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. Last Updated: 07/27/2016

Keeping Tabs on Shifting Laws

MTButler is an expert on Russian law.
Russian law has come a long way in the past decade -- and keeping up with the pace of change is particularly demanding for foreign investors.

While many countries do not treat it as an autonomous branch of legislation, foreign investment in Russia and other CIS countries has been subject to special laws that have provided some privileges and exemptions.

Now, however, the CIS legal systems are moving toward treating foreign investors the same as domestic investors, said law professor, legal practitioner William Butler.

"As the economy has become more 'marketized,' the economic grounds for foreign investor privileges begin to disappear," Butler said in an interview.

"Now the question is: How much do you protect local industry against foreign competition?" he added.

Butler has been working with the legal systems of the Soviet Union and its successor states for the last 35 years and is the author of a pioneering study in comparative CIS legislation, "Foreign Investment Law in the Commonwealth of Independent States" -- a 1,116-page volume published this year by Simmonds & Hill Publishing Ltd.

In addition to current law, the book covers the various foreign investment laws enacted since 1990, including laws that have been repealed, since they may have a grandfather clause under which they still operate for earlier investors.

"That is the core of the book. I try to compare all 12 countries and all the [foreign investment] laws which have been adopted," Butler said.

He said the foreign investment laws should be read with the foreign investment treaties that CIS countries have concluded with foreign countries. "Whenever together, they form quite an important legal platform, and they have been used in arbitration and litigation in the courts quite effectively to protect one side or the other," he said.

Butler said number of factors show that the countries have become more experienced with foreign investors.

"In most cases, they have reduced the number of financial incentives to foreign investors and tried to increase the legal stability element for the foreign investor. They have gone to the intangible incentives for foreign investment," he said.

The quality of drafting has improved, he said, particularly for those states that have passed on to a second and third generation of foreign investment law.

"The earlier laws were very much a statement of general principle, whereas now when they give investment guarantees, they are much more likely to give a more serious guarantee than in the past."

Of Butler's more than 900 publications, "Foreign Investment Law in the CIS" is his largest volume.

"I have invested two years of my life in it, in the one sense," he said. "In the other sense, it is based on decades of experience."

Butler's experience extends to giving formal legal and expert opinions on all branches of Soviet and Russian law and laws of the CIS states, advising companies and institutions that invest in the CIS, advising governments on draft legislation and lecturing at universities in Moscow and London. A co-managing partner with Phoenix Law Associates, he is licensed to practice U.S., Russian and Uzbek law.

"I am a product of the 'sputnik era,'" Butler said. "I was coming out of high school in 1957, when the space achievements in the former Soviet Union suddenly made everybody aware that something really remarkable had been achieved. There was a deep interest in this part of the world, whereas previously there had not been."

Butler's specialization in Soviet law broadened to CIS law with the breakup of the Soviet Union.

"It has become a broader subject in the sense that there are 12 countries, but the foundations are very much the same. They have the same history, the same legacy," he said.

"The foreign investor will find himself as much at home in one legal system as in the other. He can get legal advice in Moscow on all the 12 legal systems. That is a positive factor from a foreign investor's standpoint."