|
Server : Apache/2.4.62 System : FreeBSD fbsdweb2.web.rcn.net 14.1-RELEASE FreeBSD 14.1-RELEASE releng/14.1-n267679-10e31f0946d8 GENERIC amd64 User : www ( 80) PHP Version : 8.3.8 Disable Function : NONE Directory : /domains/russinvecchi/pub/ |
Upload File : |
<html>
<head>
<title>Russin & Vecchi - attorneys</title>
<meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1">
<meta name="keywords" content="Russia, Russian, attorney, attorneys, lawyer, lawyers, law, counselors, counsellors, firm, legal, international, Moscow, Vladivostok, Sakhalin, Bangkok, Hanoi, Ho Chi Minh City, New York, Puerto Plata, Taipei, Santo Domingo, and Washington, D.C., DC, Yangon, Yuzhno-Sakhalinsk, Vietnam, Thailand, United States, US, USA, Dominican Republic, Taiwan, Myanmar, Burma, far east, maritime, shipping, trade, oil, gas, petroleum, Russin, Vecchi, business, commercial, bilingual, local, global, banking, finance, litigation, arbitration, securities, recovery, taxation, minerals, energy, trademark, patent, copyright, contract, real estate, insurance, labor, technology, transportation, e-commerce, internet
">
<meta name="description" content="Russin & Vecchi is an international law firm with eleven independent offices spanning the globe and offers many business and commercial legal services.
">
</head>
<body bgcolor="#FFFFCC" onLoad="" leftmargin="0" topmargin="0" marginwidth="0" marginheight="0" text="#000000" link="#660000" vlink="#660000" alink="#FF3333">
<table width="100%" border="0" cellspacing="0" cellpadding="0">
<tr align="center" bgcolor="#003366">
<td>
<table width="392" border="0" cellspacing="0" cellpadding="0">
<tr>
<td><a href="../index.html"><img src="../graphics/hdr_logo.gif" width="118" height="111" alt="Home" border="0"></a></td>
<td><img src="../graphics/hdr_logotype.gif" width="266" height="111" alt="Russin & Vecchi L.L.P."></td>
<td><img src="../graphics/shim.gif" width="126" height="10"></td>
<td> </td>
</tr>
</table>
</td>
</tr>
<tr align="center">
<td height="1" background="../graphics/bgnd.gif">
<table width="392" border="0" cellspacing="0" cellpadding="0">
<tr>
<td background="../graphics/bgnd.gif" valign="top"><img src="../graphics/office_nav010405.jpg" width="750" height="37" border="0" usemap="#MapMapMapMap" align="top">
<map name="MapMapMapMap">
<area shape="rect" coords="2,7,48,26" href="../subpage/bangkok.html">
<area shape="rect" coords="52,9,83,27" href="../subpage/hanoi.html">
<area shape="rect" coords="84,8,170,29" href="../subpage/hcm.html">
<area shape="rect" coords="218,8,270,25" href="../subpage/newyork.html">
<area shape="rect" coords="171,8,216,26" href="../subpage/moscow.html">
<area shape="rect" coords="272,8,338,27" href="../subpage/plata.html">
<area shape="rect" coords="339,10,421,26" href="../subpage/santo.html">
<area shape="rect" coords="424,7,455,28" href="../subpage/taipei.html">
<area shape="rect" coords="457,10,521,25" href="../subpage/vladivostock.html">
<area shape="rect" coords="606,6,647,28" href="../subpage/yangon.html">
<area shape="rect" coords="649,5,746,28" href="../subpage/yuzhno.htm">
<area shape="rect" coords="524,9,603,26" href="../subpage/wash.html">
</map>
<map name="MapMapMap">
<area shape="rect" coords="4,9,43,28" href="../subpage/bangkok.html">
<area shape="rect" coords="46,10,77,28" href="../subpage/hanoi.html">
<area shape="rect" coords="78,9,144,29" href="../subpage/hcm.html">
<area shape="rect" coords="188,9,227,27" href="../subpage/newyork.html">
<area shape="rect" coords="148,8,186,27" href="../subpage/moscow.html">
<area shape="rect" coords="233,9,285,26" href="../subpage/plata.html">
<area shape="rect" coords="288,10,353,26" href="../subpage/santo.html">
<area shape="rect" coords="355,8,386,29" href="../subpage/taipei.html">
<area shape="rect" coords="387,9,441,26" href="../subpage/vladivostock.html">
<area shape="rect" coords="506,6,547,28" href="../subpage/yangon.html">
<area shape="rect" coords="548,9,628,29" href="../subpage/yuzhno.htm">
<area shape="rect" coords="441,8,505,25" href="../subpage/wash.html">
</map>
