Since Russian countersanctions were first introduced, certain directions in their application have been crystallized. In particular, the Government Commission has clarified its expectations as to the terms and conditions of selling Russian assets by foreign parties in order to obtain the Government Commission’s approval when required under the Russian countersanctions. Apart from that, new case law has emerged on this topic which says that contracts that breach the Russian countersanctions will be invalidated by Russian courts. As a significant number of restrictive measures were prolonged for 2024 – 2025 and the Russian Parliament is considering bills to further penalize failure to comply with Russian countersanctions, the topic remains highly relevant for both for foreign businesses and local entities.

The Russian countersanctions were introduced by several Presidential Decrees in the spring of 2022. They impose certain restrictions on contracts and other transactions with foreign parties associated with the so-called “unfriendly” jurisdictions that have imposed sanctions on Russia. In particular, countersanctions require deals with certain types of Russian assets (such as real estate or shares in Russian entities) to be pre-approved by the Government Commission or the Russian Central Bank.

Since then, state authorities have issued important clarifications to explain their expectations on the terms and conditions of the asset sale transactions involving such foreign parties in order to maximize the chances for their approval. In particular, the Government Commission has explained that it normally expects that the sale price comes with a discount of at least 50% compared to market value. Apart from that, the Government Commission expects sellers to make a voluntary contribution to the federal budget of up to 10% of the market value of the assets sold.

If a given contract or transaction does not comply with the countersanctions, Russian courts are prepared to invalidate the sale. The relevant lawsuit may, for instance, be brought by the Russian entity’s management. A number of prominent court judgments to this effect are already published in Russia (e.g., the case of Bauer Technologiya LLC No. А41-101031/2022).

In addition, the Russian countersanctions have recently been renewed and will remain in place in the foreseeable future. For example, foreign shareholders of designated Russian companies will remain limited in their right to vote on corporate affairs until 2024. Apart from that, the prohibition to sell or otherwise dispose of shares in Russian entities operating in the financial, fuel and energy sectors has been extended until the end of 2025.

The Russian Parliament (the State Duma) is considering a number of legislative bills which would allow the Russian authorities to charge a public fine based on the price of a given transaction in case the Russian countersanctions are breached. The State Duma is also considering a bill that could impose criminal liability for compliance with foreign sanctions against Russia.