INTERVIEW

Fighting dualismEvgenySemenyako onthe legal marketPAGE 5

epresentatives of the HagueConference on PrivateInternational Law yesterdaysought to assure Russian

lawyers, professors and Ministry of Justicestaff that the Convention of Choice ofCourt Agreements would not interfere withthe allocation of competencies between thecountry’s courts.

Russia expressed its interest in joiningthe Hague convention in 2012. Since then,it has been involved in the internationaldialogue regarding the recognition ofchoice of court agreements in commercialcontracts.

Since the treaty was created in 2005,only one country – Mexico – has joined. Itwill not take effect until another jurisdic-tion joins, which is expected to be the EUearly next year.

“We hope that others who are in theprocess of studying and implementing theconvention will follow, and that in time itwill have a critical mass for its applica-tion,” said Marta Pertegás, first secretaryof the Hague Conference on PrivateInternational Law.

But some Russian members of the 26-member roundtable at yesterday’s Conferenceon the ‘Cross-border Recognition andEnforcement of Judgments’ raised queriesabout how the convention would work with-in Russia’s procedural framework.

Taking a similar approach to the NewYork Arbitration Convention, theConvention of Choice of Court agreements isdesigned to give parties flexibility in decidingwhere any dispute would be litigated.

The arbitration convention sparked theHague’s interest in a court-focused treaty.According to Christophe Bernasconi, secre-tary general of the Hague Conference onPrivate International Law, the idea was “tohave a tool which one day will give liti-gants the possibility to fully choosebetween arbitration and litigation.”

“So the same reasons that triggered yourstate to join the 1958 convention shouldplay an important role in your considera-tion of this 2005 Choice of Court convention,” he added.

The hypothetical case studies analysed atyesterday’s conference, which is taking placein association with the St Petersburg Legal

Forum, gave rise to questions about recog-nising the division of competencies betweenSt Petersburg and Moscow courts.

At the centre of debate were aspects ofthe convention that state when a court canoverride the parties’ preference of court.“Whether the Moscow court falls underthe convention depends on a complicatedinterpretation of Article 5, paragraph 3which says it applies to the judgment if thecourt is chosen, but not to the internal dis-tribution of the courts,” said MaximKulkov, counsel at Freshfields BruckhausDeringer in Moscow.

Notwithstanding this exemption, whichis designed to accommodate and respectexisting national and bilateral regimes, theconflict between Russian procedural lawand the convention’s focus on freedom ofchoice is a controversial matter.

Pertegás assured participants that theconvention does not prevent or change thatinternal balance between the courts “Thisis not to upset any internal arrangementsthat have been made,” she said, includingthe exclusive competence of any court.

She added, however, that the parties’

chosen court cannot refuse to hear a casewhen the subject matter or jurisdiction is attheir discretion. Instead, it is only whenthere is a procedural law which makes thetransfer obligatory.

Taking the participants’ commentsonboard, she stressed the importance forcourts in this situation to indicate that thecase must be transferred. “This gives us someidea as to the real operation of the conventionin a few years time,” she said. “With Article5 we will have to encourage the concernedcourts – particularly chosen courts – to some-how give a signal if another of the country’scourts is more suited to hear the case.”

The Hague representatives also pointedout Article 2 of the convention, whichallows states to issue declarations thatexclude certain subject matter from theconvention’s application. “This is anotherpossibility or place for states to moderatethe application of the convention and takeinto consideration specific sectors whereother rules may be,” said Pertegás.

The EU, for example, is looking to makea declaration that excludes certain insurance matters.

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DAILY NEWS

The perfect place for a forumThe stage is set for St. Petersburg 2014

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WEDNESDAY, JUNE 18TH 2014

The convention at-a-glanceThe Hague’s 2005 Conventionof Choice of CourtAgreements is a litigation-style equivalent of the NewYork Arbitration Convention.

It aims to realise contractingparties’ desire to have anyfuture dispute held in a cer-tain court.

The convention onlyapplies to civil and commer-

cial matters which are inter-national, and when the con-tract’s jurisdiction clause isexclusive. It only applies tobusiness-to-business con-tracts; employment and con-

sumer contracts are specifi-cally excluded.

Mexico acceded to thetreaty in 2007. The EU and UShave signed by not yet rati-fied it (the EU is expected to

do so early next year). Othercountries that have expressedtheir interest include Russia,Argentina, Canada, CostaRica, Germany, New Zealand,Turkey and Singapore.

INTERVIEW

“We are very supportiveof PPPs, to the point ofchanging laws to providefor them” JAMES WILSONPAGE 6

PREVIEW

The flowering of in-housePAGE 8

When party preference creates problems #SPBILF

Vox pop S T . P E T E R S B U R G2 International Legal Forum Daily News

Question: Whatare you lookingforward to doingin St. Petersburg?

Ramunas Audzevicius Motieka & AudzeviciusLithuania

The forum is a great opportunityto meet old friends as well as

colleagues who I’m currently working with. I willspend time walking around the amazingarchitecture and will be sure to have dinner inTerrassa near Nevsky Prospect.

Vasily KuznetsovQuinn Emanuel Trial LawyersRussia, Moscow

I lived here when I was five yearsold. I love the relaxed

atmosphere, which is very different from Moscow.I would recommend an evening walk along theembankment and the river cruise today.

Nadezhda RoznovaLegal Partnership Case GroupRussia, Kaliningrad

I’m looking forward to meetingnew people and meeting up with

old friends. I love the city as a whole but willdefinitely take part in the evening boat trip alongthe canals and rivers. I did this two years agoand it was an unforgettable experience.

