International trade and commercial transactions in Russian Federation: overview

A Q&A guide to the regulation of international trade and commercial transactions in the Russian Federation.

The Q&A covers key matters relating to sale of goods contracts, including rules on formation, price and payment, delivery, passing of title and risk, variation and assignment, enforcement and remedies, exclusion of liability, choice of law and jurisdiction, and arbitration. It also provides an overview of the rules governing storage of goods, imports, trade remedies, exports and international trade restrictions.

To compare answers across multiple jurisdictions, visit the international trade and commercial transactions Country Q&A tool.

This Q&A is part of the International Trade and Commercial Transactions Global Guide. For a full list of jurisdictional Q&As visit www.practicallaw.com/internationaltrade-guide.

Contents

Recent trends

1. What are the recent trends affecting the regulation of international trade in your jurisdiction? Is your jurisdiction a member of the World Trade Organization (WTO)?

Recent trends

Political environments affect cross-border economic relationships considerably. For example, the adoption by some European countries and the US of sanctions in connection with the political situation in Ukraine and retaliatory sanctions of Russia caused a reduction of the volume of trade with these countries. At the same time, Russia continues on the path of the development of integration in the Eurasian region. For example, in 2015, the Eurasian Economic Union (EEU) of the Russian Federation, the Republic of Belarus, the Republic of Kazakhstan, the Republic of Armenia and the Republic of Kyrgyzstan was formed, replacing the Customs Union that consisted of the Russian Federation, the Republic of Belarus and the Republic of Kazakhstan.

On 29 May 2015, the EEU and Vietnam signed the Free Trade Zone Agreement. India and Israel are also considering accession to the Free Trade Zone.

As a member of the World Trade Organisation (WTO), Russia refers to the mechanism of dispute resolution under the WTO, the Dispute Settlement Body. There are currently nine disputes under the WTO to which Russia is a party. Russia is a claimant in four and a respondent in five disputes. None of these disputes have been resolved to date.

Disputes to which Russia is a party include both typical and extraordinary disputes for the WTO development stage. For example, a current general trend is to challenge protection measures in the WTO, and claims of the Russian Federation against the EU on anti-dumping margin calculation methods reflect this general trend.

Meanwhile, there is an extraordinary dispute between the EU and the Russian Federation caused by the situation that Russia (as the EU argues) is in default on its obligations to the WTO on the reduction of duty rates.

For settlement of these disputes, there is a judicial body, which is the EEU court under the aegis of the EEU, previously, the EurAsEC court under the Customs Union. The court considers disputes, including those initiated by business entities. The most common category of disputes is challenging introduction of anti-dumping duties and goods classification decisions.

Trade agreements

Russia is a party to the:

  • EEU Agreement (signed in Astana on 29 May 2014).

  • Free Trade Zone Agreement between the CIS member states (signed in Saint Petersburg on 18 October 2011).

  • Customs Code of the Customs Union (appendix to the Customs Code of the Customs Union Agreement adopted by virtue of Decision of the Interstate Council of the EurAsEC No. 17 of 27 November 2009).

  • General Agreement on Tariffs and Trade 1994 (GATT).

Reform

The most anticipated event in the field of statutory regulation is the enactment of the Customs Code of the EEU, which was previously scheduled for 1 January 2016. However, now that the first cycle of interstate co-ordination by the EEU member states is over, the foregoing Code is expected to become effective no earlier than the second part of 2016. The new code is to replace the Customs Code of the Customs Union that has been effective from 2010.

During the autumn session, the State Duma is expected to consider a draft law on amendment of the Administrative Offences Code of the Russian Federation in relation to administrative offences in the customs area. The draft law takes into account the initiative of the business community seeking mitigation of administrative liability and the infliction of penalties that are proportionate to the gravity of the committed offences.

 

Contracts for the sale of goods

General

2. What is the legal system in your jurisdiction based on (for example, civil law (codified), common law or sharia law)?

Russia is a civil law county. Russian contract law is codified and based on the Russian Civil Code.

Until recently, contract law did not provide for any general obligations to negotiate contracts in good faith. However, as of 1 June 2015, the Russian Civil Code provides for the general obligation of the parties to negotiate contracts in good faith.

As of 1 March 2013, contract law provides that the parties must act in good faith when establishing, exercising and protecting their rights and obligations.

Formation

3. What domestic legislation and international rules apply to a sale of goods contract in your jurisdiction? Are standard international contractual terms commonly used?

Domestic legislation

The main source of law that applies to the sale of goods is the Russian Civil Code. Depending on the particular type of good, other legislation may apply. For example, the Federal Law on Nuclear Energy Use applies to the export of certain equipment for the nuclear industry.

International rules

Russia is a party to a number of international treaties regulating the international sale of goods, including the:

  • Vienna Convention on Contracts for the International Sale of Goods (Vienna Convention).

  • United Nations Convention on Contracts for the International Sale of Goods (CISG).

