The inauguration of Dmitry Medvedev as Russian president could signal a move to create a regulatory infrastructure to boost significantly investment from Western markets, according to international law firm Orrick, Herrington & Sutcliffe.
Factors such as the current insolvency laws; accounting rules; non-recognition of foreign judgements; lack of standardised interbank documentation; and a lack of disclosure requirements are all restricting the confidence for foreign partners to work in the Russian financial market.
“The legal and regulatory framework has not developed at the same pace as the financial markets and this does leave concerns in the international market. Proposed changes to Russian Legislation relating to the bankruptcy regime for Credit Institutions and steps to implement accepted forms of master documentation will be important steps towards creating effective legal documentation. This will allow Russian banks and corporations to trade in an internationally, based largely on market standard documentation.
“Fortunately, Mr. Medvedev has indicated that improving confidence in the legal regime is an area he is going to address. This will require greater clarity in the existing legislation and developing confidence in the impartiality and effectiveness of the judicial system. Hopefully, these initiatives will gain momentum and be implemented in the near future. Make these changes and Russia can become a major international financial market,” says Martin Bartlam, a senior partner at Orrick, Herrington & Sutcliffe in London.