Russia: Returns on ice

Lawyers have been pivotal in the preparations for the Winter Olympics and the work could go on way beyond the closing ceremony

The Sochi 2014 Winter Olympic Games are now just a matter of months away. The Olympic torch has been sent into space and will be coming back down to complete its journey to the Russian seaside resort that will play host to the world’s top skiers, skaters and assorted people throwing themselves down steep, icy slopes.

As the date for the opening ceremony approaches the construction work for the Games is continuing, and Russia is in the spotlight. Its approach to environmental issues and gay rights has been examined and criticised, and protests are expected over both questions during the course of the competition.

Russia

For lawyers, the London 2012 Olympics provided plenty of work and Sochi has done the same – though, some say, to a lesser extent.

“Expectations were too high – I don’t think the Sochi Olympics has generated a lot of work for key law firms,” says Alrud senior partner Vassily Rudomino, adding that the bulk of the work was carried out by in-house lawyers from contractors or the organising committee.

Pepeliaev helps clear the way

The principal piece of legal work, which began almost seven years ago when Sochi was awarded the Games, was drafting legislation to make the event happen.

Russian legislation needed to be amended to allow for the construction work, address issues on brand protection and advertising, and deal with immigration, among other matters. The new law, ‘On the Organisation and Staging of the XXII Olympic Winter Games and the XI Paralympic Winter Games of 2014 in the city of Sochi, the Development of Sochi as an Alpine Climate Resort and the Amendments to Certain Legislative Acts of the Russian Federation’, is known more simply as ‘the Olympic law’.

Russian firm Pepeliaev Group was involved in the drafting. Litigation head Yuri Vorobyev says this was the biggest piece of work the firm has won related to Sochi.

“Almost every branch of legislation had some changes in connection with the Winter Olympics,” Vorobyev explains. “Sochi is surrounded by natural parks,” he continues, saying legislation was required to enable builders to work on the stadia required and bring equipment into the country.

“This had to be done in a simplified procedure – time is critical,” adds Vorobyev.

Another area that has required changes is immigration. As anyone who has had to apply for a Russian visa will know, the process can be long, with a significant amount of detailed information required, even for a tourist visa. With foreigners involved in organisation and construction, as well as spectators and competitors, it was necessary to make temporary changes to simplify procedures.

But the Olympic law is not permanent. Many of its measures are expected to be revoked after the Games.

Vorobyev says of the new immigration procedures: “Maybe they’ll like how it works for the Olympic Games and use it later.”

But Goltsblat BLP managing partner Andrey Goltsblat is less sure. “It may be even more difficult,” Goltsblat says of the visa process after the games.

Amendments to the law are still being made. 

Vorobyev observes: “Changes to the legislation are still being introduced. It’s not one big bag of changes to legislation – it has been a continuing process for seven years.”

Ambush rangers

Goltsblat was also involved in the drafting process, and since then has picked up instructions on brand protection and advertising. This has been a key source of work for Russian lawyers in the run-up to Sochi. The International Olympic Committee (IOC) is tough on the protection of brands associated with the Olympics, and sponsors and advertisers must comply with strict rules.

“In Russia, until the Olympic law there were no provisions against ambush marketing,” says Yust sports law head Mikhail Prokopets, explaining that the legislation has introduced the concept – intended to prevent stunts such as that carried out by Heineken at the Euro 2008 football tournament, when Dutch supporters were all given green hats to wear.

Rudomino says Alrud has been advising several official Olympic ‘partners’ and major companies on advertising and sponsorship issues, helping them through the problems caused by addressing Russian regulations in the context of advertising disseminated to a global audience.

IP issues have been the focus of Hogan Lovells’ work for the organising committee, giving advice on contracts for sub-contractors such as musicians and advising the committee to make sure it owns all necessary rights.

“That was interesting because not all these agreements are expressly regulated by Russian law,” explains Hogan Lovells’ Russian IP media and technology head Natalia Gulyaeva.

The firm has also been educating the committee, sponsors and non-sponsors on ambush marketing, drawing on experience from its London office. Unfair competition is a relatively undeveloped concept in Russia, Gulyaeva says.