  • Customs Convention on the International Transport of Goods under Cover of TIR Carnets (TIR Convention).

  • Convention for the Unification of Certain Rules for International Carriage by Air (Montreal Convention).

Standard contractual terms

Parties to international sale of goods contracts often choose to use the standard International Chamber of Commerce (ICC) international commercial terms (Incoterms) 2010. Other standard contractual terms that are not very commonly used include the:

  • UNIDROIT Principles of International Commercial Contracts (PICC).

  • Uniform Customs and Practice for Documentary Credits (UCP).

  • Uniform Rules for Demand Guarantees (URDG).

 
4. What are the authority/capacity rules for entering contracts, for different commercial entities?

Authority

Companies act through their sole executive bodies (general director). Generally, the general director can act on behalf of the company and enter into contracts. According to recent amendments to the Russian Civil Code, a company can have two or more directors with joint authority. The authority of these joint directors is listed in the company's register (Unified State Register of Legal Entities).

Under conflict of law provisions, the authority of a foreign company to enter into a contract is determined by the law of incorporation of the legal entity.

The Russian Federation and its constituent entities can enter into contracts with commercial entities and act through its state bodies. The authority of the state bodies is usually established in the relevant regulations.

Although it is highly disputed whether public bodies (local authorities) can be party to a contract, in practice, they often act on the basis of decrees or decisions that regulate their activity and authority.

Parties to a contract can act on the basis of authority granted to them by a power of attorney (PoA) or agency agreement. In practice, authority is rarely granted on the basis of an agency agreement.

Limitations

Limitations of a commercial entity's authority to enter into contract can be established under its charter or the employment contract between a company and its general director. It is important to consider whether the company has only one or more than one general director. In the latter case, the powers of each general director are listed in the company's register (Unified State Register of Legal Entities).

Limitations of the authority to enter into a contract can be established by the regulations governing the activity of the respective state authority (local authority).

 
5. What are the essential requirements to create a legally enforceable contract?

Substantive requirements

To create a legally binding contract, one party must send the other an offer and the other must unconditionally accept the offer (acceptance). Consideration is not necessary for entering into a contract.

An offer is a statement addressed to a certain person that is clearly stated and expresses the intention of the person making the offer to enter into the contract. Acceptance is the answer given to the person making the offer, which must be full and unconditional.

Formal requirements

Generally, contracts between legal entities must be in written form. Notarisation is not required. Contracts in electronic form (for example, by exchange of e-mail messages) are also legally enforceable. When presenting digital material in court, securing evidence through a notary is required.

Parties often use a bilingual format for international contracts (Russian and English). This is not a requirement for the contract to be valid. Translation into the Russian language is not required. However, the Russian language is the official language used by state authorities and courts. Therefore, translation is required when applying to the state courts.

Price and payment

6. If price provisions are not agreed by the parties, does local law impose requirements in relation to price (for example, the time, method and place of payment)?

Consideration is not a requirement for creating a legally binding obligation (see Question 5). Price is also not an essential term for international sale of goods contracts. Therefore, contracts without reference to the price of goods are enforceable.

If price provisions are not agreed by the parties, the purchaser must pay the price that is usually paid in comparable circumstances for equivalent goods.

Generally, the law does not impose any restrictions on the payment of goods. Therefore, the parties can choose the method of payment, for example:

  • Letter of credit.

  • Bill of exchange.

  • Promissory note.

  • Funds transfer.

Parties to the contract can also choose to include set-off rights.

The law provides for a wide range of security mechanisms available to the parties, such as:

  • Penalty.

  • Suretyship.

  • Pledge and mortgage.

  • Retention of title.

  • Advance payment (deposit).

  • Security payment.

  • Guarantees.

  • Other security mechanisms established by the contract or the law.

If an international sale of goods contract involves a foreign party, the parties can determine their obligations in any currency and also make payments in a foreign currency. However, there are certain currency control requirements applicable to Russian entities, such as:

  • Repatriation requirement.

  • Obligation to use Russian banks.

Delivery

7. If delivery provisions are not agreed by the parties, does local law impose requirements in relation to delivery (for example, the time, method and place of delivery)?

Duty of the seller to deliver the goods

Generally, the seller must transfer the goods as well as accessories and related documents, such as:

  • Certificates.

  • Technical documents.

  • Manuals.

The seller must deliver the goods within the term provided in the contract. If the term is not established, the obligation to deliver the goods must be performed within seven days from the date of demand, unless otherwise provided in the contract.

Unless otherwise specified by the contract, the seller is deemed to have performed its obligation to deliver the goods from the moment of either:

  • Delivery of the goods (when the seller is responsible for conveyance).

  • Notification to the purchaser that the goods are ready for delivery (when the seller is not responsible for conveyance).

Duty of the buyer to accept the goods

The buyer must undertake all necessary actions to ensure acceptance of the goods delivered under the contract. The delivered goods are inspected by the buyer within the term established by the law, contract or within customary terms. Within this term, the buyer must also check the quality and quantity of the delivered goods and immediately notify the seller in writing of any issues.

