The current Putin-Medvedev government wants Russian-owned businesses with a primary focus in Russia to be domiciled in Russia. At the same time, Putin’s latest Constitutional amendment is doing away with the most advanced segment of Russia’s otherwise pathetic legal system, that is the courts of arbitration, which litigate business disputes.
It does not make sense. I’ve tried to explain that legitimate Russian businesses may prefer to set up offshore holding companies to ensure access to efficient, independent courts. Cyprus, Cayman Islands, the British Virgin Islands, St. Kitts and Nevis, and of course the Isle of Man, Guernsey and Jersey, have one thing in common – a legal system rooted in the English tradition, at least as far as corporal law is concerned.
It cannot be said that Russian arbitration courts as good are as Jersey’s but I hear that they have improved much and that’s what counts. If something is starting to work, especially in Russia where few things work, institutionally speaking, you shouldn’t interfere lest you stop the progress.