Oda Russian Commercial Law 2007-1

62 THE SYSTEM OF SETTLING DISPUTES – INSTITUTIONS

vi) preparation of enforcement documents; vii) protesting bills of exchange;

viii) presentation of cheques for payment and con rmation of the failure of payment;

ix) presentation of maritime protests; x) preservation of evidence.

Anotary public is licensed by the Ministry of Justice.Anotary is required to havenished a higher legal education, must go through at least one year of apprenticeship, and pass a state examination (Art.2).

In cases where the law mandates a transaction to be notarised, the remuneration of the notaries public in private practice is calculated in accordance with the Law on State Duties (poshlina). Otherwise, they are free to negotiate the amount of remuneration with the client.101

101V.S.Repin, Kommentarii k osnovam zakonodatel’stva Rossiiskoi Federatsii o notariate, Moscow 1999, pp.43-44.

3

BASIC PRINCIPLES AND RULES OF PRIVATE LAW

1HISTORICAL BACKGROUND

The rst attempt at enacting a systematic code in Russia was the Ulozhenie (Code) of 1649. Primary sources of this Code are said to be the indigenous law of Russia, which included the Sudebniki of 1497 and 1550, but mostly customary law with some in uence of Byzantine law and Lithuanian law. It comprised 25 chapters with 967 provisions including some chapters on civil law – mainly on property relations.1 Successive tsars, including Peter the Great and Ekaterina II, attempted to enact a new Ulozhenie, but all these attempts failed.

In the late 18th century, another commission was set up to prepare the laws. There seem to have been two different schools of thought. One was aimed at the enactment of a new Ulozhenie, while the other sought the codi cation of the existing law. M.M.Speranskii, who was an active member of this commission, actually prepared a draft of part one of the Civil Code (persons) and submitted it to the State Council. This was followed by parts two (property) and three (contracts) in 1810. There was a very strong in uence of the French Code civil. However, the draft code was met with opposition; the State Council was not convinced that the new Code should be modelled on the Code civil.2 After Speranskii fell into disgrace and was expelled, it was decided that instead of borrowing from foreign codes, they should turn afresh to the investigation of law in the past, based upon the idea that the “laws which survived the years would best serve the state”.3 The 1649 ulozehnie as well as separate legislation which had been enacted since then were compiled, rst organised in a chronological way in the Complete Collection of Laws (Polnoe sobranie zakonov) and then in

1“Ulozehnie”, in F.A.Brokgauz et al. eds., Entsiklopedicheskii slovar’, vol 34-a, St.Petersburg

1902, p.685.

2A.N.Filippov, Uchebnik istorii russkago prava, chast’1, 4th edition, Iur’ev 1912, pp.561-567; “Ulozhenie grazhdanskoe”, in F.A.Brokgauz et al. eds., Entsiklopedicheskii slovar’, vol 34-a,

St.Petersburg 1902, p.692.

3Fillipov, ibid., p.567.

64	BASIC PRINCIPLES AND RULES OF PRIVATE LAW

a more systematic way.After his return from exile to Siberia in 1823, Speranskii was instrumental in this enormous undertaking, which nally culminated in the 15 volume Svod zakonov of 1832. In fact, Speranskii’s idea was that the Svod zakonov should be a rst step in the future enactment of the new Code, and not only a compilation of the existing law. Even in the process of preparing the Svod zakonov, Speranskii often exceeded his “humble” role as a person compiling and systematising existing law and became, occasionally and unintentionally, “the genuine creator of many of our legal norms, particularly in the area of civil law”.4

The rst part of Volume 10 of the Svod zakonov was devoted to civil law. Since the total 15 volumes were revised from 1842 and 1857, there have been two editions of Volume 10; 1887 and 1900.5 Russian Civil Law as incorporated in the Svod zakonov was primarily based upon the 1649 Code with the addition of various laws enacted at different times. It was arranged in a way similar to the Code Civil. Speranskii was familiar with Roman law, French law, Prussian law as well asAustrian law, and actually used the concepts and de nitions of foreign laws in the process of compiling and editing the then existing laws. However, despite Speranskii’s efforts, the fact remained that the law was obsolete, inconsistent, full of loopholes, and casuistic. The law lacked fundamental “guiding ideas”. In fact, it was hoped that the problems which were left unsolved in the Svod zakonov would be solved in the future ulozhenie.6

