Category: Russia

Hogan Lovells has advised Russian private equity company Elbrus Capital on its co-investment with iTech Capital into Aviasales.

Aviasales is an airline ticket merchant and comparison platform.

According to Hogan Lovells, “the funds raised will be used to launch new products, to increase marketing investments in Russia, the CIS countries, and new markets, to develop a service for organizing business trips, as well as to create a global platform [for] automated affiliate marketing Travelpayouts.” 

Hogan Lovells’s team included London-based Partner Georgy Kalashnikov and Associate Nick Edwards, Hong Kong-based Partner Andrew McGinty and Senior Associate Sherry Xiao, and Moscow-based Counsel Leonid Ervits.

Mikhail Khaletsky has been promoted to Partner with Nektorov, Saveliev & Partners.

Khaletsky has been with NSP since 2013, when he joined as an Associate, and is a member of the firm’s Tax Practice.

According to NSP, “Khaletsky specializes in Russian and international tax optimization, works on tax disputes, and supports complex restructuring transactions. His experience also covers support of Russian and international companies and private appointers – representatives of large and medium-sized businesses in different industries, including IT, financial and banking, real estate, heavy machinery, and power generation.”

“I would like to thank my partners for their trust, and I am really proud to contribute to the [firm’s] growth with this new status,” Khaletsky commented on his appointment. 

“Mikhail, unlike many other lawyers, is surprisingly non-public and even a bit private person. The paradox is that the people who worked with Mikhail, at least once, keep on addressing him over and over,” said Partner Alexander Nektorov. “I wish him the best of luck and the everyday pleasure of solving the most complicated and sophisticated cases offered by the clients.”

Bryan Cave Leighton Paisner has advised GetCourse founder and CEO Sergey Mikhaylov on a USD 50 million private equity deal with Goldman Sachs, Winter Capital Partners, and Baring Vostok Capital Partners funds. Herbert Smith Freehills advised the funds on the deal.

According to BCLP, “set up in 2014, the GetCourse platform is currently helping more than 20 thousand schools, teachers, coaches, educators, and bloggers by providing a set of functional modules for creating online courses and educational websites, facilitating marketing activities and content sales, as well as email services and end-to-end analytical tools.”

Goldman Sachs is a global financial institution.

Winter Capital Partners is an investment fund focused on investing in technology companies in education, healthcare, financial, and consumer services around the world, with over USD 1 billion in assets under management. 

The Baring Vostok funds focus on private equity investments in Russia and the CIS, having invested more than USD 3.7 billion over the past 27 years.

BCLP’s team included Partner Anton Sitnikov, Counsels Anna Zelenskaya and Anton Nefedev, Senior Associates Denis Khramkin and Mikhail Filatov, and Associates Elena Shelomenzeva, Mikhail Kuznetsov, and Marina Galitskaya.

Herbert Smith Freehills’ team included Partners Evgeny Zelensky, David D’Souza, Susannah Cogman, and Miriam Everett, Counsel Jonathan Cross, Senior Associates Denis Morozov and Sergey Eremin, Associates Elena Manasyan, Robert Bikbulatov, Simeon Volkov, Christopher Boyd, and Hannah Brown, and Trainees Konstantin Korennoy and Ksenia Zbyshevskaya.

Bryan Cave Leighton Paisner has advised Russia’s Sberbank on its sale of debt and equity in the Eurocement Group to the Mikhaylovsky Construction Materials Plant for an aggregate consideration of RUB 161 billion. According to BCLP, Schellenberg Wittmer advised the seller on Swiss law while Patrikios Pavlou & Associates and Chryssafinis & Polyviou advised on Cypriot law. Rybalkin Gortsunyan & Partners advised the buyer on the deal.

The buyer – the Mikhaylovsky Construction Materials Plant – was selected through electronic auction as the winning bidder. According to Sberbank, the transaction is “unique in terms of size and structure, … unprecedented for the Russian market. It has been closed through an open and transparent market procedure during which its participants raised their bids over 40 times.”

The sale is a part of a global arrangement for the settlement of Eurocement Group’s debt toward Sberbank, as was Sberbank’s recent sale of shares in Eurocement’s subsidiary JSC Akhangarancement (as reported by CEE Legal Matters on August 4, 2021).

Eurocement is a Moscow-based supplier of cement, ready-mix concrete, and aggregates in Russia. The company operates 16 cement plants across Russia, Ukraine, and Uzbekistan, in addition to several concrete mix plants, concrete goods factories, and aggregate-mining quarries.

BCLP’s team included Partners Yury Babichev and Matvey Kaploukhiy and Counsel Igor Zhivotov, among others.

Rybalkin Gortsunyan & Partners’ team consisted of Managing Partner Suren Gortsunyan, Counsel Konstantin Mineev, and Associates Marina Abazyan and Daniil Ivanov.

