Trends in Russian court practice in the application of interim measures in disputes with foreign companies in the first half of 2024

Obtaining interim measures in Russian courts has always been a difficult task: courts have only taken interim measures in exceptional cases.

Over the last two years, the courts' approaches to taking interim measures have changed dramatically, with such changes being particularly pronounced in sanctions disputes between Russian persons and foreigners.

The main trend

The courts impose interim measures against foreign companies in certain legal disputes, however, as a general rule, the courts' position is as follows - the mere fact that a foreign company is registered in an unfriendly jurisdiction does not automatically mean that there are grounds for interim measures; the applicant must refer to specific and convincing facts and evidence indicating the procedural grounds for interim measures (Article 90 of the Russian Commercial Procedural Code (СPC RF)):

• if failure to take these measures may make it difficult or impossible to enforce the judicial act,
• prevention of significant damage to the applicant.

Trends in court practice

Expansion of the list of persons against whose property interim measures may be taken

In disputes with foreign persons, Russian courts in some cases impose interim measures on the property of third parties or prohibit them from making transactions with their property, even if such persons are not parties to the dispute.

For example, in case No. А56-60809/2023 (Ruschemalliance vs Deutsche Bank): the court seized securities, cash and immovable property not only of the defendant (Deutsche Bank AG), but also of third parties - Deutsche Bank LLC and Deutsche Bank Technology Centre LLC. However, these measures were subsequently revoked at the initiative of Ruschemalliance.

The CPC RF does allow imposing interim measures on the property of third parties. However, according to our observations, such measures were rarely applied before February 2022.

It should be noted that although the courts do take interim measures against the property of third parties in certain cases, litigants are still cautious about filing applications for such measures against third parties and prefer to initially involve them under various pretexts as co-defendants in the case and only then request the imposition of interim measures.

For example, in case No. А56-61398/2023 (Ruschemalliance vs Commerzbank), the plaintiff first asked to involve the Russian subsidiary of the German bank, Commerzbank Eurasia JSC, as a co-defendant in the case and only then filed an application for interim measures against the Russian company, which was granted by the court.

A similar approach was chosen by Ruschemalliance in case No. А56-26171/2024 (Ruschemalliance vs the Linde Group companies).

Expansion of the scope of application of interim measures

In some cases, in addition to the simple seizure of funds, the courts also prohibit foreign defendants from disposing of their shares (stocks) in Russian companies, immovable property, trademarks, and rights of claim to third parties, as well as from performing certain actions.

For example, in case No. A56-83242/2023 (Ruschemalliance VS. Landesbank Baden-Wurttemberg) and case No. A56-83241/2023 (Ruschemalliance VS. Bayerische Landesbank) the court arrested all rights of claim, immovable property, securities, as well as funds in the German defendant’s banks within the amount of the claims.

This “wide-net” approach to identifying the property to be seized is also a distinctive feature of 2024 court practice: neither the courts nor the Russian plaintiff companies know exactly what property the defendants have in Russia, so the courts de facto give bailiffs carte blanche to search for and seize the property of foreigners, setting only an upper limit for such seizure.

Why may the court refuse to impose interim measures against foreign companies?

The plaintiff has not provided evidence that foreign companies have withdrawn their assets from Russia or that the assets of such companies are insufficient in Russia

For example, in case No. A40-302798/2023 (Otkritie Bank VS. Goldman, Sachs) and case No. A40-239814/2023 (Otkritie Bank VS. Credit Suisse AG), the courts refused to grant interim measures to a Russian bank because it had not presented any evidence that the foreign companies were withdrawing their assets from Russia or that there were risks of loss of their property.

In case No. A60-22233/2024 (Gusev S. A. VS. EUROCLEAR BANK SA/NV), the court refused to impose interim measures against the property of a foreign company in Russia, stating that the mere filing of a claim with a commercial court was not sufficient grounds for taking interim measures in the case.

In case No. A40-44358/2024 (QIWI Bank VS. QIWI PLC), the court refused to take interim measures because the Russian plaintiff company had failed to provide evidence of the impossibility or difficulty of enforcing the judgement in the future. The court also considered that the requested interim measures were disproportionate to the claims.

A similar approach was demonstrated by the court in case No. A40-101695/2024 (SBD LLC VS. SA Societe Generale).

The plaintiff requests interim measures contrary to the applicable regulations

There are also cases in the court practice where Russian persons request interim measures in violation of the applicable regulations. For example, in case No. A56-22912/2024 (VTB Bank PJSC VS. EUROCLEAR BANK SA/NV), the court refused to seize funds on “I” and “C” accounts because it contradicts Decrees of the President of the Russian Federation No. 95 dated 05.03.2022 and No. 665 dated 09.09.2023.

A foreign company has sufficient assets in Russia

In case No. A40-46479/2024 (TRANSKAPITALBANK VS. Commerzbank), the court partially cancelled the interim measures previously taken in the case stating that the defendant had sufficient assets in Russia to execute a possible court judgement in the case.

The imposition of interim measures disrupts the ordinary business activities of a foreign company and adversely affects its financial position

In the same case No. A40-46479/2024 (TRANSKAPITALBANK VS. Commerzbank), the court partially cancelled the earlier interim measures taken in the case, stating that the seizure of bank accounts of credit institutions did not meet the requirements of reasonableness and proportionality of interim measures, since it disrupted their normal economic activities, adversely affected their financial condition and could ultimately lead to the inability to meet the claims of Russian creditors.