“The Olympics have been useful in terms of developing the concept of unfair competition in the Russian market,” she says. “We’ve learned that it’s not so black and white. If we get this understanding in the market, that’s very good.”

Litigation avalanche alert

The other area generating work for lawyers is litigation. To date, there have been a handful of disputes arising from the Games but lawyers confidently expect a flood once the competition is over.

Rudomino predicts much of this litigation will be related to construction and the funding of projects, as investors try to recoup lost funds.

“We already know the government is concerned that there will be a big overspend on construction,” he points out.

Egorov Puginsky Afanasiev & Partners chairman Dimitry Afanasiev says a number of issues have arisen out of the construction process that could lead to disputes.

“Issue number one is that the Western construction companies doing the work in Sochi are operating under contracts that are one-sided in their favour,” he explains. “Template International Federation of Consulting Engineers [FIDIC] contract forms have been used, which leave little room for manoeuvre for Russian customers.

“Another issue is the difference between internationally accepted construction standards and local Russian standards used by the government to issue acceptance certificates for objects. Russian standards are more stringent than international ones. So any Russian customer finds himself in a bind because his Western contractor performs up to the international standards provided in the standard FIDIC contract, while the government expects higher standards according to local Russian rules.”

Afanasiev says these issues have already led to disputes, giving work to several firms including Egorov. There will, he adds, also be issues over investor relations, financing, competition and the environment.

Vorobyev is also predicting a surge of contentious work following the Games. Unusually, he says, this will all be litigated in Russia rather than be taken to an overseas court or arbitral centre.

Dope scope

Disputes also tend to arise during what is generally known as ‘Games time’, and at every Olympics the Court of Arbitration for Sport sends an ad hoc panel of arbitrators to resolve any issues.

Firms including Goltsblat have lawyers who will work with the panel. Hogan Lovells counsel Alexander Scard explains the panel will be on call 24 hours a day, dealing with such matters as disputes over competitors’ eligibility or decisions made on the field of play – like a score in figure skating.

“The big area, of course, is doping,” Scard adds. “They anticipate that doping tests will be even stronger than usual so doping cases will be down because people aren’t prepared to take the risks.” 

Eyes on the ball

Once the Winter Olympic Games and the Winter Paralympic Games – running a fortnight later – are done, Russian thoughts will turn to the 2018 FIFA World Cup. The tournament will be held in cities across Russia, including Sochi, and preparations have already begun.

Yust picked up a role drafting the legislation to make the World Cup happen, signed by president Vladimir Putin in June this year. 

And Prokopets explains that the World Cup law drafters have exploited the work done on Olympics legislation to get their regulations through more smoothly.

“We used a lot of provisions from the Olympic law, so these were already adopted by the State Duma and government,” says Prokopets.

A key difference between the Olympics and World Cup laws is that the latter have been designed to have a lasting impact in areas such as environmental standards.

“We tried not to limit the power of this law – it’ll work for all sports events,” says Prokopets.

While the law has been signed, it is being amended following input from FIFA; amendments are also being made to other Russian statutes.

Rudomino predicts that the World Cup will see more involvement from private companies than Sochi did, and also that PPP projects could be a more common feature. PPP remains relatively undeveloped in Russia and has not been a significant feature of the development of the Sochi infrastructure.

Another area that looks set to develop as a result of Sochi and the World Cup is sports law. Few firms in Russia have dedicated sports practices but several are beginning to grow this area.

However, all these developments will take time to come to fruition.

Afanasiev says the impact of the Olympics could be lasting for Sochi, but it is difficult to assess the legacy.

“The Sochi Olympics is not only about building new sports facilities, it’s about developing a new infrastructure that has tremendous significance for the Krasnodar region,” he says, while predicting that it could take Russia years to recoup the investment.

“This is a new experience for Russia and for lawyers – we need time to understand it,” says Prokopets.

“It’s bringing a different attitude and type of work, which is exciting,” adds Goltsblat. “It’s good for everyone, including lawyers.”

Key figures: Russia 

GDP: $2trn

Inflation: 6.3%

Population: 143m

Life expectancy at birth: 69

Unemployment: 5.3%

Source: World Bank, Federal State Statistics Service