<map name="MapMap"><area shape="rect" coords="4,9,43,28" href="../subpage/bangkok.html"><area shape="rect" coords="46,10,77,28" href="../subpage/hanoi.html"><area shape="rect" coords="82,9,161,28" href="../subpage/hcm.html"><area shape="rect" coords="207,10,255,29" href="../subpage/newyork.html"><area shape="rect" coords="166,8,205,29" href="../subpage/moscow.html"><area shape="rect" coords="259,8,322,28" href="../subpage/plata.html"><area shape="rect" coords="329,9,400,28" href="../subpage/santo.html"><area shape="rect" coords="404,8,435,29" href="../subpage/taipei.html"><area shape="rect" coords="438,9,502,29" href="../subpage/vladivostock.html"><area shape="rect" coords="585,7,626,29" href="../subpage/yangon.html"><area shape="rect" coords="512,7,583,27" href="../subpage/wash.html"></map></td>
</tr></table></td></tr>
<tr align="center" bgcolor="#000000">
<td height="1"><img src="file:///L|/new%20site/graphics/footer_holder.gif" width="1" height="1"></td>
</tr>
</table>
<table width="598" border="0" cellspacing="0" cellpadding="0" align="center">
<tr>
<td width="12" valign="top">
<P><img src="../graphics/footer_holder.gif" width="11" height="76"></p>
</td>
<td width="495" valign="top">
<P> </p>
<P align="center"><font color="#660000"><b><font face="Arial, Helvetica, sans-serif" size="4" color="#990000">Frequent
Legal Issues for Contractors on <br>
Sakhalin Oil and Gas Projects<br>
</font></b></font><font size="2" face="Arial, Helvetica, sans-serif">(Appearing soon in the Russian Energy Law Journal)</font></p>
<p align="center"><font color="#990033" size="2" face="Arial, Helvetica, sans-serif"><strong>I.
Legal Theory and Sakhalin Practice</strong></font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif"><em>Presented
by <a href="../subpage/attorneys#dc.html">Jonathan Russin</a>, Managing Partner of the firm’s Russian Practice Group. Mr. Russin is resident in Moscow,
from where he directs the firm’s offices in Moscow, Yuzhno-Sakhalinsk
and Vladivostok. He has been advising clients about Russian legal issues
since 1988. In 1997, Mr. Russin became counsel to Mobil New Exploration & Production
Ventures for the development of offshore oil and gas resources under
the Sakhalin III PSA. He and the Russian Practice Group now provide advice
to the PSA operators and their contractors and suppliers doing business
on Sakhalin. Mr. Russin specializes in international commercial and investment
matters and practiced law in Latin America for two decades before establishing
the firm’s Russian operations. He is a graduate of Yale College
and Yale Law School.</em></font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif"><strong>Pre and Post 1998: Developments in the Russian Legal System</strong></font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">The period from the break-up of the Soviet Union in 1991 until roughly
the time of the financial crisis in the summer of 1998 may be characterized
as the Structural Period for Federal Legislation. The current Constitution
of the Russian Federation dates from 1993. The state planning apparatus
disappeared in 1992 and a wholly unregulated and chaotic market immediately
began to appear. Transactions happened, buyers and sellers made deals,
but the absence of a legal framework characterized this as a period of
legal uncertainty.</font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">Gradually, the State Duma began to function, and laws designed to accommodate
and regulate a market economy took shape. By 1998, most of the principal
laws governing the functioning of a market economy were in place, including
Parts I and II of the Civil Code, the statutes governing open and closed
Joint Stock Companies and Limited Liability Companies, the law on Bankruptcy,
a Federal Securities Commission to regulate share sales and the functioning
of a stock market, the law on Production Sharing Agreements for the exploitation
of natural resources, Antimonopoly legislation, to mention only a few.</font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">The period since 1998 has been characterized by amendment, refinement
and attempts to correct abuses that have arisen as the laws began to
function in practice. The tax laws have been modified on a regular basis.