Alrud has represented French automobile educational association GNFA in a corporate dispute with a former minority shareholder, an unidentified Russian company.

According to Alrud, the dispute related to the exclusion of the majority shareholder, GNFA, from a Russian limited liability company. “After the partners’ break-up, the Russian company should have retained a limited right to use the designation, a distinctive part of [GNFA’s] and [the Russian] company’s corporate name.” 

Still, the parties reached an amicable settlement of the dispute. According to Alrud, “they concluded an agreement under which the company was granted limited rights to use the designation, on condition of withdrawing from [the] proceedings.”

Alrud’s team included Senior Partner Vassily Rudomino and Associates Dmitry Pashkov and Ilya Khodakov.

Bryan Cave Leighton Paisner, working with Uzbekistan-based co-counsel Kosta Legal, has advised Sberbank on its sale of 84.2% of the shares in JSC Akhangarancement. Legate and, reportedly, EPAM advised the unidentified buyer.

The shares were pledged to the bank as a part of a global arrangement for the settlement of Eurocement Group’s debt toward Sberbank.

According to BCLP, “Akhangarancement is the second biggest cement producer in Uzbekistan.”

Eurocement is a Moscow-based supplier of cement, ready-mix concrete, and aggregates in Russia. The company operates 16 cement plants across Russia, Ukraine, and Uzbekistan, in addition to several concrete mix plants, concrete goods factories, and aggregate-mining quarries.

The BCLP team included Partners Yury Babichev and Anton Panchenkov, Senior Associate Anastasia Kudryashova, and Associate Polina Tulina.

Kosta Legal’s team was led by Partner Vazgen Grigoryan.

Bryan Cave Leighton Paisner has advised Sberbank Investments and the Russia-China Investment Fund on a RUB 1.6 billion investment structured as a syndicated venture loan in Eruditor Group holding. White & Case advised the Eruditor group on the deal.

Eruditor Group holding is the owner of Russian professional services marketplace Profi and Zoon information service. According to BCLP, Profi enables professionals to seek customers and users to find qualified specialists in multiple sectors, including tutors, repair and beauty professionals, sports coaches, etc. Zoon provides consumers with information about various places and organizations in the tertiary sector and helps businesses promote themselves.

BCLP’s team included Partners Emma Howdle-Fuller and Anton Panchenkov, Counsels Igor Zhivotov and Alexey Koshelev, and Associates Elena Shelomenzeva, Lira Pogodina, and Sam Wilson.

White & Case’s team included Moscow-based Local Partner Ekaterina Logvinova, Counsel Adam Smith, and Associate Azamat Gaisenov. 

The mechanism of patent protection is most in demand in the Pharmaceuticals industry, and a review of judicial practice in Russia demonstrates how zealously pharmaceutical companies protect their exclusive rights to gain a market advantage.

In the Russian Federation, a drug formula can be protected as an invention by the Russian state authority Rospatent. The term of the exclusive right to a patented solution is twenty years from the date of application, and, for pharmaceutical inventions, this can be extended for an additional five years.

After the expiry of patents for pharmaceutical inventions, some manufacturers start producing generics based on these solutions (for example, British company AstraZeneca’s Iressa antitumor agent, the patent for which expired in 2019, is now the basis for the generic product Gefitinib-nativ, made by Russian company Nativa). Their actions are legal and owners of expired patents cannot prohibit them.

Within the term of the patent’s validity, however, the owner of an exclusive right can have the use of its invention by third parties suspended. In particular, the owner should prove that the infringer’s product contains every feature (or method), or its equivalent, of the invention set forth in an independent clause of the patented formula. According to Russian law, the storage or introduction into civil commerce of a drug in which the invention is used or obtained by a patented method will be considered an infringement.

The following actions with patented inventions committed without the owner’s consent do not constitute an infringement: (i) carrying out scientific research on a medicinal product in which the invention is used; (ii) using the invention under extraordinary circumstances (natural disasters, catastrophes, or accidents) with notification; (iii) the use of the invention to satisfy personal, family, household, or other needs not connected with entrepreneurial activity, if the purpose of such use is not to gain profit or income; (iv) the single production of drugs with the use of the invention in pharmacies on a medical prescription.

In the event of a violation of the exclusive right to an invention the author or other right owner has the right to demand, instead of the reimbursement of his losses: (a) an award of up to RUB 5 million (approximately USD 66,000), determined by the court based on the nature of the violation; or (b) double the value of the right to use the invention, determined based on the price that, under comparable circumstances, is usually charged for the lawful use of the invention in the manner used by the infringer.

The owner of the right can also apply for the liability measures stipulated by antimonopoly legislation, in particular in cases where the violation of the exclusive right is recognized as unfair competition in accordance with the established procedure.

As an example of the exclusive rights protection, Russia’s Nizhpharm (which, since 2004, has been part of the German Stada group of companies) won a dispute against Russia’s Altpharm for its unlawful use of one of Nizpharm’s patented inventions in its “Uroprost” product for prostatitis medication (Nizhpharm’s original product was called “Vitaprost”).

