Russia Legal News Blast, Jan. 18, 2011

The Highest Arbitrazh court has received an appeal from Central Energy Customs in a landmark case concerning Gazprom’s supply to Europe through Bulgaria. The case relates to Gazprom’s transfer pricing arrangement when exporting through its Bulgarian facility. In a marked contrast to YUKOS case, the lower courts have given highly restrictive and benignly formalistic interpretation of key terms such as interdependence, absolving Gazprom Export of all wrongdoing. Although Customs has appealed, most observers believe that they will not win – after all, Gazprom is not Yukos. The Russian Gazette has published a survey of proposed changes to the Civil Code. The published draft amendments amount to the most radical changes of business-related provisions in the Civil Code since adoption. The amendments also pave the way for sweeping tax code changes related above all to consolidated reporting for holdings and outdated transfer pricing measures. The proposed civil code amendments also introduce public companies as a new type of legal entities, proposing a new division between “unitary” and “corporation” type of legal persons. The laws on Joint Stock Companies and Limited Liability Companies will be replaced by a single law. The number of transactions subject to mandatory notarization will be increased. State agencies could be sued not only for damages resulting from illegal actions, but also for the damages arising out of lawful activities. Readers of a popular internet resource named the legendary former judge of the Constitutional Court, professor Tamara Mortschacov, “the lawyer of the year”. Professor Mortschacova has advocated liberal law causes, rule of law and human rights, and was an object of a scathing public attack by the Chairman of the Russian Constitutional court V. Zorkin some time ago. It is generally believed that the amendments to the Law on Constitutional Court that were introduced several years ago were drafted in such a way as to apply exclusively to her, mandating retirement from the highest bench in the country.