Passing of title and risk

8. If not agreed by the parties, when does title to the goods pass to the buyer?

Generally, title to the goods passes to the buyer from the moment of transfer of goods.

 
9. Are retention of title clauses enforceable in your jurisdiction? If so, what are the requirements to create a legally enforceable retention of title clause?

Parties usually incorporate retention of title clauses into their contracts. Registration of the retention of title is not a legal requirement. There is no well-developed court practice on retention of title clauses. However, the prevailing position is that in the event of selling the goods to a third party, the seller does not have the right to claim these goods from a bona fide buyer. In the event of mixing the goods, the seller also does not have the right to claim these goods. In these cases, the seller can sue the buyer for damages.

 
10. If not agreed by the parties, when does risk in relation to the goods pass to the buyer?

Unless otherwise provided by the contract, the risk in relation to the goods passes to the buyer when the seller is deemed to have performed its obligation to deliver the goods in accordance with the contract and the law.

Parties are free to amend this provision in their contract, in particular to choose International Chamber of Commerce (ICC) international commercial terms (Incoterms) 2010 to govern the question relating to transfer of risk.

Variation and assignment

11. What are the main ways and formalities to transfer contractual rights?

The main form of assignment of contractual rights is an assignment agreement. The form of the assignment agreement must coincide with the assigned contract and must:

  • Be concluded in writing.

  • Be notarised if the assigned contract requires a notarial certification.

The right to assign a contract can be excluded by the contract.

The established position is that state and municipal contracts (that is, contracts concluded with public bodies or local authorities) are not transferable.

The law does not recognise subcontracting as a form of assignment of contractual rights. A subcontract agreement only binds its parties and does not affect the rights of third parties.

 
12. What are the main rules relating to waiver of contractual rights?

Generally, the parties to a contract are free to waive their rights under the contract. However, there are certain exceptions, for example:

  • It is not possible to waive the right to apply to court.

  • It is not possible to make transactions aimed at restricting or limiting civil capacity (for example, transactions aimed at restricting the possibility of a person to enter into certain types of contracts as a matter of principle).

Enforcement and remedies

13. What are the seller's obligations in relation to the description and quality of the goods?

It is implied that the seller must deliver the goods the quality of which complies with the terms of the contract. In the absence of any specific clause, the seller must deliver the goods that are suitable for the purposes for which the goods are usually used. Parties to a contract can establish higher standards of quality of goods.

Generally, product liability is governed by the law chosen by the parties as the governing law of their contract.

The default statutory remedies for delivering defective products are the following:

  • Price decrease.

  • Free fixing of defects.

  • Compensation of costs for fixing defects.

In the event of a material breach (for example, a fatal defect) the seller can either:

  • Refuse the contract and claim the paid price.

  • Request the replacement of the goods.

 
14. What are the different types and legal status of contractual terms in your jurisdiction?

All terms of a contract can be divided into two groups:

  • Essential terms.

  • Non-essential terms.

To conclude a contract, the parties must agree on the essential terms of the contract. Essential terms of a supply agreement are the description of the goods and their quantity.

The law does not formally recognise the concepts of warranties and representations, which exist in common law countries. Following the recent reform of civil legislation, the Russian Civil Code now regulates representations and breach of representations (see Question 16).

In addition, the law does not recognise the concept of express and implied terms. The Russian Civil Code contains default rules for the supply of goods (including rules on breach of contract, late delivery or late payment). However, the parties can, to a large extent, change these rules in their agreement on the basis of the principle of freedom of contract.

 
15. What are the key rules on privity of contract and third party rights?

Generally, a contract only creates legally enforceable rights and obligations for the parties to the contract. In certain specific cases, a third party can derive rights from the contract. For example, if the third party performs an obligation for the party to the contract (in cases allowed by law), the third party acquires rights under the contract.

 
16. What are the rules relating to invalidity, misrepresentation and mistake relating to contracts?

The contract can be challenged in court in cases provided by the law (for example, in the event of deceit).

The law does not recognise the concept of misrepresentation (as it exists in common law systems). As a result of the recent reform of the Russian civil legislation, the Russian Civil Code now includes rules on representations and breach of representation. Generally, if a person relied on the representations given by the other party, the innocent party can claim damages from the other party or claim payment of the penalty provided by the contract. If a false representation was essential for the other party, then such party can also terminate the contract.

If a party made a mistake because of deceit or a wrong belief caused by false representations given by another party, the transaction can be challenged in court or, alternatively, the party can terminate the contract.

 
17. What are the main performance and discharge rules relating to contracts?

The law provides for certain cases where the parties can refuse the contract (that is, terminate the contract by giving notice):

  • Delivery of goods with a defect that cannot be fixed within a term acceptable for the buyer.

  • Repeatedly late delivery.

  • Repeatedly late payment.

  • Repeated non-acceptance of goods.

