Termination Of the Repurchase Right: New Rules for Foreign Investors Who Have Left Russia

The State Duma adopted in the third reading on 21 July 2026 the Federal Law "On Amendments to Article 5 of the Federal Law 'On International Companies and International Foundations' and Certain Legislative Acts of the Russian Federation"[1] (hereinafter referred to as the "Law").

The amendments introduce Article 20¹ into the Law on Foreign Investments[2], which enables Russian companies to terminate, through judicial proceedings, their obligations to repurchase assets from former foreign owners. Moreover, a Russian company may initiate the termination of the repurchase right irrespective of whether the former owner has made a demand to exercise it.

1. Grounds for termination of the repurchase right

The new rule provides that a court may amend an asset disposal agreement entered into after 22 February 2022 by terminating the foreign investor's repurchase right, provided that two conditions are met simultaneously.

The first condition examines the foreign investor's behaviour after the asset was sold. The court must find that the investor engaged in at least one of the following:

• publicly endorsing unfriendly actions against Russia, discrediting the Russian Armed Forces, or spreading knowingly false information about them;

• financing terrorism, extremism, or the proliferation of weapons of mass destruction;

• publicly announcing the curtailment or suspension of operations in Russia, failing to properly perform its obligations, or hindering the conclusion or performance of contracts essential to the asset's business[3].

The second condition is financial in nature. It is met where the contract stipulates a buyback price that diverges from the market value by 25% or more, or where the purchaser has injected additional funds into the asset or taken other steps without which the business would have been halted, significantly curtailed, or shut down.

The rather broad criteria give rise to legal risks of forfeiture of the buyback right for most foreign investors. For one thing, many former owners have already made public statements indicating their withdrawal from Russia or expressed negative opinions about Russia's actions, notably with regard to the Ukraine conflict. For another, since February 2022, most purchasers of foreign‑owned assets have already injected significant financial resources into the businesses they acquired. Consequently, numerous Russian entities now already possess the legal grounds to bring such lawsuits.

2. Grounds for termination of the repurchase right

The Law establishes exclusive jurisdiction for these claims with the Arbitrazh (Commercial) Court of the Moscow Region. The right to bring a claim is granted not only to the acquirer of the asset, but also to the relevant line ministry, provided that the latter obtains advance approval from the Government Commission for Foreign Investment Control. Meanwhile, the acquirer itself, before filing suit, must also secure both a conclusion from the Government Commission and a statement of position from the corresponding ministry.

Once the court ruling terminating the buyback right enters into force, the foreign investor may demand compensation from the Russian purchaser. The court will set the amount of compensation and may reduce it based on the investor's hostile conduct and the purchaser's investment in the asset, or deny it entirely if the investor is found to have funded terrorism or extremism.

Thus, the adopted Law provides Russian acquirers with an effective legal mechanism for terminating obligations to repurchase assets in cases of unfriendly conduct by former foreign owners. At the same time, the practical application of this provision remains to be assessed in the future, since at present foreign investors have not shown any activity in returning to the Russian market.