Januario Non SumbaneMinistry of Justice of MozambiqueLegal secretaryMozambique

Unfortunately I am only here forone day of the conference. I would have liked tostay to explore the city and take advantage of thecultural programme but I have to be back inMoscow.

Irina MoninaPBKRussia, Moscow

I arrived a few days ago to havea small holiday with friends. I

recommend going to the rooftop of the IsaacCathedral – it is open until 4 am and the views ofthe bridges are great. The street music onDvortsovaya Square is also worth seeing.

Pavel VolkovSandvikRussia, Moscow

I visit St. Petersburg regularly. Ifthe weather is good then all the

obvious things are worth doing – boat trips andstrolling around Nevsky Prospect. This week I willalso visit the museum of water, located in an oldwater tower in the north of the city.

Polina DenyakProperty AgencyRussia, Krasnodar

I’m from Krasnodar in the south ofRussia. It has been 15 years since

I was in St. Petersburg and I’m looking forward togetting reacquainted with the city and seeing howit has changed.

Yul EdisonEmbassy of IndonesiaIndonesia

There are a number of mycolleagues joining and we are all

looking forward to thoroughly exploring the city.The scenery and architecture around the forumsite is fantastic, especially in June.

awyers and judgesconvened at one ofyesterday’s flagshipsessions to discuss the

impact of wide-ranging amend-ments to Russia’s Civil Code.

On September 30 2013,Russia’s President signed a law thatamended Part III of the country’sCivil Code. The new law representsthe sixth set of amendments to theRussian Civil Code within the civillaw reform framework.

A key point discussed by pan-ellists was that, although the con-ception of the Code is good, andits ideas and principles sound,implementing the new legislationis the next hurdle for Russia’slegal community to negotiate.

“The first half of the event beganwith the opinion of corporatelawyers in Russia and the businessperspective,” said Elena Voinikanis,a leading expert and expert activi-ties coordinator with the RussianCorporate Counsel Association.

“Lawyers all agreed that theCode is good,” said Voinikanis.

“But it is still new and to a largeextent it depends on the level,quality and professionalism of thejudges.”

The reforms enshrine the keyEuropean principle of fairnessand reasonableness within a for-mal legislative framework.

But the concepts of reasonable-ness and fairness are prone to dif-ferent interpretations. Therefore,the way that the Code is ultimate-ly implemented depends on judi-cial interpretation, Voinikaniscontinued, during an interviewwith the Daily News.

Fittingly, the second half ofyesterday’s event presented theperspective of the judges ofRussia’s highest court – the con-stitutional court. They identifiedsome other risk factors associatedwith Russia’s large-scale civil lawreform.

“The Civil Code is the highestlevel of regulation in the civillaw,” said Voinikanis. “But nowthat the Code has come intoforce, changes to corporate legis-

lation in Russia will also berequired.”

Lawyers were aware of the riskthat the flexibility at the heart ofthe new Civil Code could be lostthrough the process of formalisa-tion involved in making changesto what is known as Russia’s spe-cial legislation.

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www.iflr.com NewsWednesday, 18th June 2014 3

Mohan PierisChief JusticeSupreme Court of Sri Lanka

I’m excited by the packed socialcalendar afforded by the ministry.

It’s my first time here and I will visit some friendswho are teaching at the university. Sri Lanka andthe Russian Federation are very close; the peopleare very friendly and I feel right at home.

Pablo CrescimbeniCuruchet OdriozolaArgentina

I am excited at being in Russia forthe first time. The exclusive

evening tours to the Hermitage and the boat tripsalong the canals look very impressive and have asense of mystery often associated with Russia.

Oleysa TrusovaPhilip MorrisRussia, Moscow

I plan to follow the itinerary of theorganisers and I especially want

to go to the Mariinsky theatre. I am originallyfrom St Petersburg and went to university here. Ilove the people; they’re really the soul of the city.

Key takeaways• Lawyers and judges con-

vened at one of yesterday’sflagship sessions to discussamendments to Russia’sCivil Code;

• A key point discussed bypanellists was that, althoughthe conception of the Codeis good, implementing thenew legislation may be achallenge;

• The way that the Code is ulti-mately implemented dependson judicial interpretation.

Ensuring success forRussia’s Civil Code

ong gone are the daysof the Soviet empire’slimiting culinarychoice. Instead, over

twenty years later, St. Petersburgoffers a remarkable 4,000 restau-rants to choose from. The city haseverything from traditionalRussian delicacies to sushi andpizza; and with this whistle stopguide, visitors will know where togo for the best meal in town.

Palkin is a lavish 200-yearold restaurant that transportscustomers back to when St.Petersburg was still the capital ofRussia, ruled by the tsars. Grab awindow seat and feast like anaristocrat, while gazing out atthe Nevsky Prospekt below andsampling the exquisite Russiancuisine.

Another top end restaurant toconsider is the L‘Europe, whichcan be found in the BelmondGrand Hotel Europe. Pridingitself as the oldest restaurant inRussia, its breathtaking art nou-veau interior, mouth wateringcourses and weekend ballet andjazz shows are sure to impress.The Belmond Grand Hotel isalso home to the City’s CaviarBar, an upmarket and stylishrestaurant with something toimpress everyone. From the stun-ning art nouveau interior, liveentertainment and on-handvodka sommelier, a trip to theCaviar Bar should be high up onthe list of any tourist seeking thefinest in Russian cuisine.

Those looking for an award-winning steak at the city’s topsteakhouse, head over to theStoganoff, an undergroundrestaurant with the best steak inSt. Petersburg. The restaurant ishoused in the former stables ofCatherine the Great and is a hitwith both tourists and locals alike

looking to eat at the only restau-rant in Russia that dry ages andhand butchers its meat. A mustfor any meat lover, with the per-sonalised drinks menu perfect forwashing it all down.

