Russian courts now look through Cyprus holding layers to reach individual debtors directly. Since Russia suspended the double-taxation treaty with Cyprus in August 2023 — following the earlier denunciation process initiated in 2022 — and as Russian arbitrazh courts have progressively applied substance-over-form doctrine in enforcement proceedings, a Cypriot intermediate holding company no longer reliably insulates an individual's Russian assets from a creditor's claim. Foreign creditors pursuing individual debtors through Cyprus-Russia corporate structures should expect Russian courts to examine the economic reality of the ownership chain rather than its formal legal appearance.
The legal basis sits at the intersection of three bodies of Russian law. First, under Russian civil legislation, courts may disregard a corporate entity and impose liability on the individual controlling it where the entity is found to have been used as an instrument of abuse of rights — a principle applied with increasing regularity since 2022 in creditor-side proceedings before arbitrazh courts. Second, under Russian insolvency legislation, the subsidiary liability (subsidiarnaya otvetstvennost) mechanism allows creditors to bring controlling persons — including individuals who held Cypriot intermediate entities — into personal liability in bankruptcy proceedings. Third, following the suspension of the Russia-Cyprus double-taxation agreement, the tax transparency justification that historically underpinned many Cyprus-Russia structures has materially weakened, removing one layer of legitimacy from such arrangements in the eyes of Russian regulators and courts.
In practice, this means that individual debtors who placed Russian assets beneath a Cypriot holding layer face a materially higher exposure than before 2022. Russian courts have, in documented proceedings, issued interim asset-freezing orders (obespechitelnye mery) targeting both the Russian operating entities and assets registered in the name of those entities, on the basis that the individual debtor retained beneficial control. The procedural avenue available to a foreign creditor depends on the type of claim: a creditor with a foreign arbitral award will approach recognition and enforcement in a Russian arbitrazh court; a creditor without an existing award will typically need to commence substantive proceedings in Russia or rely on a parallel insolvency filing.
The recommended next step for a foreign creditor is to instruct Russian counsel to conduct a preliminary asset-tracing analysis — mapping the current registered ownership of Russian-sited assets, identifying any interim measures already filed by other creditors, and assessing which procedural route (enforcement, insolvency, or direct claim) is most likely to yield recovery against the individual debtor within the available timeline.
If you are a foreign creditor seeking to enforce against an individual debtor through a Cyprus-Russia structure — make an enquiry: info@vetrovpartners.com | WhatsApp/Telegram: +7 (983) 510-38-76
— Elizaveta Razina Senior Lawyer, Practice Lead — IP Enforcement, Vetrov & Partners vetrovpartners.com/razina/
Elizaveta Razina leads the firm's intellectual property practice, representing foreign trademark owners in infringement proceedings before Russian state courts and the IP Court. She has been with the firm since 2012 and holds a degree from Novosibirsk State University (2013). She advises on anti-counterfeiting strategy and parallel import controls.
This publication is provided for informational purposes only and does not constitute legal advice under Russian or any other applicable law. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Vetrov & Partners is a Russian-qualified law firm. For matters governed by foreign law or requiring local admission in another jurisdiction, we collaborate with trusted counsel in the relevant jurisdiction. For advice regarding your particular situation, please contact info@vetrovpartners.com.