The parties can terminate (discharge) their contract by agreement. Generally, there is no statutory duty to co-operate in sale of goods contracts. However, this duty logically results from the general obligation of the parties to act in good faith in establishing and performing their obligations.

Unlike common law countries, the law does not recognise the concepts and distinguish between reasonable and best endeavours provisions.

Generally, a force majeure clause/event releases the party from liability for non-performance of the contract.

 
18. What are the main remedies and rules for losses and damages for breach of a sale of goods contract?

Types of losses

The law provides for the principle of full compensation of losses. Therefore, a person can claim for real damages and lost profit.

Additionally, the law provides for compensation of so-called future losses. The buyer can claim the difference between the price of the purchased goods and the price of the terminated contract if both:

  • It is within a reasonable term after the termination of the agreement and the termination is due to the seller's fault.

  • The buyer has to purchase the goods at a reasonable price to replace the goods that the seller failed to deliver.

The same rules also apply in the case of the buyer's fault.

Assessment of damages

The amount of damages is determined with a reasonable degree of credibility. The court cannot refuse to satisfy the claim solely on the basis that the amount of damages could not be determined with a reasonable degree of credibility. The amount of damages is determined by the court considering all the circumstances of the case on the basis of the principles of equity and proportionality.

Generally, the court is bound by the statement of the claim lodged by the claimant. In The court interprets contracts on the basis of the literal meaning of its terms. In cases of uncertainty (for example, mistakes or typos), the court examines other clauses and the whole meaning of the contract. If this does not solve the issue, the court examines the intention of the parties considering the aim of the contract.

Duty to mitigate losses

Given the general principle of good faith, the parties to a contract must mitigate their losses.

 
19. What are the buyer's remedies for breach of a sale of goods contract?

Remedies for non-delivery

Where the seller fails to deliver the goods in the quantity agreed by the parties, the buyer can purchase the goods from third parties and claim from the seller all necessary and reasonable costs suffered as a result of such purchase.

Contracts normally provide for penalties and the right of the buyer to refuse the contract for non-delivery of the goods.

Remedies for late delivery

In the case of repeatedly late delivery, the buyer has the right to terminate the contract. Additionally, the contract usually provides for penalties for late delivery.

Breach of terms regarding quality and description

See Question 13.

In all cases, the buyer can also claim damages from the seller, unless otherwise established by the contract.

 
20. What are the seller's remedies for non-payment or late payment?

In the case of repeatedly late payment, the seller can terminate the contract. Additionally, statutory interest is accrued on the defaulted monetary obligation (which is equal to the average interest rate for deposits of natural persons). Contracts also usually provide for penalties for late payment.

In all cases, the seller can also claim damages from the buyer, unless otherwise established by the contract.

Exclusion of liability

21. What are the main rules relating to excluding contractual liability? Are exclusion clauses enforceable in your jurisdiction? If so, what are the requirements to create a legally enforceable exclusion clause?

Generally, under the principle of freedom of contract, the parties to a contract can exclude or limit their liability (for example, provide for caps or exclude remedies). However, they cannot restrict or limit their liability for wilful breach of contract.

In drafting exclusion clauses, the parties must always assess the clauses from the perspective of their obligation not to abuse freedom of contract (for example, when one party bears liability without corresponding rights and the other party enjoys rights and bears no liability).

Generally, there is no distinction under the law between negligence and gross negligence in the context of contractual liability.

Choice of law

22. Will local courts recognise a choice of foreign law in a sale of goods contract? Are there any mandatory local rules that apply, despite a choice of foreign law?

Local courts recognise a choice of foreign law in sale of goods contracts. However, there are rules of direct effect that are applicable regardless of the choice of law.

  • The law provides for rules of direct applicability (imperative norms) that apply regardless of the choice of law. These rules must contain express wording that they will apply regardless of the choice of law/jurisdiction or are applicable due to their particular significance (in particular for ensuring the rights and lawful interests of the parties). For example, restrictions provided by anti-monopoly law are usually regarded as examples of such rules.

  • Foreign laws that contradict Russian public policy are not applicable in Russia. For example, a provision in the contract stating that, in the event of declaring the contract void, only one party must return all property and proceeds received under the contract to the other party will contradict Russian public policy, as it would effectively amount to confiscation of property.

 
23. If the parties do not make a choice of law, what rules determine the law applicable to a sale of goods contract?

If the parties do not make a choice of law, a contract is governed by the law of the seller's main place of business. However, if the contract is obviously closely connected with a certain country, the law of this country applies.

Choice of jurisdiction

24. Will local courts recognise a choice of foreign jurisdiction in a sale of goods contract? Are there any mandatory local rules that apply, despite a choice of foreign jurisdiction?

The courts recognise a choice of foreign jurisdiction in a sale of goods contract.

The Russian Civil Code also contains certain rules that apply despite a choice of foreign jurisdiction (see Question 22).