Michelin Star Alain Ducassealso occupies the miX resturant inHotel W. Taking a mix of localingredients and combining it withthe French culinary practices ofits head chef guarantees dinerswon’t be left disappointed.Ducasse isn’t the only celebritychef in town, St. Petersburg alsoboasts a Jamie Oliver Italian,which is popular with touriststhanks to its open kitchen, famil-iar dishes and bustling atmosphere.

Others may prefer dining atTelpo, a quaint restaurant thatboasts blazing fires and plenty ofbookshelves. The cosy and wel-coming ambience is perfect forthose looking to unwind andrelax, and the European andRussian infused menu is adelight. For those eager to spendtheir time harking back to thedays before soviet Russia, whynot head over to 1913; with itsclassic Russian food and fantasticlive band, dinner here is perfectfor those looking for elegant sur-roundings and well executeddishes.

Those with an interest inRussian literature, should consid-er a trip to the Literary Cafe,where Russian poet, Pushkin lastate before heading out for theduel that would cost him his life.But the excellent selection ofRussian and European dishesguarantees he would have had aperfect final meal there.Alternatively, The Cafe Idiot isperfect for those who want torelax with the backdrop ofRussian literature. Named after

Dostoyevsky’s The Idiot, with itsbohemian charm and vegetarianmenu, this is perfect for thoselooking for a rustic meal in anunderground grotto. Additionallymake sure to head over duringhappy hour where drinks are twofor one, plus complimentaryvodka shots.

A trip to St. Petersburg wouldnot be complete, though, without

a visit to Russkaya Rybalka, apicturesque wooden hut over-looking the lake. Not only areguests expected to catch theirown fish supper from the lake(guidance is provided to all whoneed it), there is even the possibil-ity of bumping into PresidentPutin, who as a native St.Petersburg resident is often seenenjoying this scenic restaurant.

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Where to eat in St. Petersburg S T . P E T E R S B U R G4 International Legal Forum Daily News

How to eat like a Russian tsar Whether sampling the delights of Russian cuisine, feasting in opulent surroundings or dining out like the locals, St.Petersburg’s restaurants will not disappoint, writes Amy Carlse

The best of the restTerrassa is a slick open-air sushi bar, which offerssome of the best views in the city thanks to itsrooftop location. The restaurant is located on theroof of one of the tallest buildings in St.Petersburg’s historic centre, with gorgeous views atNevsky Prospect and Kazansky Cathedral.

Gastonom, with its lively jazz band and Fieldof Mars backdrop mean many visitors enjoyeating out at this European/Asian infusedrestaurant.

Barbaresco is a high-end Italian restaurant thatpromises friendly service and rustic surroundings,

and the multi-course tasting menu is definitelyworth a try.

Avant-garde Sadko is perfect for those lookingfor a lavish restaurant and refined Russianfavourites. Situated close to the Mariinsky Theatre,it is perfect for those heading out to watch one ofthe city’s famous ballet or opera shows.

The Artist’s Attic Fondue Bar, hidden away onthe fourth floor of the Gallery Glass RosvuzdesignArt Gallery, is a delightful rooftop bar.

The restaurant remains a local secret, thanks toits cosy size, although with its beautiful view, artexhibition and fondue specialities it is well worthtrying out.

“President Putin isoften spottedenjoying this scenicrestaurant”

oday’s roundtable,‘Legal ServiceMarket. Locked andFree Markets: Pros

and Contras’ will examine theneed for unified professional stan-dards for legal practitioners inRussia. President of the FederalChamber of Lawyers, and moder-ator of the roundtable, EvgenySemenyako, explains why thetopic is as important as ever in theyear of the 150th anniversary ofthe Russian Bar.

What was your thinkingbehind creating theroundtable: ‘Legal ServiceMarket. Locked and FreeMarkets: Pros and Contras’?We remember well May 31 2002when the first advocatoryConstitution was adopted, name-ly the Federal Law On Advocacyand the Bar in the RussianFederation. A few years later thatday was declared as our profes-sional holiday.

Now we are intent on arrang-ing the second advocatoryConstitution that will unite allattorneys and other competentlawyers within the same corpora-tion. This event is going tobecome the holiday all Russianlawyers have in common.

Hopefully, the ‘Legal ServiceMarket. Locked and FreeMarkets: Pros and Contras’round table at the St. PetersburgInternational Legal Forum will bea considerable step towards devel-oping the conception of thisunion. We would love followersand opponents to take part in ourdiscussion.

Why is the topic so importantfor the Russian legalcommunity? Dualism in the legal profession iscurrently the most serious prob-lem in the area of a qualified legalaid. Nowadays, professional andethical standards, liability fortheir non-fulfillment refer only tothe advocates whose activity isregulated by the Federal law ofMay 31 2002, On Advocacy andthe Bar in the Russian Federation(law on advocacy).

By virtue of the first part ofArticle 1 of this law, advocacymeans qualified legal assistancerendered by those having the sta-tus of advocate to individuals andjuridical persons in order to pro-tect their rights, freedoms andinterests and provide access tojustice. The high quality of thelegal service rendered is ensuredby fulfillment of the above-men-tioned requirements. However,others, who render legal servicesanalogous requirements, are notset and their activity is not regu-lated by law.

In the absence of unified pro-fessional standards for legal prac-titioners we can’t provide every-body with a right to obtain aqualified legal assistance, some-thing that is guaranteed by thepart 1 of the article 48 of theConstitution of the RussianFederation. The absence of suchstandards marks the differencebetween Russia and the otherdeveloped countries.

