Investment Contracts

Investment agreements and investment contracts. The investment contract (agreement) is not provided for in Russian law. While a contract not named in law may be concluded, it must be recognised that behind such a label there is, at best, a mixed contract. In all other cases these are ordinary classic contracts — most often connected with the disposal of property or the performance of works. Correctly qualifying the contract allows the most appropriate legal rules to be applied, and — in a dispute — the correct remedy to be chosen, since using the wrong remedy leads to refusal and additional losses and costs.

What "investment" means

The old RSFSR Law of 26.06.1991 No. 1488-1 "On Investment Activity" defined "investments" as monetary funds, targeted bank deposits, shares and other securities, technologies, machinery, equipment, loans, any other property or property rights, and intellectual values invested in objects of entrepreneurial and other activity to obtain profit and achieve a positive social effect. However, this content sits poorly with the drafting technique of the Civil Code: investments are described more in economic than in legal terms.

The key Supreme Commercial Court position

This mismatch led to the Ruling of the Presidium of the Supreme Commercial Court No. 1039/13 of 2 July 2013, in which the Presidium reached the following conclusions. The terms "investments", "investment activity", and "investment contract" have no strict legal content of their own and are usually used in legislation as a general designation for a whole group of different civil-law transactions aimed at acquiring property rights for consideration.

Under paragraphs 4–7 and 11 of the Plenum Ruling of the Supreme Commercial Court of 11.07.2011 No. 54, the economic concept of "investment transactions" covers, for example, sale-and-purchase contracts, participation-in-shared-construction contracts, works (contractor) contracts, and simple-partnership contracts.

Crucially, courts resolving disputes arising from contracts labelled by the parties as "investment" must establish their legal nature and apply the Civil Code provisions on the corresponding contracts. The need to identify the civil-law nature of contracts called "investment" was confirmed in Presidium Rulings No. 4784/11 of 06.09.2011 and No. 11450/11 of 24.01.2012.

Why qualification matters

Because there is no free-standing "investment contract", everything turns on what the arrangement really is. If it is, in substance, a sale, a construction-participation deal, a works contract, or a partnership, then the rules — and the remedies — for that contract type apply. Choosing the wrong characterisation can be fatal: a claimant who sues on a mischaracterised "investment contract", using a remedy that does not fit the true legal nature, risks having the claim refused, and bearing extra costs. Careful qualification at the drafting stage, and again when a dispute arises, is therefore decisive.

What this means for foreign investors

For international investors putting money into Russian projects, the practical lesson is clear: do not rely on the label "investment contract" to do legal work it cannot do. Structure the deal as the recognised contract type it actually is — sale, construction participation, works, or partnership — and draft it to the rules of that type. This gives certainty about the applicable law, the parties' obligations, and the remedies available if the project fails. A well-qualified contract is the difference between an enforceable position and a costly dispute over what the parties actually agreed.

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