In May 2003, President Putin, in his annual address to the Federal Assembly
of both houses of the Russian Parliament, stated:</font></p>
<blockquote>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">"Tax
reforms in Russia are unfortunately becoming a constant and ongoing
process. Yes, the measures proposed by the Government to reduce the tax
burden are of course a move in the right direction. But the frequency
of amendments to tax legislation clearly exceeds the allowable level."</font></p>
</blockquote> <p align="left"><font size="2" face="Arial, Helvetica, sans-serif">The Duma continues to tinker with the implementing legislation necessary
to put the Production Sharing Law fully into effect. Changes are being
proposed to the Bankruptcy Law to correct abuses that have allowed shrewd
and unscrupulous players to strip assets from supposedly bankrupt companies.
So we are now in the period of usual legislative activity that characterizes
the work of legislatures in most market economies.</font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif"><strong>Current Conditions</strong></font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">What are the peculiarly Russian
characteristics of today’s legal
and administrative environment? The Russian bureaucracy at all levels – Federal,
Regional and Municipal – is characterized by multiple approval
and extensive document requirements. President Putin pointed to this
fact again in his annual address last year:</font></p>
<blockquote>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">".
. . the Russian bureaucracy has proved itself poorly prepared to
develop
and implement the decisions our country needs today. At the same
time, it has proved itself good at obtaining benefits and revenues
through
use of its powers and position . . <font size="1">(2) </font>The Russian
bureaucracy today still has enormous power. But the quantity of power
it has does not
correspond
to the quality. I must stress that to a large degree, this power
has its source in nothing more than the superfluous functions of
state bodies."</font></p>
</blockquote> <p align="left"><font size="2" face="Arial, Helvetica, sans-serif">The Russian Federation is
made up of 89 States, known within Russia as “Subjects of the Federation.” Sakhalin is one of the Subjects
and has its own Governor and legislature. In too many instances, administrative
decisions – such as licensing a company to carry out construction
activities – require both local and federal actions. For this reason,
the ability to coordinate the governmental requirements of companies
between Sakhalin and Moscow is often crucial.</font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">The
Government is attempting to reduce the role of the bureaucracy. Recent
legislation has reduced
the number of commercial activities subject
to mandatory licensing, and following last year’s annual address,
President Putin tasked Prime Minister Kasyanov with forming an inter-ministerial
commission on administrative reform. According to one published source: “Putin’s
goal of improving the investment climate by weakening the base of the
state mafia and general corruption is now at last reflected in practical
government action under the determined leadership of Prime Minister Kasyanov
and his deputy Boris Aleshin who is chairing a special commission set
up in July to cut back the powers of the bureaucracy.” <font size="1">(3)</font></font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif"><strong>Corruption Issues and Avoiding Dispute Resolution in the Courts</strong></font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">Corruption
in the bureaucracy remains an ever-present problem. Transparency International
released its annual report in October 2003 and ranks Russia
number 88 out of 133 countries. <font size="1">(4)</font> On a scale
of one to ten, with ten indicating the least corruption, Russia scored
2.6, slightly worse than last year
at 2.7. <font size="1">(5)</font></font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">And
what about corruption among judges and court personnel? In June 2003,
at a conference of
Russia’s top judges the chief judge of
the Supreme Court of the Russian Federation, Vyacheslav Lebedev, spoke
out against corruption in the Russian judiciary. He noted that in 2002
some 60 judges were stripped of their powers “for actions disgracing
honor and dignity.” <font size="1">(6)</font> In our experience
as a firm, it is difficult to predict when and if a court or a particular
judge may be suborned.
