Under Russian law, the losing party in a judicial proceeding must compensate the winning party for all judicial costs, including its attorney’s fees.

In a recent case, the winning party (the “Company”) claimed compensation before the Federal Arbitration Court of the Moscow Region (the “Court”) in order to recover its attorney’s fees from the tax authorities.

Notwithstanding the fact that the tax authorities did not dispute the amount of the attorney’s fees, the Court, on its own initiative, decided to award compensation of attorney’s fees “within reasonable limits” rather than in full. As a result, the Court awarded RUB 10,000 instead of RUB 19,900.

The Court thereby demonstrated that it has the full discretion and authority to decide on the costs to be compensated to the winning party and that such a decision may be rendered without application of the losing party.

[Decree No. КА-А40/3100-11of the Federal Arbitration Court of the Moscow Region, dated 25 April 2011]