 
25. If the parties do not make a choice of jurisdiction, what rules determine the jurisdiction applicable to a sale of goods contract?

Generally, state commercial courts consider cases if:

  • The respondent is located or lives in Russia, or the property of the respondent is located in Russia.

  • The managing body, branch or representative office of the respondent is located in Russia.

  • The dispute arises out of an obligation that must be performed in Russia.

  • In other cases of strong connections of the parties with Russia.

Therefore, any party to a contract can apply to state commercial courts.

Arbitration

26. Are arbitration clauses commonly included in sales of goods contracts in your jurisdiction?

Local courts recognise and enforce arbitration awards made in Russia and in foreign jurisdictions. Courts can refuse to enforce arbitral awards in certain cases (for example, for contravention of public policy).

The Russian Federation is a party to UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention).

 

Storage of goods

27. How is title to goods in storage protected and evidenced? Are warehouse receipts recognised as documents of title in your jurisdiction?

The law provides that the following types of document can be issued by a warehouse:

  • Warehouse receipt.

  • Double warehouse receipt.

  • Warehouse certificate.

The main difference between a warehouse receipt and a double warehouse receipt is that the latter consists of two parts:

  • A warehouse receipt.

  • A pledge warehouse receipt.

A double warehouse receipt allows its holders to pledge the stored goods.

Warehouse receipts and double warehouse receipts are negotiable documents of title, meaning that they grant the right to dispose of the stored goods. A warehouse certificate only confirms that the respective goods were transferred to the warehouse for storage.

 
28. What conditions and formalities must warehouse receipts comply with?

Warehouse receipts and double warehouse receipts must contain the following information:

  • Name and place of the warehouse that accepted the goods for storage.

  • Number of the warehouse receipt.

  • Name of the legal entity or person that transferred the goods for storage.

  • Description and quantity of the goods stored.

  • Term of storage.

  • Fees of the warehouse.

  • Date of issuance.

  • Signature of the authorised person.

  • Stamp of the warehouse.

A document that is not compliant with these requirements is not regarded as a warehouse receipt or double warehouse receipt. It merely serves as evidence of a transfer of certain goods for storage.

Warehouse receipts do not require authorisation from any regulatory agencies and cannot be registered with any authorities.

 
29. Are other interests over goods in storage recognised?

The owner of the goods can pledge them regardless of whether the goods are stored in a particular warehouse or not.

 

Imports

Customs authority

30. What is the authority responsible for enforcing customs laws and regulations? Are certain goods subject to specific examination procedures?

The Federal Customs Service of Russia (FCS) is a federal executive body regulating customs. In accordance with Decree of the President of the Russian Federation No. 473 of 11 May 2006, the FCS performs the following functions:

  • Statutory customs regulation, control and supervision.

  • Functions of a currency control agent.

  • Functions associated with the protection of intellectual property rights.

  • Sanitary and quarantine, phytosanitary quarantine control and veterinary supervision.

  • Discovery, prevention and suppression of crimes and offences falling within the competence of the Russian customs bodies.

The FCS operates both directly and through its local bodies (that is, regional customs administrations, customs offices and customs stations).

Import duties, tariffs and rates

31. What are the main customs import tariffs and duties?

General tariffs and rates

The Russian Federation applies rates of the Common Customs Tariff of the Eurasian Economic Union (CCT EEU) approved by Decision of the Council of the Eurasian Economic Commission No. 54 of 16 July 2012.

The average CCT EEU rate in 2015 is 9.4%.

Import duties rates set by the CCT EEU are revised annually in accordance with obligations assumed by the Russian Federation on accession to the World Trade Organisation (WTO).

Preferential tariffs

Trade between the member states of the EEU comprising the Russian Federation, the Republic of Belarus, the Republic of Kazakhstan, the Republic of Armenia and the Kyrgyz Republic is carried out without payment of customs duties.

The Russian Federation has entered into free trade zone agreements with the Commonwealth of Independent States (CIS) member states, and with Serbia and Vietnam. These provide for the inapplicability of customs duties during trade between these countries, with the exception of some goods.

Import customs duties on the goods originating from developing countries is equal to 75% of those set in the EEU, and there are zero import duties rates on the goods originating from the least developed countries (Article 36, EEU Agreement).

Non-tariff barriers to imports

32. Are there non-tariff barriers to imports into your jurisdiction?

The Eurasian Economic Union (EEU) applies the following unified non-tariff regulation measures on trade with developing countries (Article 46, EEU Agreement):

  • Import or export ban on certain goods.

  • Import or export quantitative restrictions on certain goods.

  • Exclusive right to export or import certain goods.

  • Automatic licensing (monitoring) for export or import of goods.

  • Authorisation-based procedure for import or export of goods.

The lists of goods to which non-tariff regulation measures apply and rules governing the import of these goods are set by Decisions of the Board of the Eurasian Economic Commission No. 30 of 21 April 2015 and No. 134 of 16 August 2012.

