Immediate consideration: Cyprus-Russia corporate structures post-2022 enforcement risk

Alert: Cyprus-Russia corporate structures — post-2022 enforcement risk Effective: April 2027

Foreign creditors holding claims against Russian-side debtors through Cyprus intermediary structures face a materially changed enforcement landscape. Russian courts have, with increasing consistency since 2022, declined to treat Cyprus holding layers as independent barriers to asset recovery, applying beneficial ownership doctrine and related substance-over-form analysis to look through multi-jurisdictional structures and reach assets held at the Russian operating level. The suspension of the Russia-Cyprus double tax treaty — effective from 2024 — has reinforced this trend, removing a structural incentive that previously supported the use of Cypriot vehicles and signalling regulatory willingness to dismantle their protective effect.

Foreign creditors whose recovery strategy relies on a Cyprus-Russia corporate structure should treat this development as requiring immediate review. Creditors who have not yet filed enforcement claims in Russian courts may find that the window for doing so on favourable procedural terms is narrowing: Russian insolvency legislation provides for the clawback of transactions completed up to three years before a bankruptcy filing, and distressed Russian operating entities are increasingly filing for protection. The practical consequence is that a Cyprus-held receivable or pledge that was adequate security two years ago may, today, provide materially weaker protection than the creditor assumes. Creditors with pledges over Russian real estate or equipment held through Cypriot vehicles should obtain a current assessment of their enforcement position under Russian law before the next filing cycle.

Recommended steps:

1. Obtain a current legal assessment of your recovery position against the Russian operating entity — not the Cyprus intermediary — under Russian law.
2. Verify whether any insolvency proceedings have been filed, or are likely to be filed, against the Russian debtor in the next six months.
3. If enforcement proceedings have not yet been initiated, consider the procedural options available to foreign creditors under Russian civil procedure — including interim relief and direct claims against the beneficial owner — before circumstances change further.

For an initial assessment of your Cyprus-Russia enforcement position, speak to our team: info@vetrovpartners.com | WhatsApp / Telegram: +7 (983) 510-38-76

Further analysis of how Russian courts approach Cyprus-Russia corporate structures in enforcement proceedings is set out at Asset Tracing & Recovery.

This alert is for informational purposes only and does not constitute legal advice. Vetrov & Partners is a Russian-qualified law firm. Contact info@vetrovpartners.com for advice on your specific situation.

— Elizaveta Razina Senior Lawyer, Practice Lead — IP Enforcement, Vetrov & Partners vetrovpartners.com/razina/