Russian Jv
This article was published in a slightly different form as Chapter 10 of Joint Ventures in Europe, Tottel Publishing, 2008.
Joint Ventures in the Russian Federation
Hermann Schmitt White & Case, Moscow
1
Hermann Schmitt Partner
1 General background
1.1 Joint ventures under Russian law
Russian law currently does not provide a specific definition of ‘joint ventures’.2 In broad terms, a joint venture is a structure involving two or more independent entities that decide to work together on a specific project. Both contractual (i.e. based solely on a co-operation contract) and incorporated joint ventures are customary in Russia. However, contractual joint ventures (especially in relations between Russian and foreign partners) are relatively rare, partly due to the unfavourable taxation regime of partnerships.3 Russian law generally does not provide any limitations on the types of economic activity that can be pursued in a joint venture.4 However, some industries are subject to special governmental regulation that may directly prohibit or restrict foreign investment, as the section below shows.
strategically important to Russian security and the economy. There has been a strong tendency towards increased regulation of foreign investors’ access to the country’s most attractive industry sectors, including natural resources, metals, mining and oil and gas. The state continues to maintain its influence in these spheres by controlling Russian majors like Transneft and Gazprom. In recent years, a number of new rules have been considered for the exploration of natural resources and regulation of foreign investment in areas that Russia considers strategically important to its national interests. The main proposed legislative amendments that would impact foreign investment include provisions: (i) restricting foreign investors’ access to the strategic subsoil deposits; and requiring foreign investments in strategic areas of the Russian economy to be authorised by
Joint Ventures in the Russian Federation
Hermann Schmitt White & Case, Moscow
1
Hermann Schmitt Partner
1 General background
1.1 Joint ventures under Russian law
Russian law currently does not provide a specific definition of ‘joint ventures’.2 In broad terms, a joint venture is a structure involving two or more independent entities that decide to work together on a specific project. Both contractual (i.e. based solely on a co-operation contract) and incorporated joint ventures are customary in Russia. However, contractual joint ventures (especially in relations between Russian and foreign partners) are relatively rare, partly due to the unfavourable taxation regime of partnerships.3 Russian law generally does not provide any limitations on the types of economic activity that can be pursued in a joint venture.4 However, some industries are subject to special governmental regulation that may directly prohibit or restrict foreign investment, as the section below shows.
strategically important to Russian security and the economy. There has been a strong tendency towards increased regulation of foreign investors’ access to the country’s most attractive industry sectors, including natural resources, metals, mining and oil and gas. The state continues to maintain its influence in these spheres by controlling Russian majors like Transneft and Gazprom. In recent years, a number of new rules have been considered for the exploration of natural resources and regulation of foreign investment in areas that Russia considers strategically important to its national interests. The main proposed legislative amendments that would impact foreign investment include provisions: (i) restricting foreign investors’ access to the strategic subsoil deposits; and requiring foreign investments in strategic areas of the Russian economy to be authorised by