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Monthly Newsletter - June 2013


The myth of the “Russian Soul” is the most prominent cultural stereotype used when describing Russian mentality, behavior, emotional and spiritual concepts. It is widely broadened in Russian literature and philosophy, Russian folk beliefs, everyday life and, аs some people convince, in the Russian language as well.

According to an opinion of cultural linguists, the Russian language creates a clear linguistic image of Russian soul, which shows Russians as fatalists and irrational creatures with a resigned attitude towards their lives.

Is that true? Can a language express national character? Cultural linguistics believe that it can. Do you agree with this somewhat controversial statement? Are Russians really fatalists and passive beings and is it their language that is to blame? Read further and agree or disagree.

For centuries, Russians have viewed themselves as having a very special emotional and spiritual world. According to this view, Russians should be warm-hearted, emotional, irrational, collectivistic, fatalistic, humble, subservient, reckless, freedom-loving, compassionate, ruled by longing, spiritual, mystical, passive, submissive, direct, open, sensitive and lazy. There are quite a few grammatical rules in Russian language which imply that things are happening without our influence, world is completely independent on our wishes and willings and we have usually quite poor chance to change our destiny. Cultural linguists' confidence of Russians being resigned to the fate is based on a grammatical phenomenon called impersonal constructions. In these sentences a grammatical subject is missing and the person is in the dative case. On the contrary, in English grammar, the completion of a grammatically correct sentence is based on a person's willingness or intention. Briefly, Russian is a language where things happen to people, not where people make things happened.

Let's have a look at some examples of these weird impersonal sentences. Let's learn what they mean primarily then guess what their hidden meaning is.

Impersonal sentences can describe the state of our body or mind.
“Мне не спится.” (“I cannot sleep.”) Literal translation would be ”It doesn't sleep me.” As can be seen from this awkward literal translation, grammatically this sentence implies that you don't take any responsibility for what is happening; there is some superior power that prevents you from sleeping. In English, we use “I” which holds narrator (to some extent) responsible for what is happening.

Some other examples: “Мне не здоровится.” (“I'm ill.” or literally, ”It doesn't health me.”) “Мне холодно.” (“I'm cold.” or ”It colds me.”) “Мне скучно.” (“I'm bored.” or “It bores me.”)

Impersonal sentences also describe impossibility to influence the result, they imply fatalism and resigned attitude.
In English sentences “He succeeded.” and “He failed.” the subject is responsible for the result. If you want to translate these expressions into Russian, you would most likely use an impersonal way of saying that: “Ему это удалось.” “Eму это не удалось.” (E.g. “It happened to him to succeed.” “It didn't happen to him to succeed.”) The winner/loser is dismissed from any kind of liability in both positive and negative meanings.

Some more examples: “Мне вспомнилась Прага.” (“I recall Prague.” but in literal meaning, “Prague came to my mind.” - without my influence or willing). “Ему не сиделось дома.” (“He didn't want to stay at home.”, but literally, “It didn't feel to him to sit at home.” - maybe he personally wanted to stay at home, but some strong power didn't allow him to stay).

It can also imply unwillingness/impossibility to express real feelings.
“Мне не верится, что он это сделал.” (“I don't believe he did it.” Literally ”It doesn't believe to me that he did it.” or “I would rather believe he did it, but something in me tells me not to believe.”

Dative case sentences often express irrationality.
“Его переехало трамваем.” (“He was overrode by a tram.” instead of “The tram overrode him.”) “Его убило молнией.” (“He was killed by a lightning.” instead of “The lightning killed him.”) In these sentences the tram or lightning are in an instrumental case, which implies that the tram and the lightning is a kind of superior power and that they are not to blame in the result of the action. (It's like in the sentence, “The picture was painted with a brush.” Here the brush is not the agent, as the agent is a painter. Equally, in the first two sentences the agent is not (at least grammatically) the tram nor the lightning but somebody behind it (the fate, destiny, superior power, god etc.).
It is, of course, fully adjustable and grammatically correct to use a form “Его переехал трамвай.” (“The tram overrode him.”), and “Его убила молния.” (“The lightning killed him.”). The core of mentioned statements above, lies in a possibility to use such expressions and in the fact that they are so commonly used.

NB: It's also necessary to mention that many scientists don't consider the cultural linguistics a real science and find their results unsubstantiated, irrelevant and untrue.

Reference: Вежбицкая А. Язык. Культура. Познание: Пер. с англ. Отв. ред. М. А. Кронгауз, вступ. ст. Е. В. Падучевой. - М.: Pусские словари,1996. 416 с. ISBN 5-89216-002-5. Apresjan, V. The Myth of the “Russian Soul”. FOLKLORICA 2009, Vol. XIV.


In England, and in most of the Commonwealth and English-speaking world, we have a common law system of law. In a common law system, laws develop through custom, with written laws becoming developed over time that are based on that custom.

In a common law system, one is free to do anything that is not prohibited. Furthermore, in common law systems parties to a contract are free, within certain legal parameters, to agree their own terms. English law will therefore not interfere if parties have made a bad bargain, but equally will not enforce anti-competitive provisions, even if agreed between the parties.

In Russia, and indeed in a lot of Europe and the rest of the world, the legal system is codified. Codified systems start with abstract rules that set out the main principles of the law, and from which specific legal provisions are subsequently derived.

More prescriptive

Codified systems therefore tend to be more prescriptive than common law systems. In France, for example, the law can require a contract to be amended if one of the parties has made a bad bargain.

In civil law countries, legislation is therefore the primary source of law, and if an area of law is inadequately covered by the code, then the position may be uncertain.

