Forum starts in
 

Digest 68

April 19, 2017 Subscribe

SPBILF News

The new SPBILF project, Legal Forum Live, is a series of live on-line broadcasts of a number of Forum’s sessions. Those who could not make it to St. Petersburg to attend SPBILF personally were offered a chance to attend it online in 2016 — this enabled over 2,000 representatives of regional legal community to actively participate in the Forum’s discussions.

29 companies from 23 cities have already became the event organizers under the Legal Forum Live project. Welcome to join!

Legal Forum Live Map

Propose the issues related to the arbitration reform

A visiting meeting of the Council for Arbitration Proceedings Improvement at the Ministry of Justice of the RF will be one of the events at the VII SPBILF. Participants of the Forum will be given the unique opportunity to propose the issues related to the arbitration reform, to be discussed by the Council ►

Invitation from Moderators

A new column “Invitation from Moderators” provides details of discussion sessions. In this issue:

  • Andrey Gorlenko, Executive Administrator, Arbitration Centre at ANO Institute of Modern Arbitration, moderator of discussion session “The Arbitration of Corporate and Complex Business Disputes. New Opportunities and New Challenges”;
  • Grigory Ivliev, Head Officer of the Federal Intellectual Property Service, moderator of discussion session “Legal Aspects of Technology Transfer: From Idea to Innovation”;
  • Marina Gassiy, Director of Legal Support, SUE “Vodokanal of St. Petersburg”, moderator of the satellite event “Public/Private Partnerships in Water Supply and Sanitation: Partnership or Competition”;
  • Sergey Arakelov, Deputy Head, Federal Tax Service of the Russian Federation, moderator of the discussion session “Evolution of the Concept of Beneficial Ownership for Income. The International Practice and Approaches of Federal Tax Service of the Russian Federation”.

“The full-scale arbitral reform has given us a framework for the meaningful furtherance of this alternative method of dispute resolution”

Andrey Gorlenko, Executive Administrator, Arbitration Centre at ANO Institute of Modern Arbitration, moderator of discussion session “The Arbitration of Corporate and Complex Business Disputes. New Opportunities and New Challenges”.

The years 2016 and 2017 have seen a rising interest in the arbitration institution on the part of the professional services and business communities. The full-scale arbitral reform, which is currently in the middle of an active transition from the old to the new regulatory system, has given us a framework for the meaningful furtherance of this alternative method of dispute resolution.

The top arbitration institutions have stepped up their effort to put the appropriate infrastructure in place for the arbitration of corporate and complex business disputes. It has become feasible, as of 1 February 2017, to conclude arbitration agreements to refer corporate disputes for arbitration. Some arbitration institutions have, by now, drafted and enacted their dedicated sets of rules for the arbitration of corporate disputes. One example is Chapter 8 of the Rules of Arbitration 2017, enacted by the Arbitration Centre at the Institute of Modern Arbitration.

How are corporate disputes different from conventional arbitration material, such as disputes arising from supply contracts?

The answer to this question is as complex and wide-ranging as the disputes themselves.

Firstly, corporate relations, which underlie corporate disputes, are multilateral by definition. This consideration has to be factored in when the arbitration tribunal is formed and during the subsequent proceedings, as individual stakeholders of the corporation may wish to accede to the dispute at a later point, in order to make their position known and defend their interests. How does one uphold a balance between the confidentiality of arbitral proceedings (this being one of the advantages of arbitration), and the assured enforcement of the rights of the parties to corporate relations?

Secondly, the types of action known as “derivative” or “consequential” are of particular interest. This is when a member/shareholder of a company brings action for the benefit of the company, for example, claiming damages for the company on account of some loss occasioned through mismanagement. Does it make sense to refer these kinds of disputes to arbitration? And what is the proper way of administrating and adjudicating such disputes?

Thirdly, the practice of complex multiparty deals is becoming increasingly widespread in business. These transactions may incorporate a whole range of individual contracts, involving very many parties to the legal relationship. It is logical and, indeed, highly advisable to “centralize” all the potential disputes that may arise out of these interconnected contracts within a single process. A number of novelties, designed to aid in this, have of late occurred with rising frequency in the procedures of modern arbitral institutions. Some examples of such novelties are: consolidation of claims from multiple contracts (multiple contracts), consolidation of ongoing arbitration proceedings (consolidation), entry of new plaintiffs (intervention), and joinder of additional defendants (joinder). How high is the demand for these institutions on the ground in Russia and in foreign jurisdictions? Does the addition of these special provisions to arbitration rules make it easier to compose the arbitration clause?

Fourthly, as the above remarks testify, corporate and complex business disputes require a high level of professionalism from the arbitrators and the parties alike and, by virtue of this, the arbitration thereof cannot help being costly. Therefore, much attention must be devoted to the selection of arbiters for such disputes, the financing arrangements for arbitration, and assurance of the high efficacy of the proceedings.

Finally, many overseas jurisdictions continue to stridently improve their legal framework in a bid to make the arbitration of complex business disputes easier and more successful. What further improvements could we make to the Russian legal framework, drawing on the best practice of our international colleagues?