Unified rules for determining the origin of goods are set by the Agreement between the Government of the Republic of Belarus and the Government of the Republic of Kazakhstan on the Uniform Rules for the Determination of the Country of Origin of Goods of 25 January 2008 (they are effective until the Eurasian Economic Commission approves new rules) for the purposes of:

  • Applying customs and tariff regulation measures.

  • Applying non-tariff regulation measures and protection of the internal market.

  • Establishing requirements to mark the origin of goods.

  • Carrying out state (municipal) procurement.

  • Recording statistics of cross-border trade.

 
33. Can customs decisions and import restrictions be challenged?

Steps and decisions of the customs bodies can be appealed before a superior customs body or court. A claim can be lodged in court within three months of the date when an entity or individual becomes aware of a breach of its rights and lawful interests (Article 40, Federal Law on Customs Regulation in the Russian Federation).

A claim to a superior customs body can also be lodged within three months from either:

  • The date an entity or individual becomes aware of breach of its rights.

  • The expiry of the term reserved for the customs body or its official to make a decision or take steps in accordance with the procedure prescribed by law.

A claim can be lodged in court within three months of the date that an entity or individual becomes aware of breach of its rights and lawful interests (Article 198, Commercial (Arbitrazh) Procedure Court of the Russian Federation).

Decisions of the Eurasian Economic Commission establishing non-tariff regulation standards can be appealed before the Eurasian Economic Union court (including by business entities if the decisions affect their rights and lawful business interests).

 

Trade remedies

Regulatory framework

34. What are the main regulations and authorities responsible for investigating and deciding on trade remedies?

Regulatory framework

Measures aimed at protecting the internal market include a range of "stop-gap" trade regulation measures to eliminate adverse effects that supplies of goods from developing countries have on the Eurasian Economic Union (EEU) manufacturers.

Measures aimed at protecting the internal market (or trade protection measures) are:

  • Anti-dumping measures.

  • Compensatory measures aimed at subsidised imports.

  • Measures applied due to sharp increases in imports caused by unforeseen circumstances (special protection measures).

The basis of trade protection measures in the EEU is the standards applied by the World Trade Organisation (WTO) and enshrined in the Eurasian Economic Union Agreement of 29 May 2014, specifically in the Protocol of Application of Special Protection, Anti-Dumping and Compensatory Measures against Third Countries (Appendix No. 8).

Regulatory authority

The Eurasian Economic Commission (EEC) makes decisions about the application, modification or cancellation of special protection, anti-dumping and compensatory measures.

The following are preceded by an investigation:

  • Import of goods.

  • Application of special protection measures.

  • Anti-dumping measures.

  • Compensatory measures.

The body responsible for these investigations is the Ministry of Industry and Trade of the Russian Federation.

Investigations and enforcement

35. What are the requirements and procedure to start trade remedies investigations?

The Ministry of Industry and Trade carries out an investigation of its own initiative, or based on an application of an Eurasian Economic Union (EEU) manufacturer or manufacturers' alliance.

Interested parties (including the cross-border exporter, cross-border manufacturer or importer of goods and an alliance of cross-border manufacturers, exporters or importers of goods) can express their intention to participate in the investigation in writing (clause 209, Protocol No. 8, EEU Agreement). They are recognised as parties to the investigation from the date of registration of the application seeking participation in the investigation by the investigating body. Interested parties can read investigation materials and give information on their initiative or on request of the investigating body.

All interested parties can protect their interests in the course of the investigation (clause 215, Protocol 8, EEU Agreement). For this purpose, the investigating body ensures that all interested parties, on their request, can meet to present their opposing views and propose refutations.

Appeals

36. Is there a right of appeal against the authority's decision? What is the applicable procedure?

A decision about the application of a special protection, anti-dumping or compensatory measure can be appealed before the Eurasian Economic Union (EEU) Court.

There are specific rules on the review of this type of case (Article 45, EEU Court Rules).

A review of the Eurasian Economic Commission (EEC) decision relating to the application of a special protection, anti-dumping or compensatory measure is limited to the review of the:

  • Observance of the EEC material procedural requirements and correct application of legal provisions.

  • Proper use by the EEC of the received information, proper determination of the grounds for making the disputed decision and validity of the respective conclusions.

 

Exports

Regulatory framework

37. What are the main requirements to export goods from your jurisdiction?

The main legislation in this area is the Federal Law No. 183-FZ of 18 July 1999 (as amended on 13 July 2015) on Export Control.

The lists of controlled goods are as follows:

  • List 01/XO: List of chemicals, equipment and technologies that can be used to create chemical weapons subject to export control (Decree of the President of the RF No. 1082, 28 August 2001; Resolution of the Government of the RF No. 686, 24 September 2001).

  • List 02/ XO: List of pathogenic agents (pathogens) of human, animal and plants diseases, genetically modified micro-organisms, toxins, equipment and technologies subject to export control (Decree of the President of the RF No. 1083, 20 August 2007; Resolution of the Government of the RF No. 634, 29 August 2001).