In another case, Switzerland’s Bristol-Myers Squibb Holdings Ireland Unlimited Company, which used a patented invention in its “Spraysel” product for treating chronic myeloleukemia, persuaded the court to prohibit Russia’s Mamont Pharm and Nativa companies from using that patented invention in its competing “Dazatinib-Nativ” product.

To conclude, the legal protection of exclusive rights to patented pharmaceutical solutions is the basis for the unhindered commercialization of such drugs. Legal tools prescribed by Russian laws allow pharmaceutical companies to successfully combat unfair and infringing behavior of other market players. 

By Anna Zabrotskaya, Specialist Partner, and Vera Zotova, Associate, Borenius Russia

This Article was originally published in Issue 8.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Egorov Puginsky Afanasiev & Partners has advised the US-based tool manufacturer Milltronics Manufacturing Company on its entrance into a distribution agreement with an undisclosed Russian counterparty.

According to EPAM, under the agreement, the Milltronics Manufacturing Company “will be able to expand the production and sale of its products, enter the Russian market, and offer its goods to Russian industrial enterprises.”

EPAM’s team was led by Counsel Elena Agaeva.

The firm could not provide further information on the deal.

Konstantin Kroll, Partner and Head of Russian Corporate and M&A Practice at Dentons in Moscow, reports that the Russian economy has experienced a rise in M&A transactions and that the government has taken steps to curb offshoring, regulate convertible loans, and increase the number of international arbitration tribunals in the country.

“The market is booming and our Corporate and M&A practice has been very busy,” he says, but notes that the majority of deals are made by Russian companies. He points to three main factors behind the increase in economic activity: “Firstly, demand kicked in this year after a hesitant 2020; secondly, oil and metal prices are quite high, Russian exporters are making a lot of money that, in turn, trickles down into the budget; thirdly, governments around the world are pumping money into their systems, which has also impacted Russia.” Kroll adds that the influx of cases has been noticed across the board and says that his firm advised on acquisitions ranging from banks, to TV channels, to non-governmental pension funds. Kroll and his team also advised on the formation of a strategic joint venture and sale of a 75% equity stake in Russian publishing house JSC Prosveshcheniye to Sber, VEB, and RDIF (as reported by CEE Legal Matters on July 5, 2021), as well as VTB Capital’s acquisition of a minority stake in car-sharing company Delimobil (as reported by CEE Legal Matters on June 28, 2021). Following the rise in transactions, Kroll adds, Russia’s FAS published a 100-page guideline on merger controls, which offers an in-depth review of its policies and numerous clarifications invaluable to doing business in the country.

Moving on to legislation, Kroll reports equal, if not greater, activity. According to him, Russia is taking great strides to curtail Russian-owned offshore companies. “Russia has quite a number of double taxation treaties,” Kroll says. “The government imposed strict rules on offshore taxation and has demanded that treaties be renegotiated,” he continues. He lists Cyprus and the Netherlands as examples. The former accepted to renegotiate, while the latter refused. As a result, according to Kroll, Russia denounced its treaty with the Netherlands. He also reports that the tax authorities are improving tax policies so as to help curb offshoring.

Kroll also adds that the Russian Ministry of Justice recently accredited two international arbitral tribunals, the International Chamber of Commerce International Court of Arbitration and the Singapore International Arbitration Centre, as “Permanent Arbitral Institutions” (PAI) for Russian law purposes. “As a matter of Russian law, certain types of disputes, such as corporate disputes, are only arbitrable if administered by an accredited PAI in Russia,” he says. According to Kroll, the Hong Kong International Arbitration Centre and the Vienna International Arbitral Centre were previously accredited in 2019. “The addition of two new arbitration institutions will provide more options to local businesses and will increase the number of cases that can be resolved by arbitration.”

Furthermore, Kroll reports that new legislation was passed aiming to regulate convertible loans for the first time: “even though it was done in practice before, how lenders convert debt into equity is now formally regulated.” In addition, Kroll says that Russia’s Central Bank (CBR) announced its intention to lift the limit on the percentage of shares Russian public companies can offer abroad. Kroll explains that the limit, which was originally put in place in the early 2000s, currently caps the number of shares sold abroad in one offering to 50%, while also limiting the number of same-category shares offered abroad to 25%. Another important proposal by the CBR is to re-write the regulations on mandatory tender offers and squeeze-out rules, which will have a significant impact on the Russian M&A market and should improve the rights of minority shareholders.

Finally, Kroll notes that the increase in M&A work alone might not be enough to keep the legal market sated, in the absence of sufficient foreign investment. He says that although local firms are growing, some international ones seem to be on the decline. He points to King & Spalding as an example, which recently announced it will be closing its Moscow office (as reported by CEE Legal Matters on May 31, 2021).