Assignment from a "unfriendly" entity to a "friendly" one
We previously wrote about a case in which the court unexpectedly ruled that an assignment from a non-friendly entity (the Kharkiv plant KhZPTO) to a friendly one (India) could be deemed invalid, as it causes harm to the Russian debtor (Magnitogorsk Iron & Steel Works (Magnitogorski metallurgitsheski kombinat)), which, according to the courts, is unable to utilize a set-off under the provisions of Article 412 of the Civil Code of the Russian Federation. This is significant because many companies structure their payments in situations where international bank transfers are unfeasible in precisely this manner: assignments are combined with a set-off of claims.
In June, the appellate court upheld the first-instance court's decision. The Indian assignee has filed a cassation complaint.
It is important to consider what the courts will say not only in the operative part of their rulings but also in the reasoning section, as their arguments so far, unfortunately, lack adequate regulatory justification and could be extrapolated to all types of assignments involving non-friendly entities…
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MAGENTA Legal lawyers have many years of experience in advising in the sphere of foreign economic activity (FEA), including issues of compliance with the legislation on currency regulation and currency control. For more than 10 years of our practice, none of our clients has been brought to administrative responsibility for violation of currency legislation in any of our projects. Managing Partner Anton Shamatonov is a recommended lawyer in the field of foreign trade (according to the authoritative rating of law firms PRAVO-300 2019, 2020, 2021).