  • List 03/ ЯО: List of nuclear dual-use equipment and materials and respective technologies (Decree of the President of the RF No. 36, 14 January 2003; Resolution of the Government of the RF No. 462, 14 June 2001).

  • List 04/ PO: List of equipment, materials and technologies that can be used to create rocket weapons subject to export control (Decree of the President of the RF No. 1005, 08 August 2001; Resolution of the Government of the RF No 296, 16 April 2001).

  • List 05/ ДН: List of dual-use goods and technologies that can be used to create weapons and military hardware (Wassenaar Arrangement) (Decree of the President of the RF No. 580, 5 May 2004; Resolution of the Government of the RF No. 447, 7 June 2001).

  • List 06/ ИС: List of nuclear materials, special non-nuclear materials and technologies aimed at peaceful use of nuclear power subject to export control (NSG source list) (Decree of the President of the RF No. 202 14 February 1996; Resolution of the Government of the RF No. 973, 15 December 2000).

The state body authorised to exercise export control is the Federal Service for Technical and Export Control (FSTC) (http://fstec.ru/eksportnyj-kontrol/obshchaya-informatsiya).

 
38. Are certain categories of goods subject to specific export quotas, restraints or other controls?

Cross-border operations involving controlled goods (see Question 37) and technologies providing for their transfer to foreign entities must be carried out subject to "one-shot" or general licences issued by the Federal Service for Technical and Export Control (FSTC) on the basis of applications by Russian cross-border trade participants.

A one-shot licence is issued for the supply (transfer) of controlled goods under one agreement (contract or arrangement) for a one-year period. A one-shot licence specifies the:

  • Quantity of specific controlled products.

  • Final use country.

  • Seller (consignor).

  • Purchaser (consignee).

A decision to issue or deny a one-shot licence is made based on the results of a state expert examination of the cross-border operations, which is carried out by the FSTC together with other interested federal executive bodies within 45 days of the receipt of a full package of correctly executed documents.

A general licence is issued to carry out cross-border operations involving specific types of controlled products setting out their maximum quantity and final use country without any specific indication of its purchaser (consignee).

General licences are only issued to Russian legal entities that have established a corporate export control programme and have been granted a state accreditation certificate in accordance with the prescribed procedure.

A decision to issue a general licence specifying the licence validity period is made by the government. The FSTC drafts the decision of the government. The total time for drafting these decisions, their approval and review by the government can be up to 60 days.

Penalties

39. What are the consequences of non-compliance with export regulations?

Cross border operations are subject to export regulations. Cross-border operations involve products that can be used to create weapons of mass destruction, their delivery vehicles, other types of weapons and military hardware or can also be used to prepare for or commit terrorist attacks (Article 14.20, Administrative Offences Code of the Russian Federation (AOC)). The products are subject to export control if they:

  • Are without special permit (licence).

  • Have illegally obtained permits (licence).

  • Were obtained through the provision of documents containing inaccurate information.

Breach of these export control regulations will result in the imposition of administrative fines on nationals, officials and legal entities in the amount equal to the value of the goods that are the subject of the administrative offence, regardless of whether they are seized.

Providing inaccurate data on goods or invalid documents where the data and documents may serve as grounds for not observing the bans and restrictions will result in the imposition of administrative fines (Part 3, Article 16.2, AOC):

  • From RUB1500 to RUB2500 on nationals. The goods that are the subject matter of the administrative offence can also be seized.

  • From RUB20,000 to RUB20,000 on officials.

  • From RUB100,000 to RUB300,000 on legal entities. The goods that are the subject matter of the administrative offence can also be seized.

 

International trade restrictions

Trade sanctions

40. Are there specific restrictions on trade with certain jurisdictions?

There is currently a special economic measure, effective from 7 August 2014 until 5 August 2016 (inclusive), which bans imports of agricultural products, raw materials and foodstuffs into the Russian Federation, originating from the US, the EU, Canada, Australia, Norway, Iceland, Liechtenstein, Albania and Montenegro (Resolution of the Government of the Russian Federation No. 778 on the Measures Aimed at the Implementation of Decrees of the President of the Russian Federation No. 560 of 6 August 2014 and No 320 of 24 June 201, 7 July 2014). The list of products is set out in the Appendix to the Resolution.

 
41. What is the authority responsible for imposing trade restrictions?

The President of the Russian Federation is responsible for making decisions to apply special economic measures against specific foreign countries or foreign organisations, on the basis of proposals from the Security Council of the Russian Federation. The Council of the Federation of the Federal Assembly of the Russian Federation and the State Duma of the Federal Assembly of the Russian Federation must be promptly notified about any such decision.

To protect the financial status of the Russian Federation from adverse external influence and support the balance of payment equilibrium of the Russian Federation, the government can also resolve to restrict cross-border trade involving goods, services and intellectual property.

The Federal Customs Service of Russia is responsible for monitoring compliance with bans and restrictions.

