian law for five years only, the impossibility of transferring products to third parties (including companies existing in the same group), equipment licenses and the unavailability of updates. The parallel importing made it possible to purchase some products for now. However, copyright holders from unfriendly countries will not get their lawful compensation. Russia s Government implemented requirements for opening "O bank accounts" to settle with counterparties from unfriendly countries. You can make payments after getting approval from a special state commission. Still, there are more questions than answers.

There are also many issues regarding dispute resolutions between Russian and Western companies in commercial courts. Thus the Russian legislation has two amendments, 248.1 and 248.2, in effect.

"These articles of the Arbitration Procedural Code allow cancelling the arbitration clause that provides an opportunity to consider disputes abroad, in courts of foreign jurisdictions, due to the company being under sanctions or unable to hire advisors and transfer dispute consideration into Russia s courts and take restrictive measures," explained Yuri Pustovit, Managing Partner of Advocates Bureau Yug, "If a dispute has been initiated outside of the Russian Federation, in an unfriendly country, you can issue a judicial act that ban or continue it in the jurisdiction of an unfriendly country."

According to Sergey Radchenko, Partner of Advocates Bureau Yug, after 2020, out of 54 cases under Article 248.1, 25 must be considered only in Russian courts. Out of 13 under Article 248.2, forbidding the consideration in a foreign jurisdiction, 8 cases were satisfied.

"A striking example of the article being applied and the court decision being implemented was the lawsuit of Tsargrad Media against Google after the latter blocked their Youtube channel. As a result, a court decided that Google must pay Tsargrad compensation of about 1 billion rubles. It was possible to implement the decision because Google had assets in Russia at that time," Sergey Radchenko noted.

The main problem with applying new rules is whether foreign defendants will obey or ignore them. As a result, the business is wondering whether it is even worth starting disputes as it requires a lot of time and resources.

"Is it worth starting proceedings abroad in the current conditions? First of all, you need to answer some questions. Are there any obstacles to initiating proceedings abroad? Does a defendant have assets in Russia that can become a recovery compensation? Is it possible to execute the court s decision in the jurisdictions of the assets location? Are there other grounds for refusing to recognize the court s decision in the relevant jurisdiction?" stated Anton Maltsev, Partner of Melling, Voitishkin & Partners.

Mutual loyalty

It is worth noting that now 44 countries of the world have agreed to recognize the judicial decisions of Russian courts. The list includes Bulgaria, Cyprus, Argentina, Italy, Lithuania, Latvia, Estonia, Poland, Spain, and Ukraine. Recognizing the decisions of Russian courts is possible even without a corresponding agreement. For example, in 2022, the Limoges court in France recognized the judgment of the Krasnogorsk District Court. In March 2022, the Supreme Court of New York made a similar decision.

"One of the most obvious solutions is to execute decisions rendered by a Russian court in the jurisdiction of a friendly country. For example, now such regulation operates in Turkey without an agreement and based on "anticipatory reciprocity". The Turkish judicial system has no negative experience of non-recognizing the decisions of Turkish courts in Russia," Anton Maltsev noted, "Thus, we may assume decisions of Turkish courts to be executed in our country. We know of lawsuits that were filed in the courts of St. Petersburg and the Leningrad region, and the decisions were executed in Turkey."

All participants of the Winter Legal Week Forum came to one conclusion. Despite all the difficulties, it is still worth defending your rights in international courts. Mainly we are talking not solely about financial costs but the reputation and the rights to work in foreign markets. Moreover, international judges have stated that, when resolving disputes, they will try to consider them objectively without minding sanctions and restrictions. There are such confirmations as the experience of the state corporation Rosatom.

"We have not experienced prejudice against our company," said Olga Monchenko, Chief Lawyer of the Department for Legal and Corporate Work in Rusatom Energy International JSC, "There is a practice when international judges rule in our favour if they see a proven legal position. The main problem is that foreign consultants refuse to fulfill contracts, and there are some barriers when hiring them. For example, our specialized consultants terminated all communication and legal support during the execution of the EPC contract. As a possible solution, we offer to change the approach and use creativity during team-building, i.e. to involve Russian consultants in the team and strengthen it with international specialists, to hire freelance barristers, and to include in-house teams to the maximum. Monitoring companies and individuals public activity helps greatly to select specialists. Strangely enough, American law firms turned out to be the most loyal towards Russia."

Mutual process

Summing up the discussion of the Russian legal system facing several challenges, Yuri Pustovit, Managing Partner of Advocates Bureau Yug, noted that amending Russian legislation will not solve all issues.

"The problem involves the domestic market and its interaction with foreign markets and Western countries. The latter ones have either stopped this cooperation or put it on pause. Over the past year, we have found some solutions that are not 100% effective. But we will continue working. We hope the situation will be resolved, and we will have normal business relationships with Western countries," Yuri Pustovit stated.

The three-day Winter Legal Week Forum in the mountains of Sochi finished with skiing competitions for all participants. This unusual combination of business and cultural programs and a casual environment for communication makes this Forum organized by Pravo.ru and Advocates Bureau Yug very popular within the legal community of Russia.