Shortcomings of the civil law part of the Svod zakonov were being recognised as early as the mid-19th century. In 1869, a commission for the preparation of rules on contracts and obligation was established, followed by a commission for the preparation of the Civil Code (grazhdanskoe ulozhenie) which was set up in 1882. By 1903, ve volumes of the draft Civil Code had been published.7 The draft Code was not entirely different from the existing Russian law. Basic principles of Russian law were preserved, insofar as they were not obsolete or failed to match the needs of modern times. In order to ll the gaps in the existing

4Ibid., pp.573-574.

5	L.Schultz, Russische Rechtsgeschichte, Lahr 1951, S.218-219.
6	“Ulozhenie grazhdaonskoe”, supra, p.692. In fact, Speranskii prepared a draft ulozhenie based
	upon the Code civil in 1814. For the in uence of the French Code on Russian civil law, see
	A.L.Makovskii, “Code Civil frantsii i kodi katsii grazhdanskogo prava v Rossiii”, VVAS 2005
	No.2, p.137ff.

7A.M.Guliaev, Russkoe grazhdanskoe pravo, St.Petersburg 1907, p.5. In fact, in the Russian Empire, there was no uni ed system of civil law. In the early 20th century, in addition to the Svod zakonov, there were the Civil Code of the Kingdom of Poland based upon Code civil, civil codes of the Baltic states, Belarus and the Kingdom of Finland. Ibid., p.3. See also Grazhdanskoe ulozhenie; proekt visochashche uchrezhdeniie Redaktsionnaia Kommisiia po sostavleniiu grazhdanskogo ulozheniia, St.Petersburg 1905.

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law, rst of all, the practice of the Russian higher courts was taken into account. In principle, the commission is said not to have accepted foreign law directly. However, the Code civil had much in uence, since it was actually being applied in Poland which, at that time, was part of the Russian Empire.8 In October 1913, part of the draft Code on the Law of Obligations was submitted to the Duma, but failed to be approved, due to the First World War.9 Thus, civil law provisions accommodated in the Svod zakonov remained in force until the October Revolution of 1917.

After the October Revolution, in 1922, the Civil Code of the RSFSR was enacted.10 This was at the time of the New Economic Policy, when a market economy controlled from the “commanding heights” by Bolsheviks was allowed to operate.AsA.Goikhbarg, the principal author of the Code, remarked in 1923, “until the October Revolution, there was almost, or absolutely, no theoretical work which, in a systematic way, developed and described in detail, the legal structure which was to emerge after the overthrowing of the capital”.11 It was not surprising that the draft Civil Code of the Tsarist period was extensively studied. Many provisions were taken from the draft Code, but the number of provisions was reduced from some 1,500 provisions in the draft Code to 431.12 It took only four months for Goikhbarg to prepare the draft.13

The structure of the Code closely resembled the European codes such as the BGBandtheSwissCode.14 However,thereweresomesigni cantdifferences.First of all, the part on family law was left out of the Code. There was a separate law – the Family and Marriage Code of 1918. At that time, civil law was thought to “wither away”, and only Family and Marriage Law would remain under socialism.15 Secondly, the Land Law was also separate – the Land Code, which was part of the administrative law, was enacted in 1922. This was because of the idea of the state monopoly of the means of production. Land was intended to be state property and was therefore not to be left to the Civil Code.

Although the 1922 Civil Code was designed to give stability to the economy and commerce, it did not give any protection to pre-Revolutionary rights. Nor were the newly-acquired private rights secure. This was at the time when Lenin

8 W.von Seeler, Der Entwurf des Russischen Zivilgestzbuches, Berlin 1911, S.10-11.

9Schultz, supra, S.223.

10SU RSFSR, 1922 No.71, item 904.

11A.Goikhbarg, Khoziaistvennoe pravo R.S.F.S.R., vol.1, Moscow 1923, p.5.

12V.Gsovski, Soviet Civil Law, Ann Arbor 1948, pp.24-25.

13For the text of the Code, see T.E.Novitskaia, Grazhdanskii kodeks RSFSR 1922 goda, Moscow 2002.

