The Supreme Arbitrazh Court recently published its decision in State Health Institution of Moscow v ArbatStroy, in which the court concluded that disputes arising from state contracts may not be considered by arbitral tribunals. Since such disputes are non-arbitrable, arbitration clauses in state contracts are thus invalid.
Making project financings in Russia more attractive for foreign lenders appears to be one of the reasons behind the liberalization of the mandatory currency conversion rules, although at present only export-oriented Russian companies with significant foreign currency revenues may benefit from them.
Favourable production sharing agreement legislation is generally recognized as one of the major conditions of attracting investment in Russia's economy. Although changes in this field have been slow and contradictory at times, recent developments described may be viewed as reassuring.
Existing legislation limits foreign ownership of shares in RAO UES, Russia's power monopoly, to 25% of all types of shares. In order to increase the market capitalization of the company and further the reform of the energy sector, a draft law proposes that these restrictions be eliminated.
The main principles governing the reform of the Russian electricity market have now been approved, while plans to restructure the gas industry and to sell off the goverment's stakes in certain coal companies are also underway. It is hoped that these initiatives will boost investment across the sector.
The government and RAO Unified Energy Systems (UES) are continuing with their efforts to restructure UES and sell off its assets. To attract western investors, the restructuring system should allow for the acquisition of UES's most profitable assets and operations, as well as protecting against potentially adverse changes in Russia.
Including: Securing the Project; Provision of Loans to Russian Borrowers; Governing Law of the Project Agreements; Government Approvals; Environmental Protection Matters; Rouble Risks; Political Risk Insurance
Russia’s largest energy producer, Unified Energy Systems, is planning to restructure the energy industry by improving payment collection, regulating tariffs and breaking up the monopolistic structure. It is hoped that these measures will convince foreign lenders to invest the estimated $70 billion needed to replace assets and add new capacity.