 
42. What are the consequences of non-compliance with trade restrictions?

Under Part 3, Article 16.2, Russian Administrative Offences Code, it is prohibited to provide unreliable information about goods or providing invalid documents during a customs declaration if the information or documents could be grounds for non-compliance with bans and restrictions established by:

  • International treaties of the Customs Union member states.

  • Decisions of the Customs Union Commission and regulations of the Russian Federation issued in accordance with international treaties of the Customs Union member states.

  • Regulations of the Russian Federation issued unilaterally to protect national interests of the Russian Federation (as revised by the draft law approved by the government).

Declarants and customs representatives are subject to the above rules.

The sanctions for this offence include:

  • An administrative fine from RUB10,000 to RUB20,000, for officers of a legal entity.

  • An administrative fine from RUB100,000 to RUB300,000, for legal entities.

  • Confiscation of the goods at the discretion of the court.

It is prohibited to violate bans and restrictions in relation to importing goods to the Customs Union or to the Russian Federation established by (Article 16.3, Russian Administrative Offences Code):

  • International treaties of the Customs Union member states.

  • Decisions of the Customs Union Commission.

  • Regulations of the Russian Federation issued in accordance with international treaties of the Customs Union member states.

  • Regulations of the Russian Federation issued unilaterally to protect national interests of the Russian Federation (as revised by the draft law approved of by the government).

A carrier may also be subject to the above rules.

The sanctions for this offence include:

  • An administrative fine from RUB5,000 to RUB10,000, for officers of a legal entity.

  • An administrative fine from RUB50,000 to RUB100,000, for legal entities.

  • Confiscation of the products at the discretion of the court.

It is prohibited to provide a customs representative with invalid documents for submission to the customs authorities if the information or documents do not comply with bans and restrictions established by (Article 16.7, Russian Administrative Offences Code):

  • International treaties of the Customs Union member states.

  • Decisions of the Customs Union Commission.

  • Regulations of the Russian Federation issued in accordance with international treaties of the Customs Union member states.

  • Regulations of the Russian Federation issued unilaterally to protect national interests of the Russian Federation (as revised by the draft law approved by the government).

A declarant is subject to the above rules.

The sanctions for this offence include:

  • An administrative fine from RUB10,000 to RUB20,000, for officers of a legal entity.

  • An administrative fine from RUB100,000 to RUB300,000, for legal entities.

  • Confiscation of the goods at the discretion of the court.

 
43. Are businesses subject to specific compliance requirements? What practical steps should a business take to ensure compliance with trade restrictions?

Not applicable.

Foreign trade barriers

44. What is the procedure for local exporters to complain against foreign trade barriers contrary to the WTO or other trade agreements?

As a member of the World Trade Organisation (WTO), the Russian Federation can use the mechanism of dispute resolution under the WTO. For example, the Russian Federation can lodge a claim on the calculation of dumping margin by the EU before the WTO Dispute Settlement Body.

 

The regulatory authorities

Federal Customs Service

W www.customs.ru

Principal responsibilities. Federal executive body authorised to act in the customs sphere.



Online resources

Eurasian Economic Commission

W www.eurasiancommission.org/ru/Pages/default.aspx

Description. Russian version of the official website of the Eurasian Economic Commission. There is an English version of this official website (www.eurasiancommission.org/en/Pages/default.aspx).

Federal Customs Service

W http://eng.customs.ru

Description. English version of the official website of the Federal Customs Service.



Contributor profile

Wilhelmina Shavshina, Legal Director, Head of Foreign Trade Regulation

DLA Piper

T +7 812 448 7200
F +7 812 448 7201
E wilhelmina.shavshina@dlapiper.com
W www.dlapiper.com

Professional qualifications. Russia, lawyer

Areas of practice. Foreign trade regulation; customs law.

Non-professional qualifications. Engineering Cybernetics, St. Petersburg State Polytechnic University, Russia, 1991; PhD in Law, St. Petersburg State University, Russia, 2002

Recent transactions

  • Providing legal support to a number of international automotive companies with respect to the conclusion and implementation of industrial assembly agreements in Russia.
  • Advising various automotive and manufacturing companies in their trade mark protection strategies and successfully representing them in disputes against the largest parallel importers.
  • Assisting a number of clients throughout the process of customs duty rate reduction, advising on customs value matters and other aspects of customs regulation, and the taxation of foreign trade operations.

Languages. Russian, Lithuanian, English

Professional associations/memberships.

  • Co-chair of the Transport and Customs Committee in Russia, Association of European Businesses.
  • Co-chair of the Steering Group of the North-Western Regional Committee in St Petersburg.
  • Member of the advisory council at the Committee for Budgets and Taxes, State Duma.
  • Member of a number of working groups of the Eurasian Economic Commission.

Publications

  • Customs payments and the empowerment of customs authorities in the Russian Tax Code, 2002.
  • Comments to the Customs Code of the Russian Federation, 2004.

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