14For the codi cation of private law in Europe, see H.Schlosser, Grundzüge der neueren Privatrechtsgeschichte, 10 Au age, Heidelberg 2005, S.170ff.

15M.V.Antokol’skaia, Semeinoe pravo, Moscow 1999, p.64.

66	BASIC PRINCIPLES AND RULES OF PRIVATE LAW

made the famous remark – “we do not allow anything private”. Goikhbarg even went further and stated as follows:16

Laissez faire, laissez passer are by no means the principle of the 20th century. This principle is even less applicable in our country, when a predominant part of economic activities is concentrated in the hands of the state agencies, and private persons and their associations are allowed limited participation in economic activities.

The basic idea was to exclude individualism as much as possible from the Code. The theory of A.Duguit, a French legal philosopher, contributed a theoretical basis. Individual rights were subordinated to the interests of the state. Article 1 of the Code proclaimed that civil law rights are protected insofar as they are exercised in accordance with their social and economic purpose. Article 30 explicitly provided that transactions directed against the interest of the state were void. One observer commented that the Bolsheviks chose to go in the direction of state capitalism.

The period of the New Economic Policy ended in 1928 and under the planned economy, the drive for industrialisation began. With the demise of the market economy, some lawyers envisaged the demise of civil law as well. Their view was that civil law was based upon the exchange of goods, but now that the economic plan was to replace such relations, civil law should also be replaced by economic law. Economic law, according to E.B.Pashukanis, a prominent proponent of this view, was not really law, but administrative command, which was a transitional form of law towards its ultimate withering away. However, this view went too far towards the left at a time when the communist leadership was trying to tighten control over the nation by strengthening law and order in the early 1930s. Pashukanis was criticised for his “leftist deviation” and was executed in 1938. Nevertheless, the view that an economic code was needed in addition to the Civil Code survived the socialist period and can still be encountered.

The 1922 Civil Code remained in force until the 1960s, although the relationship between state enterprises came to be regulated not by civil law, but by the Law on State Enterprises and other laws which were part of the administrative law. In 1961, the Fundamental Principles of the Civil Law of the USSR were enacted, followed by the civil codes of constituent republics.17 There was not much difference between the 1922 Code and the codes in the 1960s. One conspicuous difference was that the 1960s codes contained provisions which

16Goikhbarg, supra.

17SZ SSSR 1961 No.19, item 685.

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consolidated the role of the state as an “organiser of civil law relations” and “ensured the primacy of plans over contracts”.18

With the transition to the market economy, these laws were naturally found to be unsuitable. In the very last year of the existence of the USSR, the Basic Principles of the Civil Legislation of the USSR were enacted in May 1991. This was a total break from the civil law under socialism; it was orientated towards the market economy, although in a primitive form. In the area of property law, the USSR Law on Ownership of 1990 was also a breakthrough, since it acknowledged, for the rst time since 1922, diverse forms of ownership, including private and collective ownership.

Preparations for a new Civil Code started in the early 1990s.As was the case with the reforms before the October Revolution, the laws of various jurisdictions including the BGB, the Uniform Commercial Code, and last but not least, the legislation of Quebec, were extensively studied. In addition, indigenous laws including the draft Civil Code of the Tsarist period and the 1922 Code were also studied. In the end, the Dutch Civil Code served as a basis for the new Civil Code as a whole, although the in uence of laws from other jurisdictions can be found in various parts of the Code. The primary reason for the choice of the Dutch Code was that together with the Italian Civil Code, the Dutch Code was the latest Civil Code to be enacted in Europe. The Dutch government sent advisors to Russia to assist in the preparation of the Code.

Part One of the Civil Code was signed by the President on November 30, 1994 and came into force on January 1, 1995. Part Two was adopted one year later and came into effect on March 1, 1996. Part Three was enacted in November 2001, and has come into effect on January 1, 2002. Finally, Part Four was enacted in December 2006 and is expected to take effect on January 1, 2008.

2THE CIVIL CODE AS THE PRIMARY SOURCE OF PRIVATE LAW

1)The Uni cation of Civil and Commercial Laws

The Civil Code is the fundamental legislation of Russian private law. This is supported by the fact that the Code encompasses both the civil law and commercial law and that it has priority to all other laws in the area of private law.

