Key takeaways:

This client update analyzes the key provisions of the Higher Arbitrazh Court of the Russian Federation (VAS) official clarifications (introduced by Decree No. 13 of VAS dated January 25, 2013) with regard to Russian lease contracts (in the first instance those involving the lease of immovable property) that had long remained unresolved. In particular:

• It confirmed that part of a property may be leased provided it is properly described in the contract;
• It provided unequivocal guidance on whether a lease for future property is permitted;
• It introduced the rule that a lessee cannot refuse to pay rent and demand the refund of rent already paid merely on the ground that the lessor does not hold ownership title to the leased property;
• It introduced a new rule that if the rental is changed unilaterally (if such option is provided for in the contract) the lessor must be guided by changes in the respective average market rates. Otherwise such “non-market” increase will be deemed abuse by the lessor of his right, and the courts must dismiss any claims to recover any portion of the rent in excess of the relevant average market rate.