An international online conference was held on the 27 of May to address the legal consequences of the Covid-19 pandemic - the inability of companies to meet their contractual obligations.
The conference, organized jointly with German colleagues from the Dusseldorf Chamber of Commerce, was conducted by the Vice President of the Moscow Chamber of Commerce and Industry, Mr. Suren Vardanyan.
German companies are the leaders on the European market, with Germany being a longstanding partner of Russia, and this cooperation is mutually beneficial. The participants of the event discussed the challenging and difficult topic of contractual relations between Russian and German companies in the extreme conditions of the pandemic, which led to a sizable drop in production, disruption of technological and logistical associations.
Speakers paid special attention to the restructuring of contracts and the possibility of solving problems between Russian and German companies. Then the MCCI’s Vice President gave the floor to his colleague, Mr. Felix Neugart, the Director of the International Department of the Dusseldorf Chamber of Commerce and Industry.
The speaker acknowledged the premise that the Corona virus crisis has caused many changes. "We've been pushed into digitalization," he said, "More than a thousand people have participated in webinars in the last few weeks!" He noted that "We now have tools that we couldn't even imagine before". He then made a short presentation on the interaction between Dusseldorf and Moscow.
Mr. Maxim Shakhov, the Head of the Schaeffler Group in Russia, spoke about the main legal problems of the Russian-German business in connection with the pandemic and the experience of trying to overcome them. This crisis, which is epidemiological, has also caused great problems for the economy. There has been a significant drop in demand, especially in the automotive industry.
“We are aware that no dealerships or service stations are currently operational. That is the reason that the volume of car production in the country has fallen sharply," Mr. Shakhov lamented. He said that a maximum number of employees was sent to perform work remotely, because the health and safety of people is a priority, while the focus on the the economy is still very much present. The work of warehouses and plants has continued to the required extent.
“We have managed not to lose a single contract. I am glad that today none of our suppliers from Europe (as well as from Russia) have said that they will insist that we take away their planned production volumes, which in many cases have decreased. When there are established relationships, there is also an understanding that we are not trying to squeeze something out for ourselves; this is an objective situation and is based on understanding, which is afforded to us," said Mr. Shakhov.
Mr. Vardanyan agreed that the issue of human communication is fundamental for any business. He then gave the floor to Mr. Sergey Vasilyev, the Director of the Legal Department of the Chamber of Commerce and Industry of the Russian Federation, who explained to whom and under what conditions the Chamber issues certificates of force majeure. He said that the jurists of the Russian Chamber of Commerce and Industry had taken the main blow of discontent from both lawyers and counterparties, due to the fact that restrictive measures had caused significant difficulties in fulfilling contractual obligations and agreements.
Mr. Vasilyev reminded that the RF CCI validates force majeure conditional circumstances, i.e. force majeure under foreign trade contracts. This is directly stated in Article 15 of the law "On Chambers of Commerce and Industry of the Russian Federation". The speaker also said that the Civil Code of the Russian Federation expressly prohibits the recognition of force majeure in cases when the failure to fulfill contractual obligations is due to "insufficient funds of the debtor".
This makes it practically impossible, in some cases, to recognize force majeure in regard to financial obligations. Except in cases, related to the application of sanctions’ measures - when money is available but the account is blocked. The law also expressly prohibits the recognition of a force majeure in cases, when default of obligations is connected with non-fulfilment of obligations of third parties. This situation primarily affects the interests of intermediaries. It is also prohibited to regard as force majeure such cases, when the default is connected with the absence of goods on the market.
During the last 3 months, the Chamber of Commerce and Industry of the Russian Federation has received more than 900 appeals, related to force majeure. Including those from foreign partners. And the Chamber has issued more than 350 certificates of force majeure. "We actively work with applicants, help them, suggest what documentation is required necessary how to reissue it. In this difficult situation, we try to help all applicants. Recognizing a difficult situation businesses are in, the Russian Chambers of Commerce and Industry holds consultations and issues certificates of force majeure, free of charge.
Mr. Kamil Karibov, a jurist and partner of “Baiten Burkhardt”, spoke about new conditions for restructuring contractual obligations in Russia due to the pandemic. "The so-called "covidal" legislation has now appeared. It regulates the execution of contracts and the validity of certain legal documents - permits and licenses," said Mr. Karibov. Agreements and corporate policies on occupational safety are already being readjusted.
There are both active negotiations and smouldering conflicts between market participants. There are worrying signals that when the courts are fully operational, a wave of disputes will inundate them. "Here, of course, both direct negotiations and instruments of pre-trial settlements of conflicts play a very important role," said Mr. Karibov.
He stressed that he feels a certain optimism nevertheless, because he believes that it is precisely the possibility of remote work that allowes companies to assess its benefits, to reconfigure their business processes. "It seems to me that when we return to normal life - in offices, on construction sites - we will still have this experience. It's valuable and necessary!" - said Kamil Karibov.
Mr. Alexander Bezborodov, a lawyer and senior partner of the international law firm "Baiten Burkhardt,” spoke about the consequences of the impossibility to fulfill international legal obligations. He drew attention to some important aspects raised by the Russian Supreme Court. "The position of the Court is that each case is unique and must be considered separately," said Mr. Bezborodov.
In a court practice, there is already a sufficient number of "refused" materials, stating that Covid -19 is not a circumstance of force majeure. And a company is obliged to either fulfill its obligations or to reimburse losses that have been incurred, due to the failure of its obligations. The courts refer to specifics that, in a particular case, the company was able to perform its obligations.
The participants of the event were interested whether the Dusseldorf Chamber of Commerce and Industry is taking active measures, involved in force majeure cases. In response, it was said that the German Chambers of Commerce and Industry do not issue specific certificates, but provide seals of approval for statements that events have been held, which may be considered as the force majeure’s circumstances. Such statements are printed on a company's letterhead and not the Chamber’s.
In his closing statement, Mr.Vardanyan, the MCCI’s Vice President, thanked the speakers and organizers for their participation, and affirmed his readiness for further cooperation dedicated to common interests.