The structure of the Civil Code is in line with the Pandekten system. The Code comprises four parts. Part One covers the General Part, property rights and

18Forword, in M.I.Braginskii ed., Kommentarii chasti pervoi grazhdanskogo kodeksa Rossiiskoi Federatsii dlie predprinimatelei, rst edition, Moscow 1996, pp.7-8.

68	BASIC PRINCIPLES AND RULES OF PRIVATE LAW

other real rights, general rules of obligations and contracts. Part Two contains speci c contracts and obligations arising from unlawful acts and unjust enrichment. Part Three accommodates the Law of Inheritance and rules on International Private Law. Part Four covers intellectual property law.

As can be seen from the above structure, as far as parts one and two are concerned, the Russian Civil Code is very much in line with the German system.19 What is different about the Russian Civil Code from the German BGB is that it accommodates not only civil law, but also commercial law. There is no sepa-

rate Commercial Code. Among the former socialist countries, Hungary takes a similar approach.

Traditionally, Russian civil statutes have always contained commercial law provisions. G.F.Shershenevich, who was a leading expert on commercial law in the Tsarist period, pointed out that in Russia, there has always been an idea of “unity (edinstvo) of private law”. It was the intention of Speranskii when compiling Svod zakonov to accommodate everything which, in the West, was divided into Civil and Commercial law.20 The 1887 edition of Svod zakonov, in addition to Volume X which contained the Civil Law, incorporated the Statute on Commerce (Ustav torgovyi), in Volume XI, part 2. Towards the end of the Tsarist period, this Statute came to accommodate provisions on commercial contracts as well as merchant shipping. There were some provisions on various types of companies, including two provisions on joint stock companies.21 However, the position of the law was not clear. Civil Law as contained in Volume X still accommodated provisions on commercial companies (primarily from the 1837 Company Statute) as well as contracts such as insurance in Book Four (obligations arising from contracts).22

The draft Tsarist Civil Code was clearly based upon the uni ed system. Book Five of the draft Code (Law of Obligations) which was submitted to the Duma contained provisions on commercial contracts such as contracts of storage, carriage, carrying out of works, commission, and insurance. It also had a fairly extensive chapter on commercial companies including joint-stock companies.23 The 1922 RSFSR Civil Code, despite its af nity with the German BGB in various aspects, inherited this “unity of private law”. The 1991 Fundamental Principles of Civil Legislation of the USSR followed this, and so does the present Civil Code.

19This is more in line with the German BGB. The Dutch Code is organised in eight parts, but does not have a general part; it starts with Book One, “persons”.

20G.F.Sheshenevich, Uchebnik torgovago prava, seventh edition, Moscow 1914, pp.14-15.

21A.A.Dobrovol’skii et al. eds., Ustav torgovyi, fourth edition, St.Petersburg 1914.

22D.A.Nosenko ed., Ustav torgovyi, St.Petersburg 1909.

23V.E.Gertsenberg and I.S.Pereterskii, Obiaszatel’stvennoe pravo, Proekt, St.Petersburg 1914.

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In the early 1990s, when the enactment of a new civil code came on the agenda, some people proposed to separate commercial law from civil law.24 However, in the end, the Civil Code maintained the system of the “unity of private law”. There were several reasons for this. Firstly, this was true to the Russian legislative tradition as we have seen above. Secondly, the two latest civil codes in Europe, Dutch and Italian, had adopted this system. Thirdly, there was a strong antipathy towards those proponents of the concept of “economic law” as separate from civil law and encroaching on the area of civil law at the time of socialism. Dualism of civil and commercial law was seen to be associated with this school of thought.25

Article 2 of the present Civil Code provides as follows:

Civil law determines the legal status of the participants of civil circulation (oborot), the basis for the emergence and manner of exercising the right of ownership and other real rights, exclusive rights on the results of intellectual activities (intellectual property), regulates contracts and other obligations, other proprietary rights as well as personal non-proprietary rights related to them, based upon the equality, autonomy of will, and proprietary independence of its participants.

Then, it goes further and con rms that civil law is applicable to “entrepreneurial relations”:

Civil law regulates the relationship between persons who perform entrepreneurial activities, or the relationship in which they participate, based upon the premise that entrepreneurial activities mean independent activities performed at the person’s own risk and aimed at the systematic receiving of pro t from the use of property, sale of goods, performance of work and provision of service by those who are registered as such by procedure established by law.

