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Sergey Slagoda spoke at the session called “The law and competitive advantage for the Far East in the Asia-Pasific region” under the auspices of the Eastern Economic Forum. A detailed report by Kommersant

8 September 2016

Participants of the Eastern Economic Forum (EEF) have discussed the problems that the investors face in the territories of advanced development, and noted on the excessive administrative barriers in the area and the barriers of distrust that are still there between the business and the government. Lawyers pointed out that a number of economic bilateral agreements between Russia and China are outdated and there is a need to update them. According to the forum participants, it is now a "perfect time" to set up an international arbitration center in Russia, and the legal community has expressed its willingness to help in the development of a respective draft law.

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The session has symbolically been divided into two parts - the investment unit and the dispute resolution unit.

In the first unit, Andrey Zelenin, partner at Lidings Law Firm, has discussed everything that concerned the peculiarities of regulation of special investment contracts, one of the key advantages of which, in addition to the standard set of incentives associated with a reduction in the tax load, is the implementation of procurement from such investors as from a single supplier.

Alexander Yermolenko, partner at FBK Pravo Law Firm, drew attention to the problems impeding the arrival of new investors in the top priority development areas. The main obstacle, in his opinion, is in the field of administration of the law, that is, in the unwillingness of the state to ensure the administrative regime that it declared, as well as in the mass of the land controls and auditing barriers and in the general distrust between the state and the business. According to Mr. Yermolenko, some of such zones have about three investors, and each of them becomes an object of special attention for the inspection bodies. He referred to the territories of advanced development as an example that the state can work quickly and efficienty, and he urged to extend that not only on the investors but also on all other companies.

Alexander Molotnikov, the host of the session, suggested Kirill Stepanov, Deputy Minister for the Far East, to create a coordinating council with the involvement of his ministry, Federal Customs Service and the President's Plenipotentiary Envoy in the Far East Federal District. This body, he said, could provide a general vector in the reginal development and ensure adequate legal implementation for it. Stepanov replied that it is not advisable to increase the number of various coordinating bodies and offered to include the representatives of the businesses in the existing ones.

Dmitry Kafanov, partner at Inmar Law Firm, urged to harmonize the legislation governing investments in the fishing industry, since foreigners are virtually unable to get investment quotas in this area, and noted that the powers to assess applications should be concentrated in the Ministry for the Development of the Far East.

In the second part, the host David Goldberg noted that Russian dispute resolution laws are amongst the most developed ones and the only thing that impedes the development is legal administration. This problem could be partially solved, in his opinion, by implementing Igor Shuvalov’s idea to create a center for international arbitration.

Sergey Slagoda, managing partner of S&K Vertical, has thoroughly discussed the rules of dispute resolution in the Asia-Pacific Region. Mr. Slagoda noted that the majority of the Asia-Pacific states are bound by the treaties simplifying the process of resolution of disputes between transnational parties. The only exception is the so-called Apostille Convention, not ratified by China (excluding Hong Kong and Macao), Singapore, Malaysia and Indonesia. According to Sergey Slagoda, dispute resolution treaties between Russia and China are especially complicated. The Protocol on the general terms of supply of goods from the USSR to China and from China to the USSR, adopted in 1990, being supposedly binding, is now obsolete, since it does not reflect modern realities and prevents the development of trade between the two countries.

Then, the participants of the session discussed the need to establish international arbitration center in Russia. Turning to this subject, David Goldberg said: "The question as to where to resolve disputes is fairly important. However, people usually discuss it at the very end of contract negotiations, when there is no time, when everyone wants to sign it and go drink champagne."

Anton Aleksandrov, partner at Monastyrsky, Zyuba, Stepanov & Partners, stressed that now is a perfect time to establish an international arbitration center in Russia, because all the factors that make businesses leave state courts to opt for arbitration are only getting more and more amplified. Such a center, he said, could consider a significant number of internal disputes between Russian investors and over time become a competitive center for resolution of international commercial disputes. Dmitry Dyakin, partner at Egorov, Puginsky, Afanasiev & Partners, discussed legal aspects of the choice of the place for arbitration; its key importance, according to him, is due to the fact that the place where an arbitral institution is established relates to the choice of a state court that may cancel the arbitral award, the number of instances that may be needed, and the forms of service of process that will be applicable in a dispute.

Michael Liu, senior partner at DHH Law Firm, pointed to the need to reform bilateral instruments on dispute settlement between Russia and China and to take a fundamental decision as to the establishment of the arbitration center, because "we must first refer to the key issues, and then resolve specific difficulties” . And Kevin Nash, Deputy Director of the Singapore International Arbitration Center, noted that the right choice as to the combination of options for the procudure of dispute resolution determines the success and rapid growth of influence of a newly established arbitration center.

In the end, Alexander Molotnikov concluded that legal community is ready to provide a draft law governing the procedural aspects of dispute resolution in the Far East and noted that the establishment of an arbitration center in the region should aim at Russian rather than foreign investors, as the latter ones would in any case prefer popular foreign arbitrations.

By Anna Zanina

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