According to the FederalChamber of Lawyers, this prob-lem can be solved if we uniteadvocates and competent legalpractitioners within the same cor-poration based on the advocatorystatus.

This issue is especially signifi-cant in this, the year that cele-brates the 150th anniversary ofthe Russian Bar when we have aright to note that the modern barestablished by the Law onAdvocacy is a professional andsocially responsible corporation.Law on Advocacy has embodiedthe hopes of a few generations ofadvocates who wanted to estab-lish a unified independent profes-sional community and it has alsofixed many traditions developedby the legal profession. It is safeto say that after the adoption ofthis law the Russian Bar reachedthe new important stage of its his-torical development.

Moreover, we feel an inextrica-ble connection with our greatancestors who started creatingour legal profession during theJudiciary reform in 1864. Theirnames – and their honest attitudetowards their profession – areguiding stars for us.

Twelve years after passing thelaw on advocacy it is clear to seethat the bar is fulfilling itself notonly as a necessary element of the

whole legal system but as anactive institution of civil society.

Our corporation got strongerboth in its system and organisa-tion. The activities of qualifica-tion commissions, where advo-cates, judges, representatives ofjudicial and executive authoritywork together, proved its signifi-cance. Councils of Bar Chambersare also effective bodies of self-government. One of their priori-ties is a protection of advocates’professional rights. In the regionswhere interests of our colleaguesare protected both on the level oflocal authorities and in differentcourts, members of our corpora-tion feel safe.

The current level of organisa-tion and corporate culture allowsus to think of extension of demo-cratic principles at electing advo-catory self-regulatory bodies andpresidents of chambers. The lawon advocacy gives us this oppor-tunity. We shouldn’t forgetthough that we are a professionalcorporation and should followthe priorities defined by our pro-fessional goals.

Upgrading the quality of com-petence standards and ethicalnorms in our community andstrengthening the institutionitself, we will strive to establishthe united corporation of practic-ing lawyers. We are sure that thiscorporation will increase the legalprotection for citizens and institu-tions dramatically, overcome legalnihilism and boost the prestige ofboth legal profession and ourstate.

A state-run programme enti-tled Justice, from April 15 2014,is aimed at closing the gaps inlegal aid. Among the main tasksof the programme is to increasethe level of protection of public

interests, implement rights of citi-zens and institutions. Sub-pro-gramme one defines ways of com-plementing this task, in particular,it mentions: adjustment of thequalified legal aid system andmodernisation of the bar institu-tion; promotion of the status ofadvocates in professional legalcommunity through the mecha-nism of regular professionalenhancement and competenceassessment; development andmaintenance of competition onthe professional legal servicesmarket; provision of legal assistance to people, includingpro bono.

Among the results we expectfrom this sub-programme is thedevelopment of the unified legalservices market accessible for dif-ferent groups of the population. A

number of measures mentioned inthe Appendix 3 are designed toachieve this result. For instance,in 2014 the regulation of profes-sional legal services market pro-viding citizens and juridical per-sons with access to competentlegal aid should be enacted by thedecree of the Ministry of Justiceof Russia. In addition, in 2015 weplan to draft the Federal law onprofessional legal assistance in theRussian Federation aimed at optimising the permit to work as an advocate as well as standar-dising the professional legal services market.

All these measures will beaddressed at today’s roundtable.

What topics will the panellistsdiscuss?We plan to discuss issues aroundthe bar institution enhancement,promotion of the status of advo-cate in the legal community,adjustment of the qualified legalaid system with the help of uni-fied requirements for all the play-ers of the legal services market,exclusion of all the unfair partici-pants from the market.

Who will speak at yoursession?Our roundtable will feature repre-sentatives of judicial, legislativeand executive branches of thegovernment, advocates, bars,legal attorneys and counselors.

Our discussion session will beinteresting for both Russian andforeign attorneys, lawyers fromRussian and international compa-nies, representatives of stateauthorities and academics. So itwill be of relevance to everyonedealing with protection of therights of citizens and institutionsand problems of advocacy.

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www.iflr.com Interview: Evgeny SemenyakoWednesday, 18th June 2014 5

Fighting dualismSESSION NAME

Legal Service Market.Locked and Free Markets:Pros and Contras

TIME/PLACE

Wednesday June 1812.30pm-2.30pm

Key takeaways• Panellists will explain bar

institution enhancement andthe promotion of the statusof advocate in the legalcommunity;

• Other topics covered willinclude the adjustment ofthe qualified legal aid sys-tem with the help of unifiedrequirements for all in thelegal services market.

“Dualism in thelegal profession iscurrently the mostserious problem inthe area of aqualified legal aid”

Can you briefly outline theEBRD’s objectives in Centraland Eastern Europe (CEE) andthe Commonwealth ofIndependent States (CIS)Our main aim is to help the coun-tries in the EBRD make the tran-sition from state-planned to openmarket economies, and we do thisprimarily by supporting andencouraging local companies inour regions to adopt best prac-tices, as well as developing impor-tant businesses for the local econ-omy through EBRD debt andequity financings.

What energy or infrastructureprojects have you worked onin the CEE or CIS?Recently I’ve worked on wind,solar, biomass and hydro powerplant financings in Ukraine andgold and copper mine financingsin Bulgaria and, indirectly,Armenia.

Would it be fair to say youhave a strong focus onrenewable energy in theCEE/CIS region? We are very focussed on it. We arean international financial institu-tion, despite our name; EBRD hassignificant non-European share-holders including the US, Japanand Australia, as well as the EUand its individual EU memberstates. All of EBRD’s shareholdershave a say in setting EBRD’s strat-egy for clients in connection withEBRD financing.