The Code seems to avoid the term “commercial (torgovyi)” and instead, uses the term “entrepreneurial (predprinimatel’skyi)”. However, various works on commercial law (torgovoe pravo) are still being published.26

24V.V.Chankin,’Torgovoe pravo: sovremennye tendentsii’, GiP 1993 No.2, pp.57-64; A.G.Bykov, “Predprinimatel’sloe pravo; problemy formrirovaniia i razvitiia”, VMU, seria pravo, 1993 No.6, pp.4-5.

25E.A.Sukhanov, “O proekte novogo grazhdanskogo kodeksa Rossii”, VMU, seria pravo, 1993 No.5, p.5.

26M.M.Lassolov, Kommercheskoe pravo, Moscow 2001; Iu.E.Bulatotskii and V.A.Iazeev, Kommercheskoe (Torgovoe) pravo, Moscow 2002.

70	BASIC PRINCIPLES AND RULES OF PRIVATE LAW

2)The Primacy of the Civil Code over other Laws in “Civil Law Relations”

The Code provides that civil legislation comprises the Civil Code and other Federal laws adopted in accordance with it. Civil law in this context includes other Federal laws (but not presidential decrees or governmental decrees).27

These laws include the following:

General Part

Law on Joint Stock Companies;

Law on Limited Liability Companies;

Law on State and Municipal Unitary Enterprises;

Law on Banks and Banking Activities;

Law on Securities Market;

Law on Non-Commercial Organisations;

Law on Religious Organisations;

Law on Social Organisations;

Law on Production Cooperatives;

Law on Insolvency;

Law on the Civil Status.

Property Law

Land Code;

Law on the Payment for Land;

Subsoil law;

Law on Registration of Real Property and Related Transactions;

Water Code;

Forest Code;

Housing Code,

Law on Obligations

Law on Pledge (zalog);

Law on Hypothec;

Law on Leasing (lizing);

Law on the Protection of the Rights of Consumers;

Law on Concession Contracts;

Law on Foreign Currency Regulation and Control.

27M.I.Braginskii ed., Nauchno-prakticheskii kommentarii k chasti pervoi grazhdanskogo kodeksa Rossiiskoi Federatsii, second edition, Moscow 1999, p.43.

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The Civil Code has a special status, as the very basis of private law, in relation to these laws. The Civil Code explicitly provides that norms of civil law contained in other laws should coincide with the present Code (Art.3, para.2). This principle of the primacy of the Civil Code is a signi cant exception to general rules that new law breaks the old law and special law has priority to general law.28 Under socialism, the legislature attempted to “eliminate defects of economic legislation” by enacting an enormous number of laws and regulations which were not always properly coordinated. The intention of the present legislature is to avoid contradictions between various laws covering the same area by giving primacy to the Civil Code which is “uni ed, logically consistent, and free from internal contradiction”.29 The only exceptions to this rule are provisions of laws which have a clause “unless the law provides otherwise”. This is understood to give priority to laws other than the Code.30

However, this often creates confusion. For example, company law is part of the civil law. Therefore, the Civil Code has priority to the Law on Joint Stock Companies and Law on Limited Liability Companies. These laws have been enacted after the Civil Code, and have more detailed provisions. Nevertheless, in cases of contradiction, the Civil Code prevails. Thus, the scope of the books of accounts to which shareholders are granted access differs between the Civil Code and the Law on Joint Stock Companies, but the Civil Code is decisive.

3BASIC PRINCIPLES OF RUSSIAN PRIVATE LAW

Part One of the Civil Code is the General Part of the Code. It sets out basic principles and rules of civil and commercial law.

Article 1 of the Code lists various principles of civil law. These are:

i) equality of the participants in the relationship regulated by civil law; ii) inviolability of property;

iii) freedom of contracts;

iv) prohibition of arbitrary interference with private persons by any person; v) recognition of the necessity of the uninhibited exercise of civil law rights; vi) ensurance of restoration of infringed rights and court protection.

28Ibid., p.42.

29M.I.Braginskii and V.V.Vitrianskii, Dogovornoe pravo, obshchie polozheniia, second edition, Moscow 2005, p.53.

30Ibid., p.58.