Civil Law Reforms Pending in Russia

By
Larissa Eltsefon

On July 18 2008, Russian President Dmitri Medvedev issued an edict requiring that improvements be made to the Civil Code of the Russian Federation. The Committee appointed for this project subsequently produced the "Conception of Reform of Civil Legislation of the Russian Federation," which was discussed at a 30 November 2009 Kennan lecture by William Butler, John Edward Fowler Distinguished Professor of Law, Dickinson School of Law, Penn State University.

"There is no better or more important vantage point from which to study Russia than the legal system," began Butler, adding that "there is very little that does not come within the purview of [the law]." The Russian Civil Code was enacted in four parts between 1994 and 2006, and according to Butler, has stood the test of time and judicial practice. However, the Committee considered that although the Civil Code represents a system of major legal norms shared in principle by the civil legislation of all countries of the Romano-Germanic tradition, it is nevertheless "in some measure distinctively Russian."

Butler noted that the most important concepts in the code are set out in Part I, which regulates the status of juridical persons and "rights to a thing," i.e. the rights to property and full ownership. However,according to Butler, the Committee believed that many serious economic violations had occurred under the cover of the Code. In addition, the Code failed to satisfactorily regulate financial transactions and contained major gaps or insufficient detail in places.

Land reform was also highlighted by Butler as an important issue raised by the Committee under Part I. The Conception of Reform recommended that the Civil Code address land relations, which are now regulated by the 2001 Land Code. Although this notion had been rejected in the 1990s, the Committee has reopened the issue. It is particularly pertinent because the Land Code deals not only with principles of land ownership, but also with any natural resource in the subsoil, including natural gas and oil. Changes to the Land Code will have powerful implications for the Russian energy and gas sector and the Russian economy.

Butler observed that "The Committee incorporated developments in the EU into their own legal thinking." In particular, the Conception recommends the inclusion of two principles. First, that the words "corporative relations" be inserted to affirm Code regulation of this sphere of activities as well as over individual civil law relations. Butler stressed that the word "corporative" was used instead of "corporate" because the former was a very broad concept embracing such ideas of simple partnership and of entities that are not juridical or natural persons. Second, the Conception recommends making a general reference to "good faith," which is implicit in Anglo-American law but is not specifically referenced in the Code provisions regulating transactions under Russian law. Butler explained that in the planned economy of Soviet times the notion of "good faith" was superfluous.

Among other proposed reforms, the Committee addressed two recent creations: the state company and the state corporation. One state corporation – Rosatom – deals with nuclear technology and has been given the power to enter into international treaties on behalf of the Russian Federation. Butler stated that Rosatom's days were numbered if some of the Conception recommendations were ultimately adopted.

When asked about the next step for the Conception, Butler said that the Russian Federation would not enact it as written. Instead, the Presidential Administration and the government would transform the recommendations into language appropriate for amendments. Nevertheless, it is clear that the Conception was influenced overall by international legal concepts and the Committee's desire to accommodate these considerations. Indeed, Butler stated that there were two important multilateral organizations that had a special impact on the development of Russian law: the WTO and the EU. "The Committee is intellectually sympathetic to the integrative legal processes occurring in these institutions," he concluded.

Blair Ruble, Director, Kennan Institute
 

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