The shareholders recognisethat developing renewable energyand energy independence and effi-ciency is very important. Thistranslates into renewable energybeing an important and growingsector for EBRD investment, aswell as EBRD imposing high stan-dards of corporate governance,

environmental and social behav-iour standards on its clients.

Do you finance conventionalenergy projects in theCEE/CIS region too?We could, and we do, but con-ventional energy projects tend tobe more controversial and diffi-cult for a number of reasons.Also, we have an internal require-ment that we must be “addition-al”, in the sense that if othercommercial banks are willing toprovide financing, then EBRDshould not become a financierand thereby exclude them. Theremust be a development role forEBRD to play in any project. Inthe case of a high-profile conven-tional energy project in EBRD’sregion, the argument for EBRDbeing involved in the financingtends to be different and morecomplex because it is based onthe fact that it would lead totighter IFI covenants beingimposed on the operator, ratherthan the need for financing itselffrom EBRD.

Is Russia an active market forEBRD and you personally?Russia is our largest and mostactive country of operation, but Ipersonally have many projects inUkraine. Ukraine is, and has beenfor the last few years, the secondor third largest and most activecountry of operation after Russia;it is comparable to Poland andTurkey.

How important a role dopublic-private partnerships(PPPs) play in achieving theEBRD’s objectives you outlinedearlier?Part of our role is to help coun-tries make this transition to freemarket economies and on the

legal side, we have a team whohelp legislators within govern-ments design their PPP laws. It isseen as a key component, if youcan eliminate corruption at thatlevel and make engagement withthe private sector cleaner andmore transparent, then that’s avery positive thing. We are verysupportive of PPPs, at the point ofchanging laws to provide forthem but also at the level offinancing PPP bidders.

Are there any regulatoryissues that frequently arisewhen you are working onUkrainian energy projects? In most cases, the client hasobtained all the construction andsupply contracts and the equitymoney, then EBRD lends itsmoney and they go ahead andcomplete the construction andoperation of the new renewablepower plant. They enter into agrid connection agreement and apower purchase agreement, whenthe state energy market, the stateofftaker, buys the power from thisnew power plant.

At the end of this process, thelast step for EBRD is to receive anassignment of the money that iscoming in from the state offtakerso that if there’s a problem for theplant operator in repaying theloan, EBRD can just receive themoney directly from the state off-taker.

At that point, we would allowthe guarantee that we’ve hadfrom our main shareholder – oursponsor – to fall away because wehave this additional security,which should be sufficient to sup-port our loan. But the problemfor our clients – and for EBRDbecause this was always part ofthe project – is that the state off-taker in Ukraine won’t allow, for

technical reasons, an assignmentwhereby it can just be informedby EBRD that it should start paying EBRD instead of thepower plant.

Our challenge is to convincethe state offtaker in Ukraine thatthey should allow financiers, notjust EBRD and other developmentbanks, to have rights to be paiddirectly because that allows thesepower plants to be properlyfinanced and improves the wholesector. But we haven’t managed todo this yet.

Are there any specific laws orregulations that make energyprojects more difficult tofinance for EBRD?We have encountered problemswith the National Bank ofUkraine (NBU) introducing newregulations, which interfere withthe administration and operationof our hard currency loans. InUkraine, they currently have acontrol regime and we under-stand that the NBU is trying toshore up the banks in Ukraine,but quite frequently they intro-duce a new regulation that causesserious concerns about our exist-ing and future exposures, and wehave to revert to the NBU and to

demand, at the very least, anexemption for EBRD loans fromthe new regulation.

Can you give me a recentexample? Recently the NBU stated that nohard currency lender was permit-ted to impose an uncapped float-ing interest rate component (egLibor or Euribor) in a loan to aUkrainian borrower. In the loanregistration certificate, the NBUwanted to be able to say that themaximum interest payable by anyUkrainian borrower is X, andobviously if there’s no cap and theloan rate is floating, they can’tinclude such a figure.

However, almost every EBRDloan starts off at least as a floatingrate – sometimes the rate is fixedlater – and we have had problemsin convincing the NBU and gain-ing an understanding that thisfloating rate we were providingfor in our loan agreements wouldbe respected, recorded and a bor-rower could pay it. After manydiscussions, the NBU confirmedthat it didn’t apply to EBRD.

This article appears courtesy ofIFLR1000’s Energy andInfrastructure Guide 2014

Interview: EBRD’s James Wilson S T . P E T E R S B U R G6 International Legal Forum Daily News

Financing a renewable futureEuropean Bank for Reconstruction and Development (EBRD) senior counsel, James Wilson, speaks to Ben Naylorabout his work in Russia and the CIS

James WilsonSenior counsel, EBRD, London

Since he joined EBRD in 2005, James Wilson has advised on over150 signed debt and equity financings, mostly in the areas ofmining and natural resources, renewable energy, real estate,distressed assets, private equity funds and shipping finance. Prior tojoining EBRD, Wilson was a corporate M&A lawyer focusing onprivate equity transactions and fundraisings at legacy firm Lovells inLondon. He has an LLB Honours in Scots law from the University ofAberdeen, an LLM in maritime law from the University ofSouthampton and was admitted as a solicitor in Scotland in 1996and England in 1998.

orporate governancefailings could bebanks’ biggest weak-ness in future stress

tests, research has revealed.According to a report pub-

lished by risk management firmMoody’s Analytics, governancehas become a key tenet of stress-testing programmes and a qualita-tive measure regulators use toassess the rigor, auditability, andrepeatability of the banks’ stresstesting processes.

Stress tests are economic andfinancial shocks imposed on acountry’s biggest lenders to gaugetheir ability to withstand a crisisand prevent further taxpayerbailouts. Simulated doomsdayscenarios include a currency cri-sis, a property market crash and aspike in unemployment.

