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Activity of foreign law firms

A bill proposing to limit participation of foreign law firms in civil and arbitration proceedings was brought in before the State Duma

Moscow 18.04.2016 14:57
On April 14th, a bill “On amendments to article 60 of the Arbitration Procedure Code of the Russian Federation and article 51 of the Civil Procedure Code of the Russian Federation” was brought in before the State Duma.  The document suggests introducing provisions to the Arbitration Procedure Code and the Civil Procedure Code according to which a representative in arbitration and civil proceedings respectively “cannot be a foreign state, international organization, as well as an organization under their control, a foreign legal entity, a Russian legal entity with foreign participation, as well as their employees, a foreign citizen”. Exclusions are meant only for the cases provided by part 4 of art. 59 of the Arbitration Procedure Code and part 2 of art. 48 of the Civil Procedure Code concerning conduct of cases of an organization in arbitration and general jurisdiction court respectively by bodies of these organizations.
As follows from the explanatory note, the bill is aimed at the development of the national court representation institution. The author of the document, deputy of the State Duma Denis Voronenkov, states that the idea about priority of national court representation and limitation of participation of foreign law firms in court proceedings has already found practical application in countries such as China, India, Brazil and Germany.
“The necessity to adopt a similar prohibitory rule in Russia has been caused by sanctions against Russia from the part of a large number of foreign states as well as by negative macroeconomic situation. Participation of foreign law firm as consultants and representatives  of Russian businessmen increases the risks of damaging economic security of the state, as persons potentially affiliated with foreign intelligence agencies have access to commercial secrets and analytical data”, the explanatory note states.  
At the same time, the document clarifies that the limitations shall concern only court representation by foreign law firms in Russia, as “taking into account the rights of businesses to receive professional legal assistance it is reasonable to keep the possibility of foreign law firm to provide consulting services in the area of international legislation”.
It should also be noted that the financial and economical reasoning, in addition to the lack of additional expenses from the federal budget, mentions: “after applying restricting measures for foreign law firm a decrease in capital outflow from the Russian economy is expected in the form of profit of the aforementioned organizations for renewable intellectual resources”.
On April 15, the bill was brought in before the Committee of the State Duma for civil, criminal, arbitration and procedural legislation.  
As the Vice-president of the Federal Chamber of Advocates Gennady Sharov mentioned, a similar legislative initiative was generally predictable since there had been many attempts to regulate this situation before. “However, they were of scholastic, selective nature, while the problems in the field of professional legal assistance should be solved comprehensively. First of all, the Bar should be granted with exclusive rights to court representation - the Federal Chamber of Advocates spoke of the necessity of this measure more than 10 years ago. This suggestion is taken into account in the draft Concept of regulating the professional legal assistance market, prepared within the “Justice” state program, the adoption of which has unfortunately been delayed” - Gennady Sharov underlined. He also mentioned that court representation is only a small part of the activity of foreign law firms, and court cases are mostly conducted by Russian advocates. Besides, as the Vice-president of the Federal Chamber of Advocates reminded, under existing law a foreign citizen can also be an advocate in Russia.

Topic: foreign law firms