Russian Federal Assembly Passes Legislation to Provide Relief to Russian Tenants Under Their Leases in Light of COVID-19 Emergency

On March 31, 2020, the State Duma adopted and the Federation Council approved a new emergency prevention law – Draft Law № 931192-7 (the “Law”).

The Law contemplates the significant rent relief for tenants, applicable to all real estate leases (although most relevant for commercial retail leases) entered into before the authorities adopted the “high alert” or emergency regime for the relevant region (in Moscow, such regime was adopted on March 5; in St. Petersburg, on March 13).

In short, the Law:

• obliges a landlord to sign an addendum to the lease deferring rent payments for 2020 within 30 days of the relevant tenant’s request. Deferred portion of rent would ultimately have to be paid. Requisite terms and more detailed regulation of such deferral (in particular, what are conditions that a tenant must meet to get a rent holiday and how long does that holiday last) are to be developed and adopted by the Russian Government;
• entitles a tenant to claim a reduction of the rent for 2020 due to it being impossible to use the leased property because of the “high alert” or emergency regime on the territory of the relevant region. If the tenant and the landlord do not reach agreement on the reduction, the tenant is entitled to apply to a court to reduce the rent taking into consideration restricted conditions of premises use.

The Law will enter into force upon its signature by the President and official publication.  Its progress may be tracked here.