Doing business in Russia

Chukotka (capital – Anadyr), Khanty-Mansi, Komi-Permyak (capital – Kudymkar), Nenets (capital – Naryan-Mar), Yamalo-Nenets (capital – Salekhard).

(4) Krais:

Altay (capital – Barnaul), Kamchatskiy (capital – Petropavlovsk – Kamchatskiy), Khabarovsk, Krasnodar, Krasnoyarsk, Perm, Primorskiy (capital – Vladivostok), Stavropol, Zabaykalsk (capital – Chita).

(5) Federal cities:

Moscow, Saint Petersburg, Sevastopol.

(6) Autonomous Oblast:

Yevrey [Jewish] (capital – Birobidzhan).

Subjects of the federation have their legislatures and governments, who act within the competence determined by the constitution and, in some cases, an agreement between the federation and the region. It is supposed that outside of the jurisdiction of the federation and the joint jurisdiction of the federation and the subjects of the federation, the regions exercise the entire spectrum of state power. In reality most of the Russian laws are in the federal competence and as such have superiority over regional legal acts. Another complication of relations between the federation and the regions is the composition of the tax and budget systems. At the moment the majority of regions receive financial assistance from the federal budget.

Municipalities

There are over 240,000 municipalities in Russia. The structure of a municipal government is determined by the regional legislation under the legal framework established by the federal laws and includes a legislative body at local level.

Sources of Law

Law in Russian society

The Russian legal system in its main features follows those of the European countries. The principles and ideas lying in its foundation are the inviolability of ownership, freedom of contract and the judicial protection of rights along with others that are recognised and shared by modern Western society. Most Russians share Western social values. Moreover, they truly consider themselves to be a part of the Western culture. However, Russia has somewhat different experiences and its own answers to historical challenges.

For those doing business in Russia or with Russians an understanding of the role of law in Russian society is of important practical value. It is likewise important to understand the difference not only between law and repression but between law and other forms of regulation of the human relations like, for example, economic or social pressure, religious beliefs or family relationships. Law is the product of long historical experience and not merely a product of the legislative power of the sovereign. The idea that the law-maker may enact any law it pleases has ignored the fact that law in a deeper sense, like other social institutions, is a living tradition. Law is a part of a culture and as such it is intimately connected to the whole historical experience of a nation.

According to a leading sociologist, Talcott Parsons, Western social institutions are based on the institutions of ancient Greece and Rome. This relation has three main «bridges». First of all, the Western Christian Church kept an idea of formal equality of all people as an example for the whole society – a society where there are no privileges, and everybody is equal in the sight of God, who appreciates them according to their individual qualities. On the other hand, the Western Church was always a unified institution, with the centre in Rome, independent from civil government. Secondly, the organisation of Western medieval cities, just as in a modern society, was based on principles other than personal relationship or origin. A medieval city with private property and market became a point of growth for modern economical institutions. Thirdly is the legacy of a Roman-Greek legal structure with professional bureaucracy, an army and uniform law for the whole country.

Russian social and legal institutions emerged from a background very similar to that of the Western Europeans. The Slavonic tribes, predecessors of Russians, seem to have had a social order not essentially different from that of Germanic tribes who settled in the West. The laws of ancient Russia were similar to the Anglo-Saxon or Germanic or Frankish law at this time. Russians as well as West Europeans were converted from paganism to Christianity and despite provincial differences shared the ideas of the Western Church. However, if we view Russian history as a whole and compare it with the history of the West we see that perhaps the most striking difference between the two histories is the relative deficiency of the role of law in the Russian social relations. The historical choice of the Russian society was that the law as an institute of the formal rules and procedures did not supersede completely the informal rules and regulation.

When the Bolsheviks came to power as the result of the Socialist Revolution in 1917 they considered law as the instrument of class exploitation. The People's Commissariat of Justice enacted in 1919 «Leading Principles of Criminal Law», which stated:

«only with the final smashing of the opposing overthrown bourgeois and middle classes and with the realization of the communist social order will the proletariat annihilate both the state as an organization of coercion, and law as a function of the state.»

Moreover, they saw a legal system as a reflection of the market and expected that the abolition of the market and of economic individualism would bring about «the withering away of law in general, that is the gradual disappearance of the juridical element from human relations» (E. Pashukanis, The General Theory of Law and Marxism (Transaction Publishers, 2001)).