“The institutions’ process andgovernance framework for stresstesting calculations and work-flows is becoming even moreimportant than the calculationitself,” said Cayetano Gea-Carrasco, head of stress testingservices and advisory at Moody’sAnalytics, an author of the report.

In the recent US stress test, theFederal Reserve Bank (Fed) object-ed to the capital plans of severalbanks due to qualitative deficienciesin their governance frameworks,analyses, internal controls, infor-mation systems and assumptionswhen performing stress testing.

“Where banks are failing, theyare not failing because they arenot passing the stress tests, butbecause they are not able toexplain clearly how they reachedtheir results and the narrativeregarding the qualitative assump-tions used in the calculation,”said Gea-Carrasco.

The Moody’s Analytics practicehead added that regulators wantbanks to use stress testing as a partof their business managementprocess and as a risk managementtool for strategic decisions – notonly for regulatory compliance.“This represents a significant chal-lenge for the banks in terms ofdata, systems integration andworkflow coordination,” he said.

A new regime for EuropeWhile banks in the UK and UShave established governance

frameworks for stress testing, theirEuropean counterparts lack suchclear guidelines. “If stress testing isgoing to be a regular exercise inEurope, in the same way it is in theUK and the US, banks in theregion will need a governanceframework specifically for stresstesting,” said Gea-Carrasco. “Weare working with banks right nowto put that in place.”

Moody’s Analytics recom-mended that banks set up a single

stress-testing programme boardcharged with the centralised coor-dination and oversight of bank-wide stress testing activities.

“The major feedback we’vehad from banks is the difficulty ofcoordinating the process and theimplications for all businessunits,” said Gea-Carrasco.“Traditionally banks work insilos – finance, technology, risk,and so on. Stress testing cutsacross all these boundaries.”

In establishing the new frame-work, European banks are grap-pling with who to put in charge ofthe exercise. While some favourthe chief risk officer or chieffinancial officer, Gea-Carrascoreported that some are planningto introduce a newly-created roleof chief operating officer forenterprise-wide stress testing.

Results of the EuropeanBanking Authority’s stress testswill be published in October.

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www.iflr.com NewsWednesday, 18th June 2014 7

Why governance matters to stress tests

“If stress testing is going tobe regular, banks will needa governance frameworkspecifically for it”

arely a year goes bywithout an article ordiscussion on how therole of the in-house is

changing. This regularity is unsur-prising though, because it’s true:the job is not what it used to be,and as multinationals grow, sodoes the role of the in-houselawyer.

As today’s session, ‘In-housecounsels: where we are and whatis coming’ will explain, those whopractice in-house are no longerexpected to simply provide legaladvice. Companies now demandtheir internal lawyers navigate thecommercial complexities of legaland regulatory risks within theglobal market.

Essentially the role of an in-house counsel is to steer a compa-ny away from risk and act as alegal guardian. But there are anumber of other duties as well. Ageneral counsel, for instance, isno longer just a legal advisor –instead she is a strategic businessadvisor, risk analyst and boardmember.

Difficult transitionsAs the role evolves, so too do theexpectations of the company.David Leitch, group vice-presi-dent and general counsel of FordMotors, believes that in-houselawyers are now expected to beintimately aware of everythinggoing on inside the company soas to increase their ability toanticipate and identify potentialrisks. For Leitch, this brings withit a unique challenge. “Whenthings go wrong inside a compa-ny, in some way or another, thegeneral counsel is at the centre,either leading the investigation orbeing investigated,’ he says. Thatcan be a difficult transition for alawyer who must share in thesuccess or failure of the company,rather than just move onto thenext case file.

In Russia specifically, the lastseveral years have witnessed gen-eral counsels as board membersparticipating in the most signifi-cant business decisions.According to AlexandraNesterenko, president of theRussian Corporate CounselAssociation, and moderator oftoday’s session, general counselalso often lead the most impor-tant company committees: com-pliance, investment and other keybusiness committees. “Businessadvice supported by legal knowl-edge is the main advantage of thecompany legal director,” saysNesterenko.

As general counsel find them-selves navigating the pathbetween legal advisor and busi-ness strategist, it is important torecognise the growing demands

for them to provide an insightfulperspective into business decisions.

From a financial perspective,companies with in-house legalteams save on arduous andlengthy legal fees by having a self-contained team of in-houselawyers that can provide a deeperunderstanding of the business,and thus can provide a greaterappreciation of how to deal withproblems that may arise.

Of course, in-house legalteams still turn to outside coun-sel for help on more complexissues. Leitch notes that it isimperative that in-house teamsfeel comfortable relying on theadvice and counsel of lawyerswho are trained in legal systemsthat the general counsel may notknow – an issue important forthose operating in multi-nationalcompanies.

Clear messages Other priorities general counselshould consider for a harmoniousin-house/private practitioner rela-tionship include being aware ofone another’s expectations, ideal-ly through good communicationchannels so as to limit the numberof surprises along the way,according to Leitch. Nesterenkoagrees: “in-house counsel shouldeffectively manage external coun-sel regarding the task, fees andfinal result. They must give clearmessages to the outside counseland keep the process under con-trol. These two points are crucialfor the successful cooperation.

Working for only one clientcan be attractive, says Leitch,who believes that while outsidelawyers do have the best interestsof the enterprise in mind, as anin-house lawyer, one’s prioritiesare more aligned with those ofthe company “You tend to feelmore invested in the overallenterprise,” he says. Not only aregeneral counsel intimatelyacquainted with the nuances ofthe business, but their legalknowledge provides the compa-ny with a commercial edge whichis not always possible from the

constraints of a law firm office.For the in-house lawyer, yourcolleagues also happen to beyour client.

