The State Duma has adopted a law that could radically change the landscape of foreign investment in Russia. Now the state and acquirers have a tool to block the return of assets to foreign investors from unfriendly countries if they sold their assets after February 22, 2022.
The law allows terminating the right to repurchase an asset through court. This applies to transactions where the former owner could return to the capital on pre-agreed terms. Moreover, the conditions under which the right to repurchase can be terminated are divided into two groups: political and economic.
Political conditions include discrediting the army, supporting sanctions or extremism. Economic conditions include a deviation of the repurchase price from the market price by 25% or more, or the acquirer's investment of additional funds without which the business could have stopped.
Disputes will be heard by the Arbitration Court of the Moscow Region, even if the parties agreed to proceedings in a foreign court, but sanctions made it inaccessible. Investors can claim compensation within a year, but the court may reduce it or refuse entirely if the investor is involved in financing terrorism.
This law is a significant step in regulating foreign investment and reflects Russia's desire to protect national interests amid international tensions. For foreign investors, this is a signal of the need for more careful planning of their actions and consideration of new legal realities.
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