Outsourcing Law in Post-Soviet Russia

Abstract

In the period 1992-2013 a significant portion of the Russian economy was placed in corporate or contractual structures that were governed by foreign law rather than Russian law. The largest Russian commercial disputes, including between Russian litigants, were heard in foreign courts or tribunals rather than in Russian courts. This phenomenon reflected the outsourcing of Russian demand for substantive law and dispute adjudication to foreign legal systems and infrastructure. Legal outsourcing is not specific to Russia, however it reached proportions in Russia that seem unprecedented. It was primarily driven by the Russian economic elite's avoidance of Russian jurisdiction, for political risk mitigation and asset protection. It was allowed by Russian political structures and enabled by a robust supply of foreign legal infrastructure. The article reviews the Russian institutional failure to address this situation of regulatory competition. It also addresses the Russian regulatory backlash that became visible in 2012/2013. It argues that by empowering foreign lawyers and foreign adjudication rather than Russian lawyers and Russian adjudication, legal outsourcing on such a scale was detrimental to the development of Russian legal institutions. The article also questions the current preference for party autonomy in European private international law and whether European (and English) jurisdictional rules should allow a more robust doctrine of forum non conveniens.

Keywords: Russia, regulatory competition, jurisdiction, private international law, Brussels regime, Cyprus, English courts, law firms