12.08.2016 — Russia Has for the First Time Lost in the WTO Arbitration on a Case Initiated by the European Union

The WTO arbitrators have issued a decision on the EU versus Russia case concerning the import duties enacted by Russia in respect of several products, such as refrigerators and palm oil. Despite the fact that, according to Russia, most import duties had been brought in line with the WTO rules by the time when the decision was issued, the arbitrators considered Russia at fault for violating the WTO law in respect of 11 out of 12 import duties challenged by the European Union. At the same time, the Russian authorities emphasize that the legislation will be fully consistent with the WTO rules in the nearest future.

Despite its accession to the WTO back in 2012, Russia has failed to implement certain WTO rules thus far. For instance, according to the European Commission, Russia has for a long time used import duties in respect of certain agricultural and other goods in the amount of 10% and 15% instead of 5% envisaged by the WTO rules. This formed ground for the EU’s initiation of arbitration proceedings in the WTO in accordance with the specialized procedure of dispute resolution between the WTO members. As a result, the WTO arbitrators decided in favor of the European Union.

According to the decision, Russia is obliged to bring its import duties into compliance with its international obligations. Failure to comply with this decision will enable the claimants to lawfully enact countermeasures against Russia, aiming to reimburse its own losses, for instance, by accordingly increasing the duties in respect of Russian goods. The Russian authorities note that they do not dispute the arbitrator’s findings, and the import duties will be corrected in accordance with the WTO rules in due course, while the violations have been partially remedied already. Russia is also a respondent in a number of other cases initiated by the EU and Japan, which are still to be resolved by the WTO. These cases in particular concern the prohibition of pork export from the EU and the Russian antidumping measures in respect of lightweight cars.

11.08.2016 — Holiday Calendar for 2017 is Approved

Holiday calendar for 2017 was published on the legal information website. Two holidays, which coincided with weekends, were transferred to other days in order to rationalize the usage of holidays and non-work days: January 1 that coincided with Sunday is transferred to February 24, and January 7 that coincided with Saturday is transferred to May 8.

Therefore, New Year Holidays will last 9 days. 4-day holidays will last from February 23 to February 26, but the Women’s day holiday will last only one day (March 8).

10.08.2016 — United Eurasia Could Make the Western Countries Lift the Sanctions against Russia

“United Eurasia” is a new project, which is created by the Security Council of the RF in co-operation with the Russian Academy of Sciences and aimed at creation of two transportation logistics passages that will connect the Trans-Siberian Railway, the Baikal-Amur Mainline and the Northern Sea Route, and the respective infrastructure. The project is focused on development stimulation of Siberia, the Far East and the Arctic and on providing conditions for a new social and economic level of the country by reclamation of these regions.

The total price of the project will reach 220-240 billion rubles by its presumable completion in 2035. However, project initiators believe that its implementation will help to develop new territories, technological production, stimulate labor migration and tourism and also create propitious conditions for settling more than 7 million people.

Furthermore, it is suggested to bring the US, China and other western countries into the project. According to the initiators, their participation will help to develop further relationships between China and Russia, and also will help to begin rapprochement of Russia with the US and other western countries followed by lifting mutual sanctions. 

09.08.2016 — A Dispute Concerning the Legal Consequences of Ruble Devaluation will for the First Time be Considered by the Supreme Court

The Supreme Court will consider a dispute between a bank and a loaner, which revolved around the bank’s unilateral increase of the interest rate as a result of sharp ruble devaluation. The bank relied upon the contractual provision that entitled it to increase the interest rates in the event of currency devaluation or a threat of such devaluation. Courts of three instances have upheld the bank’s position, yet the Supreme Court chose to scrutinize the details of the case on its own.

In the case under consideration, the loaner disagreed with the bank’s decision to unilaterally increase the interest rate from 9.5% to 21% per annum, which was taken with reference to the currency devaluation that took place in Russia. The bank has so far managed to successfully substantiate its legal position in courts of three instances by referring to a special clause in the contract enabling it to unilaterally and proportionally increase the interest rate.

However, according to the Supreme Court, since the contract clause in question mentions a “proportionate” increase of the interest rate, the bank should have proven its calculations and specified in respect of which currency the devaluation developments were analyzed. The results of the dispute will be released at the end of August. 

08.08.2016 — Public Hearings on Construction Matters are to be More Open

The Ministry of Construction and Housing Infrastructure of the Russian Federation has developed amendments to the City Planning Code aiming at improving publicity and representation of public hearings on city construction matters. Proposals include dropping the anonymity of the public hearings’ participants and publishing the housing projects to be discussed during public hearings on the Internet in advance.

The proposed amendments provide that a list of individuals and legal entities that took part in public hearings has to be attached to the minutes of public hearings. This novelty will likely prevent a number of abuses currently taking place in practice. Storing personal data of public hearing participants (individual name or company name), including their registration addresses, will make it possible to independently confirm that the decision was taken by residents of a given district. Therefore, in the event of a dispute it will be possible to establish that non-residents, which have no right to vote during public hearings, were present during the decision-making process. This unfair scheme is often used by developers today in order to ensure that the desired decision is taken.

Another novelty is associated with informing residents on public hearings and ensuring an advance publication of the housing project on the municipalities’ websites or on the website of state and municipal services.