Despite the fact that the Communists soon set aside the idea of the inevitable withering away of law in the Soviet Union, a large part of social relations was outside of the legal regulation. Moreover, many forms of commercial activity were directly outlawed. For example, for private entrepreneurship one could be imprisoned for up to five years with confiscation of all property; for speculation, which was effectively a trading operation, where profit is made on the margin between purchase and selling prices, one could be imprisoned for up to seven years; for transactions with foreign currency, one could have been sentenced for up to eight years. Land, real estate, machinery and other means of production were by far owned by the state. The institute of proprietorship was abolished, and the inheritance was made unjustly complicated.

That said, however, it does not mean that there is no law at all in Russia or that law is just a window dressing for a system of hierarchical subordination backed up by force and corruption. On the contrary, Russian law stands on determined and clear legal principles following in its main features the legal principles of the modern Western society. Moreover, in this writer's view, rule of law is still and was possible even during the darkest years of Russia's history.

The truth probably is that in Russia the law is competing with other forms of social regulation to a much larger extent than that in most Western countries. This conflict being a part of the everyday life, it largly influences the way business is done in this country and those considering undertaking business in Russia should be prepared for the cumbersome and ineffective work of some governmental bodies, even though in recent years the availability and speed of most government services provided improved drastically, mostly because of widespread governmental e-services; there is a tendency of state authorities and even courts to interpret Russian laws narrowly, reducing one's private rights, and there is a negligence of the law by certain parts of Russian society. It also shall be taken in account that in recent years protectionist tendencies and so-called «protection of traditional values» are on the rise.

Sources of Russian law

The framework of the Russian legal system is created by the constitution, constitutions of the subjects of the federation, decisions of the constitutional court, decisions and directives of the Supreme Court, international treaties, federal constitutional laws and federal laws, regional laws and ordinances, municipal legal acts, directives and statements of the Central Bank and government ministries and state authorities.

The conflict of legal acts is resolved according to the juridical power of the legal acts. The constitution has supreme power over the whole territory of Russia. Codes and federal constitutional laws have more power than federal laws. A conflict between regional and federal laws is decided in favour of a regional law if one is admitted within the regional competence and vice versa. An international treaty that has been ratified has direct effect and precedence over domestic legislation.

Russia is a civil law country; decisions rendered by courts are not binding on other courts. However, the lower courts generally follow the principles established by the Supreme Courts. Moreover, according to art.304 of the Code of Procedure in commercial courts, the Economic Panel of the Supreme Court (until 2014–Supreme Commercial Court) can set aside a decision of a lower court on the grounds that this decision contravenes uniformity in interpretation of law as established by case law. In practice precedents of the higher courts are becoming an important source of Russian law.

Useful Links/government Contacts

Websites [All accessed on 17 April 2021]

Russian Law Resources in English: http://www.russianlawonline.com.

President of the Russian Federation: http://president.kremlin.ru.

The Russian administrative bodies: http://www.gov.ru.

Security Council: http://www.scrf.gov.ru.

The Council of the Federation: http://www.council.gov.ru.

The State Duma: http://www.duma.gov.ru.

The Government: http://www.pravitelstvo.gov.ru.

The Constitutional Court: http://ks.rfnet.ru.

The Supreme Court: http://www.supcourt.ru.

Federal Courts: https://sudrf.ru/.

The Central Bank: http://www.cbr.ru.

The Central Electoral Commission: http://www.cikrf.ru/.

The Federal Tax Service: https://nalog.ru/.

Unified Portal for State Services: https://gosuslugi.ru/.

Finance

Imports and Exports

General

Russia is a Member State of the Eurasian Economic Union (EAEU). Russia shares its customs and border regime with Armenia, Belarus, Kazakhstan and Kyrgyzstan.

The customs legislation is codified. It consists of the Customs Code of EAEU, and corresponding EAEU acts, treaties, federal laws, orders of the President, ordinances of the Government and numerous regulations of the Federal Customs Service. As an EAEU member, Russia also is a member of multiple free trade agreements (e. g. between EAEU and Singapore, Vietnam or Serbia).

Federal customs service

The Federal Customs Service is a united centralised organisation, which is answerable to the Government of the Russian Federation. It is responsible for control of imported and exported goods in the Russian Federation; the collection of customs payments, anti-dumping and compensations duties; the compilation of statistics; the prevention and restraint of cross-border fraud and the violation of the currency control regulation. The Federal Customs Service is a huge organisation employing tens of thousands of people and is responsible for the major source of state revenues. It is often criticised for being a difficult and unpredictable organisation. Yet, as governmental e-services spiked in Russia in recent years, many of the services are provided via the Federal Customs Service website, accelerating the decision-making process and making it more transparent.

Import