Nesterenko thinks that in-house counsel actually have morethan one client, despite workingfor a single company. “In-housedeal with finance, sales, market-ing, HR, production and logisticsdepartments,” she says, addingevery day they must find the righttone for each department andevery person. “So the complexityof the tasks managed by in housecounsels should not be underesti-mated,” she adds.

Today’s session will focus onthe growing expectations compa-nies have on general counsel, withdistinguished speakers from arange of prominent in-house legalteams. Nesterenko, who is moder-ating the session hopes the panel-lists will be forward-looking intheir analysis. “We will discuss thefuture of the in-house profession.That’s going to include businessexpectations, role models, regula-tion needs as well as ethical pointsof the profession.”

It should prove to be a fascinating session, with YuliyaBondarenko, director of the legaldepartment at Rothmans, Benson& Hedges in Canada among thepanellists. Other speakers includeElen Borisenko, deputy ministerof Justice of the RussianFederation, Ruslan Ibragimov atMobile TeleSystems, IgorKondrashov at Sberbank SIB,David Leitch at Ford Motors andIgor Maydannik at Rosneft.

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The flowering of in-house

“The complexity ofthe tasks managedby in-house counselshould not beunderestimated”

SESSION NAME

In-house counsels: Where we are and whatis coming

TIME/PLACE

Wednesday 18th June,3.30pm – 5.30pm, TheEast Wing of the GeneralStaff Building, The StateHermitage Museum

Key takeaways• The panellists will outline the

growing expectations thatcompanies have for their in-house legal teams to not onlyprovide solid legal advice,but also to provide strategicbusiness advice so as toacknowledge potential risk.

• General counsel are becom-ing increasingly multi-disci-plinary, which poses ques-tions as to what the future ofthe role will be.

• Speakers will determine themain trends of further devel-opment and shaping of anin-house counsel’s role inthe company as one of thekey strategic business part-ners. The discussion willinclude general counsels ofthe largest Russian andmultinational companies invarious industries.

Preview S T . P E T E R S B U R G8 International Legal Forum Daily News

he Russian authoritiesover recent years havebeen actively workingon reforming anti-

monopoly legislation. Marketsundergoing vibrant growth, thegap being bridged with westernregulatory rules, the role of theantimonopoly authority beingbolstered – these and much morehave been summoned to encour-age competition in our country.However, do all initiatives of theauthorities justify their initialaims of developing the competi-tive environment?

Receiving unclear signals fromthe authorities and becoming lostin the unjustifiably frequentchanges to legislation, Russianbusiness figures sometimes findthemselves in the most real king-dom of crooked mirrors. At thesame time, a lack of understand-ing of legal rules, resulting in

breaches of them can hit a compa-ny’s budget with billions of rublesin fines, trigger criminal investiga-tions of its managers or, as a min-imum, seriously damage the repu-tation of the infringing company.

If the law is amended, modelsof business conduct should betransformed, and in some cases soshould the corporate structure.Business is obliged to adapt tochanging regulation on the fly. Tothis end, the necessity arises tocreate an anti-monopoly compli-ance system that would assistwith reacting as promptly andefficiently as possible to new sig-nals and with reducing anti-monopoly risks.

Several years ago, major com-panies started to practice imple-menting policies which were setsof rules unifying certain businessprocesses. The overwhelmingmajority of such policies were

aimed at reducing anti-monopolyrisks. However, a policy is only asmall part of the possible systemfor managing anti-monopolyrisks. If legislation is amended, itmay mean that there is a need toadapt the procedures put in placeby the policies. Moreover, a poli-cy does not in itself guaranteethat a company will be able toreact to changes in the externalenvironment.

Integrated systemsBusiness needs an integrated sys-tem for reacting promptly to adynamically changing legal envi-ronment. This system shouldcombine several functions atonce: identifying and analysingrisks, devising and implementinga system for meeting anti-monop-oly requirements and arrangingfor those involved in businessprocesses to communicate with

one another. Such a complete sys-tem for warning of antimonopolyrisks and for minimising the con-sequences if they come to passmay offer a way out in conditionsof excessive legislative activity, ifbusiness does not wish to fallunder the watchful eye of the regulator.

On June 20 2014 within thescope of the IV St PetersburgInternational Legal Forum,Pepeliaev Group in associationwith Legal Insight magazine willhold an introductory sessiondevoted to the topic: ‘Anti-monopoly compliance: Reality orutopia?’.

There are currently more ques-tions than answers in the anti-monopoly compliance system.Specialists in the sector and busi-ness representatives are discussingwhether it is possible to createsuch a system in practice, what

the risks are of implementing itand the costs are of developing it,what practical steps have beentaken in this direction, and ulti-mately whether business feels thatsuch an instrument is needed.

The introductory session‘Antimonopoly compliance:Reality or utopia?’ will take placeon June 20 2014 at 16:00 beforethe start of the ‘Russia’s BestLegal Departments’ awards cere-mony at the Corinthia Hotel, 57Nevsky Prospekt, St Petersburg.

Attendance is by invitation. Toapply to take part, please contactIrina Krylova at Pepeliaev Group:i.krylova@pgplaw.ru

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Sponsored feature S T . P E T E R S B U R G10 International Legal Forum Daily News

Anti-monopoly compliance: new system for the warning of risksSergey Pepeliaev, managing partner, Pepeliaev Group

t. Petersburg is knownfor its majestic archi-tecture, impressivehistory and cultural

delights, which are likely toimpress even the most seasonedtravellers. As a city steeped inRussian history, plenty remains ofthe previous tsardom, which hashelped maintain it as a destinationof choice for those eager to learnmore about the country’s past.