The participants and contributors of our session will discuss all of these questions that are interesting in themselves and also critical to the appeal of the Russian jurisdiction and to further development of the arbitration institution in Russia. This topic cannot fail to generate much interest among legal professionals working in the fields of corporate law, M&A, and dispute resolution.

“The questions we propose to discuss are of strategic significance, being devoted to the national policy objectives in the field of intellectual property”

Grigory Ivliev, Head Officer of the Federal Intellectual Property Service, moderator of discussion session “Legal Aspects of Technology Transfer: From Idea to Innovation”

What makes the subject of your discussion session relevant?

The importance of intellectual property, and of the economic and civil-law circulation and commercialization of intellectual product copyrights, whether by means of technology transfer or otherwise, is on the increase today. Innovation is now definitive for Russia’s development vision. The President of Russia has repeatedly stressed the need to boost the productivity and export activity of the science-intensive, technologically advanced economic sectors and reduce the nation’s dependency on the raw commodities sector. None of this is possible without technology transfers, or without building the proper legal interfaces between inventors, scientists, copyright owners, investors and manufacturers. How do we set our technological priorities? How do we appraise the value of intangible assets? What is the current state of the legal regulation of technology? How good is the legal infrastructure that underpins it? What are the legal vehicles for the transference or licensing of intellectual property? How can we assure the legal protection of intellectual property and of the interests of all the stakeholders in the technology transfer process? All of these questions, which we are going to address, have strategic significance as they belong in the sphere of national policy-making on intellectual property issues.

Which legal professionals would you especially recommend to attend your session?

The lawyers dealing with intellectual property matters in their practice are definitely advised to attend. The executives who oversee in-house research and development for major corporations, as well as patent lawyers, would also benefit from our session. I would also recommend the CEOs of high-tech innovation companies and small start-ups to attend, if they are beginning to set sights on the international, as well as domestic, market for business opportunities, particularly since we are not only expecting Russian speakers and guest contributors at our event. There will be guests from certain international organizations, whose decisions impact the intellectual property sector globally.

“The successful implementation of public/private partnership projects in unheated water supply and sanitation is one of the pivotal factors of the environmental and sanitary well-being of our communities”

As part of the Satellite Events of the VII SPBILF, on 19 May from 2pm to 4.30pm the business lunch “Public/Private Partnerships in Water Supply and Sanitation: Partnership or Competition?” will take place in the multimedia room of the Water Universe museum complex on the premises of Vodokanal St. Petersburg.

A steady participant of the St. Petersburg International Legal Forum, Vodokanal St. Petersburg has stepped up its contribution to the Forum in the past three years. Vodokanal has hosted discussion panels focused on some of the most topical aspects of legal regulation, most notably — in the field of water conservation and environment protection.

Tell us about the discussions you have hosted

A problem cannot be solved by simply mentioning it in passing. That is why we have adopted a committed systemic approach to those issues that enter in the focus of our discussion panels. We have examined the legal component of rational water use and water environment protection consistently since 2014. Our participants pioneered the debate on the challenges of building an integrated water resources management system at the IV SPBILF, where our discussion panel was entitled Water: Legacy of the Past, Resource for the Present and the Future. The topic acquired an international dimension in 2015. Today we can see that rational use of water resources, which is key to such a system, is only possible where the related business activity is regulated by a solid legal and organizational framework. With this in mind, we have decided to focus our panel at the upcoming SPBILF on the key aspects of regulating the specific types of business which proximately impact the environmental safety of our communities.

How are you planning to organize your work at this year’s SPBILF, and what will be your keynote topic?

This year we are honoured to host a SPBILF satellite event. Our topic for discussion this time is the legal regulation and implementation of public/private partnership projects in unheated water supply and sanitation. These projects or, more precisely, the successful implementation of these projects is one of the pivotal factors of the environmental and sanitary well-being of our communities, so we cannot afford to make mistakes. Any oversight may entail tremendous damage to the environment and people’s safety. And there have been plenty of instances of oversight. There was this emergency in Perm in 2016, and there was the utilities emergency in Dagestan, the blame for which was almost immediately placed on private utilities contractors. Any 3P project is always a competition of public and private interests. It is the lawmaker’s job to take this competition where it will inure to the benefit of regular citizens and the environment, instead of letting it degenerate into competition solely for the sake of profit. Competition should lead to a real, not just nominal, partnership. This is the core message of our upcoming panel session, so we decided to put in the title of our satellite event: 3P in Water Supply and Sanitation: Partnership or Competition?

I would like to note that this topic is not new to us. I made a presentation on this same topic at the previous SPBILF ‘2016. My paper and the debate that followed provoked a very strong reaction, so I felt I should and, indeed, had a duty to develop my paper into an article, which was published earlier this year in the federal Lawyer Journal. So the panel this year is not going to be a green-field event exactly. In fact, our future participants are already trying on their works for the intellectual battle ahead, in which, hopefully, the truth will be the real winner.

