Expertise/Russia–China Practice
Service
A joint project with a Chinese partner is structured through a jointly owned company in Russia, the entry of the Chinese participant into an existing company, or contractual cooperation without joint ownership.
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Timing and fees are indicative and are confirmed when the engagement is agreed.
A joint project with a partner from China follows one of two models, and the set of documents depends on the choice.
Under joint ownership, the Chinese and Russian companies set up a jointly owned company in Russia, or the Chinese participant enters an existing Russian company. The following are determined: the participants' roles, management and financing, each party's resources, distribution of results, changes in participation and termination of the project. Support is provided either to the Chinese or to the Russian participant.
Without joint ownership, the parties pool resources on a contractual basis: one provides production, the other sales, service or access to customers. The following are determined: the allocation of responsibilities and costs, payments between the parties, distribution of results and the terms for ending the cooperation. This model is used at the start of a relationship and in projects of limited duration.
The outcome of the service is the work performed within the scope agreed with the client.
Acting for the Chinese company
Challenge
A Chinese and a Russian partner were setting up a joint venture, and they had different legal traditions, expectations regarding management and views on the allocation of control.
What was done
The Chinese company was advised on the ownership structure, the management and exit mechanics, and the alignment of the parties' interests under Chinese and Russian law. The venture was launched on the agreed terms.
Parent company due diligence
Challenge
A Russian buyer was acquiring a Russian company whose parent was a Chinese company. Closing the transaction required due diligence of the Chinese parent company and its connection with the asset being sold.
What was done
Legal due diligence of the Chinese parent company was carried out, covering the group's corporate structure, the chain of ownership of the Russian subsidiary and the legal risks at the intersection of Chinese and Russian law. The acquisition of the Russian company went ahead with a legal picture that was clear to the parties.
Legal due diligence
Challenge
Independent legal due diligence of a Chinese company was required, covering its corporate structure and legal status at the intersection of Chinese and international law.
What was done
An opinion was prepared on the corporate structure, the chain of ownership and the related legal risks. The client obtained a clear legal picture for its further decisions.
Contract review
Challenge
Contracts for the international sale of goods between China and Russia carry risks of divergence in the governing law, delivery terms and dispute resolution mechanisms. Such contracts were reviewed on behalf of the Chinese company.
What was done
The governing law, delivery terms (Incoterms), currency and tax aspects and the dispute resolution procedure were analysed. The risks were identified and eliminated before signing.
Before joint activities begin and before any significant investment of funds, equipment or other resources. In an existing project, the relationship is documented when the parties' roles change, the scale of activity grows, a new participant joins or oral arrangements diverge from the actual relationship.
The scope of the rights granted to the project is determined independently of the contribution to the charter capital: the methods of use, territory, term, access to technical documentation and the prohibition on transfer to third parties. The documents set out the procedure for ceasing to use the technology and designations when a participant exits and when the project is closed.
First, it is determined which disagreements are regarded as material. Then negotiation procedures, the involvement of an independent person and mechanisms for changing or terminating participation are applied. In a project with a Chinese party, the time the partner needs to take a decision is taken into account.
The choice depends on where the assets are located, the nature of possible claims and how the decision would be enforced. Some corporate disputes relating to a Russian company fall within the jurisdiction of the Russian courts, and a clause providing for such disputes to be heard abroad may prove unenforceable. What matters is the enforceability of the decision against the particular party: the dispute resolution procedure in Russia–China projects is agreed together with the mechanisms for exit and for buying out the partner's interest, which in some cases work faster than proceedings.
An hourly rate, a fixed fee or a combined model is used; in some cases part of the fee depends on the outcome achieved. The fee is determined by the time actually spent, the complexity of the matter and the overall timeframe of the project, and is agreed before work begins.
Describe your matter and the circumstances in which it arose. The consultation establishes the possible structure of the work and the scope of legal support required.
