Pipelines East

Legal Business, Russia and The CIS, November 2012

Pavel Karpunin, Partner of Capital Legal Services

Russia’s energy and natural resources sector is a rare bright spot in an otherwise bleak economy. With the government looking to attract even greater investment from Asia, LB assesses the market’s prospects.

The road to nowhere

While the investment climate in Russia has improved by leaps and bounds, one ongoing issue that certainly needs to be addressed is the parlous state of the country’s infrastructure. The problem is particularly acute in the east of Russia, where much of the connection with Asia is likely to be developed. ‘In order to have any possibility of developing in this direction one of the important issues is to develop the infrastructure here,’ says Pavel Karpunin, a partner at the St Petersburg offi ce of Capital Legal Services. ‘We have a very big country and very few connecting lines between east and west. That is why the development of infrastructure is of huge importance.’

Joining the club

Finally it has happened. After almost 20 years of negotiations, going back to the pre-World Trade Organization (WTO) days of The General Agreement on Tariffs and Trade, Russia has joined the WTO. That it took so long for Russia perhaps doesn’t come as a surprise.

For the most part, Russian lawyers feel that viewed as a whole the final deal is in Russia’s favour, despite claims that certain sectors such as pharmaceuticals and the automotive industry might suffer. The protective benefits that the WTO provides give them a far stronger position than they were in previously.

International law firms with significant trade practices, particularly those with offices in Geneva, where the WTO is headquartered, Brussels or Washington DC, could find themselves in a strong position. Russian domestic producers seeking access to international markets, something that will be on the increase following accession, have already started making enquiries. Many of these had previously instructed domestic law firms, but now their international rivals could get a foot in the door. It is certainly something that is on the radar with domestic lawyers. ‘There is a fear that the foreign legal companies will be able to make some good business,’ concedes Pavel Karpunin, a partner at the Russian firm Capital Legal Services.

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