Russian laws are not that dissimilar from laws in the United States. Both countries share common processes in contract management with foreign entities. Agreements clearly define rights and responsibilities. However, it’s important to understand Russia’s legal system and have knowledge about vital contractual clauses. Contracts with Russian businesses or citizens are binding and governed by Russian Federation laws.
Russia’s System of Laws
Most agreements use Russia’s Civil Code as a guide. The Civil Code regulates transactions with foreign entities, leaving an international agreement subject to the country’s laws. However, American citizens should research the legal status of Russian enterprises, which will determine the entity’s ability to enter into a legally binding agreement. Simply request a State Registry Certification, License, and Tax Registration Certificate. If the organization has an invalid license, it’s representatives may not sign a contract with a foreign company. In addition, if the parties choose to designate another country’s laws to govern the legality of the contract. However, the country chosen must have a treaty with Russia for the country to adhere to a foreign court’s ruling. Therefore, it’s advisable to establish the laws of Russia as the governing structure for any agreement with Russian businesses.
Usually Russian enterprises expect exclusive rights to provide goods or services for the entire country and other independent nearby countries, such as Moldova, Kazakhstan, and Belarus. This is especially true for major importers and distributors, which maintain networks throughout the region. In most cases, it’s better not to give one Russian company an exclusivity agreement. If for any reason the provider doesn’t meet its obligations or reach targets, an American-based company will have other distribution options available.
It’s a daunting task to collect overdue money from Russia. For this reason, it’s common to request upfront payment for goods sent to Russia or a significant deposit prior to delivery. Russian consumers and businesses are familiar with the practice and readily accept prepayment or partial payment terms. The balance of the receivable is generally paid via a bank transfer. As companies in Russia often conduct business with United States currency, submitting payment with the dollar is acceptable. Companies also conduct financial transactions with euros. However, the volatility of rubles causes most companies to avoid entering into agreements with rubles as the designated currency for the financial exchange. It’s better to decline sales offering payment with rubles.
Import companies will collect and distribute goods frequently. It’s important to choose a distribution company with experience and an excellent track record. An inexperienced firm may run into delivery issues. Russian laws are strict and customs scrutinizes imported goods for quality. There are numerous documents required to pass safety requirements, including sanitary, analysis, and origin certificates. Therefore, a clause governing the quality of goods supplied or distributed serves to designate the party responsible for obtaining the required certificates.
Conducting business in Russia requires detailed knowledge of the country’s laws. Contact an experienced attorney who may provide guidance and ensure adherence to the Russian laws.
