Russian users have become more active in suing software suppliers who have left the Russian Federation

Over the past year, the number of disputes related to non-fulfillment of terms of delivery and software support has increased by 20% in judicial practice, say RTM Group. We are talking primarily about claims against large foreign vendors who left the Russian market and violated agreements with Russian counterparties – Oracle, HPE, Dell, Cisco, Microsoft, etc. Lawyers suggest that in 2024 the number of such disputes will increase by another 30%, increasing the number of bankruptcies.

“Kommersant” got acquainted with the results of a study by the consulting company in the field of forensic examination and IT law RTM Group, dedicated to litigation related to licensing and mixed agreements for software. Thus, from January 1 to November 1, 2023, 1,162 judicial acts were issued in this category, which is almost 20% more than during the same period last year (981 acts), RTM Group calculated. In 2024, the number of such litigation with foreign vendors may increase by another 30%, company representatives suggest.

The largest claims in this category are brought by plaintiffs against Russian legal entities of foreign vendors who have ceased their activities in Russia: Oracle, Hewlett Packard Enterprise (HPE), Dell, Cisco, Microsoft, etc.

Disputes relate to non-fulfillment or improper fulfillment of obligations under license agreements for software and its technical support and involve the recovery of damages or unjust enrichment.

“Often, customers purchased infrastructure equipment and software with certificates for technical support from popular Western vendors – the same Dell, HPE, Oracle, Cisco, etc. The minimum was a year in the case of software, but most often the contract was for three or five years,” explains Alexey Zotov, head of IT infrastructure at K2Tech. There were, he adds, also extended contracts under which customers could receive a “more rapid response” from the supplier; this cost additional money, but in fact, manufacturers unilaterally stopped fulfilling their obligations.

Now the defendants in dozens of similar cases are the Russian representative offices of Microsoft (Microsoft Rus LLC) – 15 claims have been brought against it for a total of 200 million rubles, the average amount of penalties is 13.2 million rubles. Eight legal claims were brought against the HPE structure (Hewlett Packard Enterprise LLC) for 255.7 million rubles, the average volume of each claim was 31.9 million rubles. In total, by September, Russian distributors and integrators had recovered more than 4.7 billion rubles from foreign IT vendors who had left the country, they wrote “Vedomosti”.

RTM Group notes that if the defendant does not satisfy the plaintiff’s demands, then the court, as a rule, forecloses on their property and assets remaining in Russia, even in the event of bankruptcy of the legal entity.

But in a number of cases, the satisfaction of claims through the sale of the debtor’s property may be prevented by the actions of the defendants. For example, in April of this year, Cisco Systems destroyed its own property worth 1.86 billion rubles, reported TASS.

One of the predicted consequences of the increase in the number of such court decisions will be an increase in the number of bankruptcy proceedings, believes Vladislav Varshavsky, managing partner of Varshavsky and Partners. Also, the lawyer notes, it is worth considering the significant risk of bringing the general directors of Russian subsidiaries to subsidiary liability.

Tatiana Isakova