A Q&A with Ad Board member Andrey Goltsblat of Goltsblat BLP LLP discussing the legal climate in Russia.
What changes have you noticed in M&A and Foreign Direct Investment given recent geopolitical changes, such as sanctions and foreign ownership rule of mass media?
Well, honestly, there is different data for development of the M&A market. If we go back to when the cruelty in Crimea happened and the whole crisis went down and the market went flat, it was mostly frozen—there wasn’t a lot of activity, very few deals, and we felt slightly stressed and frustrated. However, I believe of the economy: even if the crisis is deep, money can’t sleep. It has to work. And what we noticed last year—at the end of last year—was quite a lot of activity on the M&A market, particularly in the pharma industry, intercom, energy, chemicals. We’ve been engaged in many deals, and particularly we’ve been able to deliver revenue this year 13 percent higher in our M&A practice than last year. I’m talking about the U.K. financial year, which is basically a reflection of the market getting back to life. We’ve got a lot of things going on, especially with distressed transactions and joint ventures. I think investors, not only local Russians but foreign ones—Japanese in particular—are looking at Russia as an opportunity, and it’s quite notable.
How has your role as Chief of Staff for the Constitutional Commission of the Russian Parliament informed your practice?
I think fundamentally because basically working on the Constitution and taking the managerial role on the Constitutional Commission was an experience that helped me a lot to develop and build a business in a structural way and an analytical way. Basically, I think
Can you describe some of your work in support of human rights?
That’s basically protecting some of the inhabitants that were put in quite a stressful position by the government of Moscow in the early 90s, so we provided support to their rights to their property. We also supported some activists during the early 90s. We were trying to promote the Constitution Rule of Law at the time. Since you were not allowed access to the papers, we played an active role in the development of the Free Media Law. In particular, in 1993, Parliament was dissolved, so we were engaged in supporting the new development of Russian law. Most of my human rights work was during my Constitutional Commission times. We were working on a situation where I supported Alexander Solzhenitsyn and his fund. I helped him relocate to Moscow to resettle here, supported the miners’ movement at that time, etc.
What do you consider the most pressing legal issue in Russia right now?
I think the most critical legal issue in Russia now is proper law enforcement. I think because of the economic situation and the budget, there are some pressures from the state and the enforcement agencies and the courts, and sometimes we notice that the fiscal situations prevail when the court judges judge disputes with the state. I think it’s quite aggressive behavior of the enforcement agencies to hold over a business. Obviously, it’s an issue when it becomes a task to protect those businesses, which we do—it’s a white-collar crime. I think those are the critical legal issues these days—and, of course, uncertainty and legislation development, but otherwise I don’t see many. I think most important is the state pressure because of the economy and crisis. That’s what we notice, and that’s what’s been inflated and reflected in our legal issues.
And my last question is how did you originally become involved in the law and how did you end up in your practice?
That was just by accident, a happenstance. I never wanted to be a lawyer; I never sought to be a lawyer. But then, when I graduated from the Law School of the Interior Ministry back in 1985, I thought that maybe I’d become a lawyer. Then I did my post-graduate thesis on the topic “The development of the idea of law in Russia in the period 1905–1917.” When I started researching that historical period and saw how things happened: we had the 1989 elections to the first Russian independent Parliament, then we had 1991 and the Soviet Union collapsed. So then I could become the head of the Constitutional Commission somehow, and then I just became a private commercial lawyer after the 1993 Constitutional collapse, so that’s not by accident.
Those are all the questions I had. Is there anything else you want to add about your firm or your practice or law just in general in Russia?
I think law generally in Russia, commercial law, is quite a good one; in particular, civil law. It allows you to do deals under Russian law but, obviously, enforcement and justice need to improve a lot. If we can do so, I think we’ll have a good environment to do business here. I have to say quite honestly that if you comply when doing business in Russia, you might not necessarily be able to implement your business plan in a timely fashion, but at the same time, you’ll improve and enhance your security dramatically. So basically complying with the law in business, while doing business in Russia, you get greater protection and security than if you don’t. Yes, your project may be delayed, but at the same time, you can feel comfortable when you accomplish a certain stage.