Oda Russian Commercial Law 2007-1

x	TABLE OF CONTENTS

3)	Liability for Damage Caused by Persons Who are Declared
	Incapable to Act	345
4)	Liability for Damage Caused by a Person Declared Partly
	Incapable to Act (Limited Capability)	345
5)	Liability for Damage Caused by a Person Who is not
	Capable of Understanding the Meaning of his Act	346
6)	Liability of a Juridical Person or a Physical Person for the
	Damage Caused by an Employee in the Course of
	Discharging his Employment Duties	346

3Liability for Causing Damage to the Life or Health of an

	Individual		346
4	Moral Damage		347
5	Product Liability		350
6	Government Tort Liability		350
7	Unjust Enrichment		352
	CHAPTER 11 – BANKING LAW
1	Historical Background		355
2	The Emergence and Development of Commercial Banks		356
3	Sources of Banking Law		362
4	The Central Bank (Bank of Russia)		364
5	Credit Organisations (Banks and Non-Banks)		366
6	Current State of the Russian Banking System		368
7	Supervision over Credit Organisations		371
8	Bank Con dentiality		375
9	Restructuring and Liquidation of Credit Organisations		375
	1)	Financial Restoration	376
	2)	Interim Administration	376
	3)	Reorganisation	377
	CHAPTER 12 – NATURAL RESOURCES LAW
1	The Ownership of Sub-soil Resources		379
2	The Sub-soil Law		380
3	Licensing System v. Production Sharing System		384
4	The Production Sharing Law		388
	1)	Autonomy of the Production Sharing Agreement	388
	2)	Parties to the Production Sharing Agreement	389
	3)	Blocks available for production sharing	390
	4)	Procedure for the Conclusion of a Production Sharing
		Agreement	391
	5)	Terms of the Production Sharing Agreement	392

TABLE OF CONTENTS			xi
	6)	Production Sharing and Taxes	393
	7)	Stability of the Production Sharing Agreement – Grandfather
		Clause	395
	8)	Dispute Resolution	396
5	Pipeline Transportation and Export		396
6	The Demise of the Production Sharing System		397
7	Prospective Reform of the Sub-soil Law		400

CHAPTER 13 – ENVIRONMENTAL LAW

1The Background to the 2002 Law on the Protection of

	Environment		403
2	Outline of the 2002 Law		407
3	Environmental Standards and their Enforcement		410
4	State Ecological Review		413
5	Procedural Aspects of Economic Activities		416
6	Rights of Individuals and Social Organisations in the Procedure		418
7	Agencies in Charge of Environmental Protection		421
	CHAPTER 14 – TAXATION
1	Historical Background		425
2	The Tax Code		428
3	Taxes and Levies		429
4	Basic Principles and Rules of Taxation		430
5	Tax Agency		432
6	The Procedure		434
	1)	Tax Inspection	434
	2)	Compulsory Collection of Taxes and Sanctions	435
	3)	Procedure for Contesting Decisions of the Tax Agency	438
7	Major Kinds of Taxes		440
	1)	Corporate Pro t Tax	440
	2)	Value-Added Tax (VAT)	442
	3)	Uni ed Social Tax	443
	4)	Tax on Assets of Organisations	444
	5)	Individual Income Tax	444
8	Taxation of Foreign Companies		446
	1)	Foreign Companies with a Permanent Establishment in Russia	446
	2)	Foreign Companies without a Permanent Establishment in
		Russia	446
	3)	Transfer pricing	447

xii	TABLE OF CONTENTS

	CHAPTER 15 – THE SYSTEM OF SETTLING DISPUTES – PROCEDURE
1	Jurisdiction		449
2	Composition of the Court		450
3	Parties and other Participants in the Procedure		451
4	The Adversarial Principle and the Role of the Court		453
5	Presentation of the Application for an Action		454
6	Settlement		456
7	Security Measures		457
8	The Hearing		458
9	Evidence		459
10	Judgments and Decisions		461
11	Appeal and Other Procedures		461
12	Costs		466
13	Enforcement of Judgments		466
	1)	General	466
	2)	Enforcement Documents	467
	3)	Enforcement Procedure	468
	4)	The Actual State of Enforcement	471
	CHAPTER 16 – PRIVATE INTERNATIONAL LAW
1	Sources of Private International Law		473
2	General Rules		474
3	Renvoi		478
4	Personal Law		479
5	Applicable Law on the Speci c Issues		479
	1)	Ownership Rights and other Real Rights	479
	2)	The Form of Juristic Acts	480
	3)	Contracts	481
	4)	Obligations Arising from the Causing of Harm (Tort)	484
	5)	Unjust Enrichment	484
	6)	Competition Law	485
	INDEX		487

LIST OF TABLES

Table 1	Categories of cases handled by the commercial court in 2005	29
Table 2	Breakdown of disputes arising from civil law relations	30
Table 3	Cases Heard by District Courts in 2004	32
Table 4	The progress of privatisation	113
Table 5	Major objects in Federal ownership and privatisation
	program of the 2000s	114
Table 6	Ownership structure of Russian industrial enterprises (1)	119
Table 7	Ownership structure of Russian industrial enterprises (2)	120
Table 8	Comparison of Joint Stock Companies and Limited
	Liability Companies	123
Table 9	Shareholder’s rights	150
Table 10	Insolvency cases handled by the commercial court
	2003-2006	210
Table 11	Registration of Credit Organisations as of January 1, 2006	367
Table 12	Measures applied to Credit Organisations in 2004	374