During the summer months,St. Petersburg is awash with themidnight sun, an annual phenom-enon that celebrates the extendedsunlight caused by the city’snorthern location. The WhiteNights Festival provides touristsand locals with an excuse toparty throughout the night, whilethe Arts Festival offers a fantasticopportunity to catch the best ofRussian ballet and music. Thereis little doubt that summer is thebest time to visit St. Petersburg,as it transforms into a city thatnever sleeps.

The St. Petersburg InternationalLegal Forum is held at PalaceSquare, a central location, whichmany consider the hub of the city.The square boasts excellent viewsof the Winter Palace and GeneralStaff Building, but most visit to seethe 47.5 metre high AlexanderColumn, erected after the Russianvictory in the war with Napoleon’sFrance. The Square can transportvisitors back to Russia’s turbulentpast, especially considering thepivotal role the location playedduring both the 1905 and 1917revolutions.

Winter PalaceFor the art critics in attendancethis week, St. Petersburg providesan assortment of galleries andworld-renowned collections. Asone of the oldest and largest muse-ums in the world, the StateHermitage offers a fantasticopportunity to marvel at the LaDanse (Rembrandt), LittaMadonna (Da Vinci) and thegallery’s three million other pieces.The artwork isn’t the only attrac-tion: located in the Winter Palace,visitors are also able to wanderaround the former imperial resi-dences of the Russian tsars.

Others may prefer spendingtime at Arts Square, which boastsa number of cultural highlightsincluding the Philharmonic Halland the State Russian Museum,which is well known for its col-lection of Russian art. For thosewith a fondness for Britain, theRistsordi Art Loft is hosting aBritish Contemporary Art

exhibition, entitled ‘EnglishBreakfast’, to celebrate theBritish Council’s 2014 CrossCultural Year of Great Britainand Russia.

As the former capital of theRussian Empire, St. Petersburg isable to offer a number of interest-ing and unique attractions,including the iconic Church ofOur Saviour on Spilled Blood. Itsimpressive architecture will havevisitors grabbing for their cam-eras as they gaze up at its early20th century design. The strikinginterior is just as impressive, espe-

cially the mosaic icons and jaspershrine to Tsar Alexander II, whowas assassinated at the site. Andthen there’s the Peter and PaulCathedral, the tallest OrthodoxChurch in the world and St.Isaac’s Cathedral is worth a visitfor its size alone. The imposingregal architecture and windingcanals make St. Petersburg astrong contender for one of theworld’s most beautiful cities.

In a city well known for itsopulence, a visit to one of St.Petersburg’s many majesticpalaces is essential. UNESCOWorld Heritage Site PeterhofPalace, also known as theRussian Versailles, is sure toimpress thanks to its impeccablegardens, splendid cascades andcommanding views of the Baltic.Just as impressive is the flamboy-ant Tsarkoye Selo, which boaststhe infamous Amber Room, aluxurious chamber adorned withover six tonnes of amber, thatwouldn’t look out of place in thepages of a fairy tale. The palacesbecome increasingly busy duringthe summer, so those eager tospend time admiring the grandeurof the Russian Empire, shouldarrive early.

Other attractions include theFabergé Egg Museum, theMuseum of Soviet Arcade Games

(all of which still work), theMariinsky Theatre, The HouseUpside Down and the KomarovBotanical Gardens, the oldest inRussia. Keep a look out for thetsaritsa nochi, a flowering cactusthat only blossoms one night ayear – in the middle of June.

Those after some retail therapywill be pleased to hear that St.Petersburg offers a vast selectionof shops, most of which are cen-tred on or around the NevskyProspekt, a bustling street thatruns through the heart of the City.Look out for the Kazan Cathedral,Singer House, The RussianNational Library and the GostnyDvor. Those wanting a morerefined shopping experience, canhead over to The Passage, an 19thCentury arcade and home of theKomissarzhevskaya Theatre.

There are plenty of ways to getaround St. Petersburg, includingthe canal tours under the city’s314 bridges, the tram service andthe reliable Metro, which is notonly one of the world’s deepestMetros, but also impresses com-muters with its artwork, opulentchandeliers and marble columns.Public transport closes at aroundmidnight, so do ensure that if youare out in ‘St. Partysburg’ youmake alternative means back toyour hotel. If you do want to

sample what the city has to offerafter hours, then look out for thelegendary avant-garde bar FishFabrique, The Barrel, a slickcocktail bar that holds karaokecontests on Wednesdays; XXXXa popular Russian nightclubchain that plays plenty of hitsfrom the 1980s and Purga, a clubthat parties like its New YearsEve every night.

Visitors looking to unwindafter a long day will find a num-ber of enchanting pubs and barsto let loose in. For those after atraditional English pub, headover to Dickens, while wine barfans should consider Jean-Jacques. Others may preferspending their time at The Hat,an excellent spot to listen to livejazz, and those seeking an edgierRussian bar can visit Da Vinci.But for the truly authenticRussian drinking experience,visit the St. Petersburg VodkaMuseum, Visitors can learnabout the history and impor-tance of vodka to the City, whilesampling a number of nativevodka shots and snacks.

The forum organisers will be run-ning excursions throughout theweek. Just check your delegatepack for details and informationon how to book.

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www.iflr.com Things to doWednesday, 18th June 2014 11

Russia’s white lightFrom castles to cathedrals; vodka to Da Vinci, St. Petersburg is steeped in history and culture. Amy Carlse finds outwhat’s in store for adventurous visitors

“A visit to one ofSt. Petersburg’smany majesticpalaces isessential”