The fact that Russian law allows a right of appellate review in almost
all cases increases the chance that a particular matter will eventually
get a fair hearing. But generally, we advise clients to adopt strategies
that will avoid the need to resolve disputes in court.</font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">One technique to diminish
the possibility of litigation is to structure relations with the other
party to your contract in a way that creates
a continual balancing of risks. As lawyers, we are trained to look at
contract obligations and ask: “If the obligation is breached by
the other side, what remedies are available to my client?” The
answer is often: sue for damages, seek an injunction, or go to arbitration.
But all of these remedies rely on a dependable, efficient and honest
judicial system. Instead, we now advise our clients to analyze the terms
of their contracts on a time basis, so that each exposed step by one
party is balanced by a reciprocal exposure to the other. </font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">To use
a simple example, in a construction contract the obligation of the
owner to make an advance payment should be balanced by the presentation
of purchase invoices by the contractor, indicating the materials that
will be obtained through the advance payment. Better still would be to
make the advance payment directly to suppliers rather than to the contractor.
The idea is to analyze contract performance by structuring a CPM or PERT<font size="1">(7)</font> chart
to insure that a risk exposure assumed at any given moment by one party
is balanced by similar exposure of the other party. It is not always
possible to structure a project so as to achieve a continuing balance
of risks, but even so, this exercise will alert a party to particular
points at which exposure is unbalanced, and it may be possible to require
other kinds of guaranties from the other party to cover such contingencies.
Again, the point of the exercise is to minimize the risk to resort to
litigation or arbitration to remedy a contractual default.</font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif">Our experience indicates at least one bright spot in looking at the
objectivity and honesty of the court system. In tax litigation we have
found that the courts have acted in most cases based directly on the
law and evidence before them. One could assume that regional courts are
beholden to regional authorities and likely to favor the local tax administrators,
but our experience indicates the contrary, and we have seen numerous
instances where over zealous actions by the tax police have been remedied
upon review in the courts.<br>
<font size="1"> </font></font></p>
<p align="left"><font size="1" face="Arial, Helvetica, sans-serif"> (2)
In his 2002 address the President directly called for limitations on
corrupt
bureaucrats.<br>
(3) United Financial Group, Russia Morning Comment, October 10, 2003.<br>
(4) For reference purposes, Finland is number 1, the U.S. is number 15 and
Bangladesh is number 133.<br>
(5) The Moscow Times, October 8, 2003, page 5.<br>
(6) Pravda, June 16, 2003.<br>
(7) Critical Path Method (CPM) and Project Evaluation Review Technique (PERT).
These are technologies often used to plan the synchronization of activities
required
in complex construction</font><font size="2" face="Arial, Helvetica, sans-serif">.</font></p>
<p align="left"><strong><font size="2" face="Arial, Helvetica, sans-serif"><a href="chapter_II.html">Next</a></font></strong></p>
<p align="left"><br>
</p></td>
</tr>
<tr>
<td colspan="2">
<p><img src="../graphics/bottom_navbar.gif" width="598" height="23" usemap="#Map2" border="0"><map name="Map2">
<area shape="rect" coords="280,3,367,19" href="mailto:[email protected]">
<area shape="rect" coords="412,4,466,19" href="../subpage/links.html">
<area shape="rect" coords="512,3,561,20" href="../index.html">
<area shape="rect" coords="169,3,224,20" href="../subpage/offices.html">
<area shape="rect" coords="37,4,119,20" href="../subpage/attorneys.html"></map></p>
</td>
</tr>
<tr>
<td width="12" height="210"> </td>
<td width="495">
<table width="284" border="0" cellspacing="0" cellpadding="0">
<tr>
<td> </td>
<td><img src="../graphics/footer_logo_rv.gif" width="143" height="76"></td>
</tr>
<tr>
<td> </td>
<td>
<p><font face="Arial, Helvetica, sans-serif" size="2"> </font><font face="Arial, Helvetica, sans-serif" size="2">815
Connecticut Ave, N.W.<br>
Suite 650 <br>
Washington, D.C. 20006-4047<br>
T: (202) 822-6100<br>
F: (202) 822-6101<br>
<a href="mailto:[email protected]">[email protected]</a></font></p>
<p> </p>
</td>
</tr>
</table>
</td>
</tr>
</table>
</body>
</html>