Points of law: 1) whether the actual presence in the territory of the Russian Federation of a representative office of a foreign legal entity constitutes, under the Agreement between the Republic of Latvia and the Russian Federation on Legal Assistance and Legal Relations in Civil, Family and Criminal Matters (1993), a sufficient ground for assuming jurisdiction by a Russian commercial court with regard to a dispute involving the aforementioned foreign legal entity, or it is only the formal presence of a properly registered representative office that may constitute the necessary precondition for such assuming of jurisdiction?; or 2) whether it is essential, for the purposes of determining the jurisdiction (proper venue), that the Russian branches of the foreign legal entity did not take part in assisting the disputed transactions?

Ratio decidendi: the Presidium held that: 1) the sufficient condition for assuming jurisdiction by a Russian commercial court may be the fact that the defendants – i.e. foreign legal entities – were conducting entrepreneurial activities in the territory of Russia through affiliated persons. The Presidium applied the doctrine of “piercing the corporate veil” and noted that such approach to the evaluation  of the presence of a representative office or a branch, proceeding from the circumstances of a particular case, is conformant to the current international practice, in particular the practice of the European Court of Justice, as evidenced by its decision of 09.12.1987 in the case SAR Schotte GmbH v. Parfums Rothschield; 2) in the event that a branch or a representative office does not participate in the conclusion, formalisation and execution of the disputed transaction, the criterion of determining the international jurisdiction by the seat of the branch or representative office of the legal entity, as consolidated in para 23 of the Agreement on Legal Assistance, may not apply, which is conformant to the generally-accepted approach to its application (cf. the decision of the European Court of Justice of 18.03.1981 in the case Blanckaert&Willems v. Trost).

Practical consequences: it is apparently the first case in the Russian court practice when a court explicitly based its decision on the “piercing corporate veil” doctrine.  The Judgment says that prior court decisions in analogous cases if inconsistent with this interpretation may be reversed in the procedure and within the limits envisaged by Art 311 of the Commercial Procedure Code.