By the way, provisions have been made to ensure that our satellite event takes place in a perfectly comfortable and conducive ambience. The hosts of the Forum have decided to move the panel to the premises of Vodokanal St. Petersburg, namely — the Water Universe museum complex in the centre of the city. All the requisite technical and organizational facilities will be in place there for our speakers and the audience to do their best, most productive work. And yes, we do have a nice surprise up our sleeve for our guests, but I cannot tell you what it is yet!

What makes your chosen topic relevant at this time?

Environmental protection and sanitary and ecological well-being are questions that get much attention and are widely discussed. At the same time, decisions on these questions are some of the hardest to make. This remark also applies to the professional domain of law. I feel vindicated in this remark by the high level of the guests that have attended our events at different times over the years: Ms. Hannele Pokka, Permanent Secretary of the Ministry of the Environment of Finland, Mr. Kumar Swatantra, Chair of the National Green Tribunal of India, officials of the Russian Ministry of Natural Resources, and eminent legal professionals from Russia and the rest of the world. The then President of Finland, Ms. Tarja Halonen, sent a letter of greetings to the participants of our panel in 2014. And we are proud of having worked together with the late Valery Musin, Full Professor, Doctor of Laws, and one of the brightest stars on the firmament of Russian jurisprudence, who passed away in 2015.

I am positive that our upcoming panel will once again prove to be a highlight of the Forum. This time, we have invited debate contributors from a number of nations, including representatives of some major professional services firms, and members of Russian academia.

We cannot overlook the fact that 2017 has been declared Environment Year in Russia by decree of the President of Russia, Vladimir Putin. What this means is that both environmental protection professionals and government authorities will eye the topic of environment with enhanced interest this year. Russia has hundreds of Environment Year themed events planned in 2017, and I’m sure our discussion panel will fit right in there, taking the prominent place it deserves.

Let me also note that we welcome SPBILF participants to attend our satellite event, and will be glad to see anyone genuinely interested in its subject among our audience.

“De-offshorization policy of the state has been paying ever more attention to global trends in the area of international tax law harmonization”

Sergey Arakelov, Deputy Head, Federal Tax Service of the Russian Federation, moderator of the discussion session “Evolution of the Concept of Beneficial Ownership for Income. The International Practice and Approaches of Federal Tax Service of the Russian Federation”

In recent years, de-offshorization policy of the state has been paying ever more attention to global trends in the area of international tax law harmonization, to actual use of conservatory treaty measures to avoid double taxation and to various concepts of tax abuse prevention.

The concept of the “actual right to income” (or “beneficial ownership of income”) is used as an independent mechanism to counteract the misuse of international treaties. The idea behind the concept is to exempt country-based residents from taxes and to allow them using a lower tax rate if this country is a party to the agreement, which makes it possible to grant benefits only to the actual income owner who has the right to manage their income and decide its financial future. Corporate resident acting as an agent or intermediary, technically being a conduit company, cannot be granted the respective benefits.

Although certain approaches have been internationally enshrined and the concept of “beneficial ownership of income” has been incorporated in the legislation of many countries, including that of the Russian Federation, the concept of the “actual right to income” still entails a number of value judgements that cause disputes about their application.

Federal Tax Service has adopted international approach towards exposure and establishment of violations related to inappropriate application of double taxation treaties. The round-table discussion will provide real-world cases to illustrate the conditions indicating the limited income management functions and mandate, as well as transit nature of cash flows and substantiation approaches.

One of the most pressing issues related to the application of international treaties is identification of key characteristics distinguishing the actual owner from other persons together with identification of steps that a tax agent needs to take in order to identify the beneficial owner of income. The panellists will analyse the legal reasoning that demonstrates rather convincingly the amount of necessary proof and possible risks for companies.

Especially relevant are the questions about the role of the Comments to the Model Convention in their interpretation and the mandatory requirement to use the “lifting the corporate veil” principle to identify the company controlling the holding and the “end beneficiary.”

These and other matters are slated for discussion with national tax officers, academics and leading experts of the Russian and foreign legal and consulting companies. The panel will be moderated by Sergei Arakelov, deputy head of the Federal Tax Service.

The panellists will discuss main approaches in international compliance practice and analyse the legal approaches of the Russian Federal Tax Service in disputes related to confirming the actual right to income, the awareness of which will help businesses to mitigate fiscal risks in planning and avoid any issues with tax services. This all makes the topic relevant for both Russian and international companies doing business with foreign entities and using double taxation treaties, as well as consulting and legal firms protecting the interests of taxpayers.

Propose the issues related to the arbitration reform

A visiting meeting of the Council for Arbitration Proceedings Improvement at the Ministry of Justice of the RF will be one of the events at the VII St. Petersburg International Legal Forum. The Council plays a key role in the undergoing arbitration proceedings reform.

The Council consists of acknowledged experts in arbitration, representatives of leading research and educational entities. corporate lawyers, bar and consulting firms representatives, representatives of government authorities, national business associations, chambers of industry and commerce.

Participants of the Forum will be given the unique opportunity to propose the issues related to the arbitration reform, to be discussed by the Council.

Most popular and relevant issues will be summarized and reviewed at the visiting meeting, and the resolutions made by the Council will be published.

The proposals shall be submitted by May 1, 2017, inclusive, to programcommittee@spblegalforum.com

Previous Digest Issues