The Russian Government's Response to the COVID-19 Coronavirus Pandemic

Key Takeaways

• Travel into Russia for non-citizens is severely limited until May 1.
• Visa applications will not be accepted between 18 March – 1 May 2020.
• Anyone traveling from a country with a significant spread of Coronavirus outbreak must self-isolate when they arrive in Russia.
• The Russian government is reacting to the crisis by implementing a number of temporary measures to simplify business procedures during this time, including absentee voting at Annual Shareholders' Meetings.
• Employers must undertake certain measures regarding the testing of employees.
• Different regional and local governments have enacted different measures; it is important to check before you travel.
  
• The Russian Government and Central Bank announced certain economic measures to support businesses as well as individuals from adverse the economic implications of the coronavirus COVID-19 pandemic.

Russian government authorities have recently implemented a number of new measures to combat the impact of the Coronavirus COVID-19 pandemic and stem its further spread. Below is a list of recent measures affecting companies operating in Russia or otherwise doing business with Russian parties. 

As the situation evolves we will continue to update you.

Employment, Migration and Public Events

In order to secure the health and safety of the nation, the Russian Government imposed an entry ban on non-Russian citizens until May 1, 2020, with a number of exceptions, including:1

• Employees of diplomatic missions and consulates based in Russia (and their family members) 
• Holders of service or diplomatic visas 
• Employees of international organizations and their Russian representative offices (and their family members) 
• International freight and transport drivers 
• Crew members of air-, sea- and rivercrafts 
• Permanent residents

It will also not be possible to apply for Russian visas or invitations until May 1, 2020.

In addition, local authorities have imposed their own travel limitations. Moscow authorities have imposed the following restrictions, under Order 21-UM,2  issued by the Mayor of Moscow, dated March 16, 2020: 

• A ban on all public events larger than 50 people until April 10, 2020
• Russian citizens coming from countries with a recorded coronavirus infection case must contact a hotline to inform the Moscow authorities of the places and dates of visit (+7 (495) 870 45 09) 
• Russian citizens coming from countries with a significant spread of new coronavirus infection (e.g. China, South Korea, EU countries, the USA, UK) must self-isolate for a period of 14 days from the date of return to Russia (Self-Isolated Persons).

Similar measures are being imposed in other cities, e.g. in St. Petersburg (self-isolation, informing local authorities on trips, etc.).

• In order to fully comply with Order 21-UM, as well as applicable Russian laws, we recommend that employers take the following actions:

Allow employees to work remotely from their residence when possible. It is strongly advisable that employers amend employment agreements to allow employees to work remotely. Unless the employment agreements already have such provisions, it may be necessary to set out certain protections  for employees who are usually obliged to be present at their place of work: 

1) additional compensation for use of personal equipment;

2) forms of receiving instructions and providing work product, forms of confirmation of remote working, etc.

• Cancel any unnecessary business trips 
• Prohibit entry of Self-Isolated Persons to company premises
• All office visitors are recorded (e.g. on paper) so that it would be possible for companies to inform authorities about visitors and to provide contact information. Such records may require asking for consent to process personal data of any visitors (e.g. names, contact numbers, etc.) 
• Provide staff who are not able to work remotely with sanitizers, soap, etc. 
• Ensure that a process for monitoring the temperature of employees is carried out on the company premises and to ensure that those with high temperatures work from home
• Following any request from Russian authorities, provide information regarding all contacts of a particular person with other persons and carry out disinfection of the premises (in case of an exposed coronavirus case).

It is important to note that Self-Isolated Persons must continue to be paid during their period of self-isolation under general labor rules. In order to be compensated a Self-Isolated Person needs to obtain a sick leave certificate without visiting medical institutions (medical staff should be able to visit such individuals at their residence). 

Annual Shareholders’ Meetings

Under Russian law, joint stock companies need to hold annual general shareholders meetings between March – June of each year to resolve matters such as the composition of the board of directors and the audit commission, appointment of an external auditor, approval of the annual results of the company, etc. 

Currently, under the Joint Stock Company law, annual meetings must be attended in person and absentee voting is prohibited. However, the RF Government has proposed a draft law which would allow absentee voting at annual meetings which would be in effect for 2020 only. Draft Law No. 901908-73 introduces absentee voting for annual shareholders meetings and was adopted by the Federation Council on March 14, 2020. It is currently awaiting the signature of the President before it can be enacted into law. 

Force Majeure

Given the severe disruption to business operations, parties are considering whether it would be possible to call a force majeure event under their contracts or invoke a material adverse change clause. The ability to call such an event depends on the terms of the specific contract and the applicable law and the interpretation of the contract by the relevant court or tribunal.

Under Article 401 of the Russian Civil Code, unless otherwise stipulated by the law or by the specific contract, a person who has failed to perform, or improperly performed, an obligation shall bear responsibility unless such person proves that proper performance was impossible due to force-majeure, i.e., because of extraordinary circumstances, which made the fulfilment of the contract impossible.

Some support for calling this global health crisis a force majeure event can be found in the language of Order 21-UM, which states:

“The spread of coronavirus infection is an extreme and overwhelming circumstance, which has caused the implementation of a high alert regime...which constitutes a force-majeure.”

In addition, there is apparently ongoing discussion amongst officials as to whether coronavirus will be considered a force-majeure event for the purposes of public procurement. For more on how force majeure clauses may be viewed, please see Dechert OnPoints here and here.

Whether Russian courts, other national courts or arbitration tribunals will agree to allow the use of force majeure clauses to terminate or suspend a contract will depend on the specifics of the situation and may not apply generically to all contracts or situations. 

Your usual Dechert contact would be happy to discuss whether a force majeure event may be valid and how specific contracts may be interpreted.  

State Support

On March 17, 2020, the Russian Government and the Central Bank have announced certain measures to support businesses and individuals from the adverse economic implications of the COVID-19 Coronavirus pandemic.4. Generally, these measures need further specification to be legally implemented. In summary, if implemented as announced, such measures would allow companies to minimize the negative economic effect of the coronavirus and lower oil prices. Among the measures announced:

• A deferral of collection of taxes in the aviation and tourism industries
• The release of travel companies from certain mandatory payments
• The Central Bank has allowed banks to deal with borrowers in the transport and tourism industries without any additional negative impact on their credit rating
• The government will provide state guarantees for restructuring and prolongation of loans
• The Central Bank softened requirements for banks granting loans to the pharmaceutical and medical equipment industries
• An expansion to the plan on preferential loans for small and medium-sized businesses
• The government will help state contract suppliers (e.g. fines will not be applied to state contract suppliers if currency control measures are not followed for the export of raw materials)
• A zeroing of import duties
• An expansion of the practice of using the green channel at customs for certain types of socially significant goods.

Read 'The Russian Government's Response to the COVID-19 Coronavirus Pandemic'.