Russian Contract Law: What Foreign Businesses Must Know
A contract with a Russian counterparty is governed by the Civil Code unless the parties validly choose another law. It is concluded once the parties agree on all essential terms in the required form. For a foreign company the practical risks are elsewhere: vague subject matter, currency restrictions on payments, a dispute clause that a Russian court will not respect, and a partner with no real assets.
How a Contract Comes into Being
A contract is formed by an offer and its acceptance. Russian law accepts an exchange of emails or signed scans if the contract or prior practice allows it. Transactions between legal entities must be in writing. Some deals, such as the sale of a share in an LLC, require a notary, and transfers of real estate must be registered with Rosreestr. Silence is not acceptance unless the parties agreed so.
Terms Without Which There Is No Contract
The subject is always essential. The law adds others by contract type: for a sale, the goods and their quantity; for construction, the scope of work and deadlines; for a lease of premises, the object and rent. Any term that one party insisted on also becomes essential. If one is missing, a court may declare the contract not concluded, and the parties will argue about unjust enrichment instead.
Currency Rules You Must Respect
| Issue | Practical effect |
|---|---|
| Price in foreign currency | Allowed, but payment between residents is usually in roubles at an agreed rate |
| Payments to non-residents | Go through a Russian bank that checks the contract |
| Contract registration with the bank | Required for export and import deals above a threshold |
| Repatriation of export proceeds | Resident must ensure proceeds are received |
| Restrictions since 2022 | Special procedures for counterparties from certain states |
A contract that ignores currency control may still be valid, but the Russian party risks fines, and payments can be blocked.
Choosing Governing Law and Forum
In a contract with a foreign element the parties may choose foreign law, but mandatory Russian rules still apply. A choice of international arbitration is possible. Russian courts claim exclusive jurisdiction over disputes involving sanctioned Russian persons and may disregard a foreign arbitration clause when the Russian party cannot access that forum. Consider a Russian arbitration centre or a neutral venue.
Getting a Contract Enforced
A Russian court judgment is enforced by bailiffs or directly through the debtor's bank. A foreign court judgment is enforced in Russia only under a treaty or reciprocity, after recognition by an arbitrazh court. Foreign arbitral awards are recognised under the New York Convention, subject to public policy grounds. Security such as a pledge, surety or independent guarantee reduces enforcement risk.
Warning Signs in a Draft
- The counterparty is registered at a mass address or was recently created.
- The signatory has no authority under the charter or a power of attorney.
- Penalties are one-sided or unlimited.
- No clear acceptance procedure for goods or work.
- A dispute clause refers to a forum you cannot use.
Contract Review by Attorney E. V. Petrova
Attorney E. V. Petrova drafts and reviews contracts in Russian and English, checks counterparties, adapts dispute and currency clauses to current rules and negotiates terms with your Russian partner.
The main channel of communication with the lawyer is email: lawyer@lawyer-moscow.com.