ABBREVIATION OF RUSSIAN PERIODICALS

BVS RF	Biuletten’verkhovnogo suda RF
GiP	Gosudarstvo i pravo
KhiP	Khoziaistvo i pravo
NG	Nezavisimaia gazeta
PiE	Pravo i ekonomika
RG	Rossiiskaia gazeta
RIu	Rossiskaia iustitsiia
SU	Sobranie uzakonenii i rasporiazhenii rabochekreschains-
	kogo pravitel’stva
SZ RF	Sobranie zakonov RF
VE	Voprosy ekonomiki
VMU	Vestnik moskovskogo universiteta
VSND RF i VS RF	Vedomosti sobraniia narodnykh deputatove RF i
	Verkhovnogo soveta RF
VVAS RF	Vedomosti verkhovnogo arbitrazhnogo suda RF
VVS RFSFR	Vedomosti verkhovnogo soveta RFSFR
VVS SSSR	Vedomosti verkhovnogo soveta SSSR
ZRP	Zhurnal rosiiskogo pravo

* Status juris

Status juris of this book is March 31, 2007

** Minimum wage

Minimum wage is used as a basis for the calculation of nes and other pecuniary payments in Russian law. The current minimum wage for this purpose is set at 100 roubles (circa 4 US Dollars) by the Law No.82-FZ of June 19, 2000 as amended.

FOREWORD TO THE SECOND EDITION

“You say that rule by terror has diminished. That is for sure. But rule by terror, basically, is not the ultimate form of discipline, but rather, its failure.”

Michel Foucault, Dits et écrits, Paris 1976, vol. III, p. 69.

This is a new and substantially expanded edition of the Russian Commercial Law. Since the publication of the rst edition in 2001, there has been some signi cant legislative developments. The Law on Insolvency of 1998, which was known to be abused on various occasions, was replaced by a new law in 2002. The two procedural laws – the Code of Civil Procedure and the Code of Commercial Court Procedure, were both replaced by new laws in the same year. A major amendment to the Joint Stock Company Law, which took place in 2001, and was incorporated in the rst edition, has been put into practice. Compared to the rather chaotic situation in the 1990s, the system of commercial law and procedure in Russia has more or less stabilised. In the light of such developments, most chapters have been rewritten or extensively revised.

However, while writing the second edition, some changes in other directions were noticeable. First, while in the 1990s, the establishment of the “law governed state” was regarded as a major goal, in the 2000s, it has become very rare to come across this term. Instead, centralisation and “discipline” seem to have become the keyword of the day. Secondly, disclosure of information by government agencies seems to have become narrower in scope. For instance, statistical and factual information regarding disciplinary actions on judges, which used to be available, is hard to get hold of now. Thirdly, as can be seen in the saga involving Sakhalin 2 and Kovikta projects, there have been cases where the stability of major foreign investment projects came to be at risk.

As was the case with the rst edition, the book is intended to shed light on the actual operation of Russian law, rather than summarising or reiterating statutes. For this purpose, the support of Herbert Smith where I work as a consultant was invaluable. I would like to thank the senior partner Mr. David Gold, the

xviii

FOREWORD TO THE SECOND EDITION

Global Relationship Partner, Mr. Richard Fleck, the managing partner of the Moscow Of ce, Mr. Allen Hanen, and the Russia-related people at Herbert Smith. My gratitude also goes to the directors of the Max Planck Institute for International and Foreign Private Law, professors Klaus Hopt and Jürgen Basedow as well as Dr. Harald Baum for providing me with essential research facilities in Hamburg and to Professor Jeffrey Jowell of University College London for his unfailing warm support since my arrival in London. I also wish to thank Ms. Annebeth Rosenboom, the former editor of Martinus Nijhoff Publishers, and Mr. Peter Buschman, the current editor, and his team as well as Ms. Vera Kislova, formerly of University College London, for enabling the publication of the second edition. Finally, last but not the least, my gratitude is due to my wife Midori, who has assisted and supported me throughout the process of preparing the second edition.

London, July 2007

Hiroshi Oda

1

SOURCES OF LAW

1THE CONCEPT OF THE LAW-GOVERNED STATE

The present Constitution of the Russian Federation, which was enacted in 1993, starts with the following provision (Art.1, para.1):

The Russian Federation – Russia is a democratic Federative law-governed state (pravovoe gosudarstvo) with a republican form of government.

The concept of the law-governed state originated as the Rechtsstaat in 19th century Germany and was introduced into Russia towards the end of that century. Some Russian proponents of this concept went further than their German counterparts and supported the introduction of a democratically elected parliament and the subordination of the Tsar to the laws enacted by parliament. The Russian constitutional movement came close to fruition after the February Revolution in 1917, but the Bolshevik Revolution in October the same year thwarted all hope for the realisation of constitutionalism. The democratically elected constitutional assembly, in which the Bolsheviks were a minority, was disbanded by the Bolsheviks soon after the October Revolution.1

Under the socialist regime, the concept of the law-governed state was totally rejected as a “bourgeois ideology” which was against the dictatorship of the proletariat. It was eventually replaced by the concept of “socialist legality”. Socialist legality was of cially de ned as the “strict observance of law by administrative agencies, social organisations, government of cials, and citizens”. This notion was totally different from the concept of a law-governed state since i) the law was not enacted through a democratic procedure – to start with, there was no democratic election, ii) the law was subordinate to political expediency

1On the development of this concept in Germany and Russia, see H.Oda, “The Emergence of Pravovoe Gosudarstvo in Russia”, Review of Central and East European Law, 1999 No.3, p.373ff.