Although immense change has overtaken Russia – both socially and economically – in the last 25 years, the legal regime that governs business activities, and which was designed for use in a system where businesses were publicly owned, has not kept up with this pace of change. In a codified system, that can cause problems. For example, although Russia has introduced legislation concerning share options, it has only done so relatively recently, and neither business people there nor the courts have much experience of them. Their enforceability therefore remains uncertain.

Offshore companies – a popular solution

In order to enter into an effective joint venture in relation to a Russian business, the most effective and most common approach is to structure it through an offshore holding company.

This will require a restructuring of the Russian business in advance, whereby the local owners will transfer ownership of the business to an offshore holding company, and will in return be issued shares in the offshore holding company. The overseas partner will then subscribe for shares in that offshore company for cash. (Joint ventures in Russia usually involve the local partner supplying the business and local knowledge, and the overseas partner supplying development funds.)

The holding company’s location will be driven by tax advantages which permit the easy remittance of profits from the business to the parent, and then on to the shareholders. Because of its closeness to English law, which is the prevalent law governing cross-border transactions involving Russia, and because of its geographical proximity to Russia, Cyprus has traditionally been the jurisdiction of choice for holding companies of Russian businesses, though the British Virgin Islands, the Netherlands, England and New Zealand are also used. Whilst Cyprus’s current banking crisis has seen a move away from having bank accounts located there, the use of Cyprus for holding companies does not seem to have been affected.

Shareholders’ agreement

A shareholders’ agreement will then be put in place at the level of the parent company. This will contain provisions such as rights to appoint directors, veto rights, share options, transfer rights (pre-emption, drag-along and tag-along) and deadlock resolutions.

The shareholders’ agreement can provide for arrangements imposed at the level of the offshore parent company, particularly as regards veto rights, to have effect at the level of the local business. In the event of a breach of this provision by the local partner, this in itself would not enable one to go to the Russian courts and seek damages or an injunction. It would, however, enable one to bring an action for damages against one’s local partner under the main agreement.

Overseas court judgements are generally unenforceable in Russia, whereas arbitration awards generally are. For this reason, shareholders’ agreements in relation to Russian businesses tend to provide for arbitration, rather than court proceedings, even where the shareholder agreement is put in place at the level of an offshore parent company in a common law jurisdiction. This enables awards against parties located in Russia to be enforced against them.

Limited direct control

On the subject of enforcement of awards against local partners, anyone entering into a joint venture in Russia for the first time must accept a degree of trust with their local partner, and must accept that their direct control over the local company will be limited.

One way around this would be to find a second local partner – perhaps a local private equity fund, or an overseas private equity fund with experience in the region – to see if they are prepared to go in as a co-investing partner. The commonality of interest, combined with their local knowledge, would bring enormous benefit to someone going into a joint venture in the region for the first time.

Guest article by Nigel Kotani

Nigel Kotani is a consultant at Excello Law Solicitors. He has extensive experience of cross-border private equity and Merger & Acquisition transactions involving the Former Soviet Union. This email address is being protected from spambots. You need JavaScript enabled to view it. 020 7952 2490.


"l’esperto di commercio russo, il “guru” Ignaty Dyakov"

If you read an Italian newspaper Il Tirreno from 30th April 2013, you would find out, that Russia Local's director – Ignaty Dyakov, is a guru. How did he merit such a flattering appellation? Very simply. He accepted an invitation to Florence, Italy, and delivered a day-long training, during that he advised owners and staff members of more than a dozen boutiques and jewellery shops on Selling to Russian customers.

‘Doing business in Russia: an Introduction’ workshop on 5th July in the City Business Library

You are not an Italian luxury brand, but you want to learn about business possibilities in Russia nevertheless? Don't worry, we have an option for every pocket. You can join us on the 5th of July in the City Business Library in London, where we are giving a free-to-attend lecture on Doing business in Russia: an Introduction. Don't miss an opportunity to find out what Russian market's peculiarities are, how to attract Russian clients’ interest, what to say and what not to say when negotiating with Russians, how to find the right person to talk to and much much more. Admission is free, but the tickets must be booked via

Keep track of the CBL website and book your tickets on time. The capacity is limited and according to our experience from the previous volume, the tickets go quickly.


We are happy to promote Peter Ustinov’s largely forgotten play The moment of Truth, which is to be given at Southwark Playhouse from 26 June - 20 July 2013 and narrates a story about the mechanics of toppling governments, the pretences of war and the power of propaganda.

A republic is poised to fall. The only remaining members of an unpopular government are its cynical Prime Minister and a naïve, emotional Foreign Secretary. The invading army has it’s boots upon the soil of this crumbling nation. Inside the cabinet office, toy soldiers and old icons of military glory veil the realities of war and bloodshed. Death, in a moment of truth was never so real. The recent Arab spring that has swept up North Africa and the Middle East has powered the propaganda machines of domestic and foreign nations, sparking revolutions and toppling governments. As a military dictatorship rages with rhetoric and uprisings continue to gather pace, there couldn’t be a more timely revival for The Moment of Truth.

STARRING: Bonnie Wright - (Harry Potter), making her stage debut in the role of 'The Girl'.
Rodney Bewes - (The Likely Lads, Dear Mother...Love Albert) also stars as 'The Marshal'.
Other cast includes Callum Coates, Mark Carey, Toni Kanal, Damian Quinn, Miles Richardson and Daniel Souter.
Directed by Robert Laycock
Designed by Alex Marker

For more information please visit this page - "The Moment of Truth" in London



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