Dmitry Uryakin analysed for CRE the current situation with the lease of retail space by suspended foreign companies and the prospects for resolving disputes with landlords
The majority of foreign companies which suspended their operations in Russia in February-March are planning to decide on their further actions by December. There are several options: withdrawal, rebranding/downbranding, transferring representative offices to interested parties from other countries, withdrawal from contracts with individual shops. At the same time, some players intend to continue to retain the “suspended” status, but the owners of the premises are not as loyal as they were six months ago, demanding the revision of contracts, payment of rents, forfeit payments, etc. Dmitry Uryakin, Associate at Maxima Legal, made a special comment for CRE magazine on current situation at the market and prospects of resolution of disputes between lessee companies and landlords.
“In practice, most diligent landlords do try to reach an agreement with tenants before and outside of court by signing lease termination agreements. In some cases this agreement provides an installment payment on overdue lease payments as well as restructuring of penalties for non-use of the commercial property and for premature termination of the lease agreement. This allows commercial landlords to get their money here and now, without engaging in protracted litigation.
However, if a deal fails to be reached, the conflict is certain to be taken to court, where the lessee’s “contractual” position is certain to be less advantageous than the lessor’s. This is encouraged by the behaviour of the lessees themselves. This is facilitated by the behaviour of lessees themselves, who for various reasons, often not market ones, ignore the provisions of contracts, stopping operating activities and ceasing to pay under them, and the paternalism of our legislator, who since March 2022 has been trying to protect the interests of domestic entrepreneurs from the actions of “unfriendly” persons in various ways.
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