Russian business law: the essentials

Since 1925, the economic-legal department was created in the MSU faculty of USSR law. During the 1920s, the Civil and Land codes were adopted; also, drafts of the Economic, Commercial, Industrial, and Cooperative Codes were developed. The creation and tremendous development of business law was explained by the combined nature of the Soviet economy, and the industrialization of civil law. Moreover, the idea of business law significantly correlated with socialist ideology and the idea of common good. However, the MSU faculty of USSR law was reorganized in 1931.

The revival of teaching business law related to a decree of the Communist Party, dated 1964.[12 - "On Measures on Further Development of Legal Science and Improvement of Legal Education in the Country."] The first textbook on business law was developed by a group of authors, supervised by a doctor of legal sciences, Professor V. V. Laptev in 1967.

The final concept of business law was developed by a group of authors from MSU and the Sverdlovsk law institute, supervised by V. P. Gribanov and O. A. Krasavchikov. According to that concept, the business legislation could be recognized as an integrated and complex formation, where norms of different branches of socialist law interacted with regulation of different areas of business activity.

The modern period of business law started after the establishment of the business law and foreign trade regulation department of MSU in 1989, and was later renamed into the business law department in 1992, and headed by Professor A. G. Bykov.[13 - Eu. P. Gubin, P. G. Lakhno, I. V. Savelyeva were also members of the department.] After the fall of the USSR and at the beginning of new economy system formation, it was vitally necessary to study business law as a separate branch of law that would regulate legal relationship in a new free market environment.

Currently, the development of Russian business law is led by the MSU Business Law Department with Professor Ev. Gubin, one of the authors of this book, as its Chairman.

4. Entrepreneurship as a Legal Concept, and Business Law Principles

Another important thing to understand regarding specific rules of business law, is the legal approach towards entrepreneurship, along with business law principles.

In the Russian legislation, entrepreneurship is defined as an independent activity, aimed at regular receipt of profit from use of property, product sale, implementation of works, or service delivery carried out at their own risk by persons registered according to the laws (article 2.1 of the Civil Code of the RF). Thus, any activity can be declared entrepreneurship if it has the aforementioned features, in other words, (1) independence, 2) risk character; 3) focus on regular receipt of profit. Although it is not directly indicated in a given definition of entrepreneurship, the word «activity» itself indicates it must be a continuous, regular, not a single act, and be carried out for a more or less a certain time period.

The principles of business law form the basis for being a separate area of law, and determine its unity. The principles of the market economy underlie business law principles, as market relations are the subject of business regulation.

The following principles of business law are usually mentioned by legal scholars,[14 - See, for example, I. V. Ershova, G. D. Otnykova, Russian Business Law, 2011.]inter alia: (1) freedom of entrepreneurship, (2) variety and equality of ownership forms, (3) economic space integrity, (4) competition and limitation of monopolistic activity, and (5) state business regulation. These and other principles of business law are explained further in this book.

The principle of entrepreneurship freedom is enshrined by Article 34 of the Constitution of the RF, establishing that “each person has the right to freely use his abilities and property in order to carry out business and other economic activity not prohibited by a law.” The same article of the Constitution bans economic activity aimed at monopolization and unfair competition.

Another important principle relates to state regulation of economy and entrepreneurship. For example, article 71 of the Constitution of the RF includes the following spheres into the jurisdiction of the Russian Federation, inter alia:

(1) federal policies and programs in the area of state, economic, ecological, social, cultural and national development of the Russian Federation;

(2) legal framework of a single market; financial, foreign exchange, credit, and customs regulation, monetization, pricing policy; federal economic services, including federal banks;

(3) federal budget; federal taxes duties; federal funds of regional development;

(4) federal property and its management.

The principle of state regulation is enshrined not only in the Constitution of RF, but also in the constitutions or charters of the Russian Federation constituent territories, federal and local laws, and other legal acts.

Finally, the integrity of the economic space is another core principle of market economy and business law. In accordance with articles 8 and 74 of the Constitution of the RF, the integrity of economic space, free movement of goods, services and financial resources, support for competition, and the freedom of economic activity are guaranteed in the Russian Federation.

Now, our reader has the necessary background. Let your journey to the Russian business law begin! We hope you will enjoy it.

Evgeny Arkhipov[15 - Lomonosov Moscow State University, PhD candidate, LL. B. 2014.]

Chapter 1 – Business Legislation

1. Business Legislation

Russia belongs to the Continental (Roman-German) legal family. Statutes (laws) are the main source of law.

1.1. The Hierarchy of Legal Acts Regulating Entrepreneurial Activities

The system of legislation of the Russian Federation consists of three levels: federal, regional (at the level of subjects of the Federation), and local (at the level of municipal entities). At the top of the pyramid of normative acts is the Constitution of the Russian Federation. Moreover, the Russian Federation is a party to several binding international treaties.

The Constitution of Russia sets the areas of competence and powers of the federal and regional governmental bodies in its Articles 71–73. Article 71 of the Russian Constitution lists the procedures by which legal acts can be adopted, solely at the federal level. Article 72 of the Constitution describes the areas in which the regulation can be carried out by both regional and federal acts. Meanwhile, the acts of the regional authorities on such matters shall comply with the acts of the federal authorities. The regional authorities “have full power” on matters not listed in the aforementioned two articles (Article 73 of the Russian Constitution).

Currently, no law on normative legal acts has been adopted in Russia, which is common in several countries. Therefore, the legislative system is not fixed in any act in a complete form. However, separate norms establishing the hierarchy of acts are still available in various sources. With regard to such norms, as well as provisions of the jurisprudence, the schematic system of the normative legal acts in Russia can be explained in the following chart.

An act with a lower legal force should not contradict an act with a higher legal force. If such a contradiction arises, the act with a higher legal force shall be applied.[16 - Please see below for a more detailed on the correlation between federal and regional acts.]

1.2. Requisites of Legal acts

In order to be able to precisely identify a specific legal act, the legal acts shall have the following requisites:[17 - Legal Directory Systems "Consultant Plus" and «Garant» may be used for searching for the texts in Russian of the legal acts of the Russian Federation. The database of these systems is available on the official websites as well: http://www.consultant.ru/online/ and http://www.garant.ru/.]

i) The type of a legal act

Main types of legal acts: a federal law, a decree, a decision, an order, a command, an instruction, an informative letter.

ii) Adopting body

An adopting body for federal constitutional laws and federal laws is not specified; only the Parliament of the Russian Federation can adopt these acts. Similarly, an adopting body for regional laws is not specified.

iii) The name

Legal acts do not have official abbreviations in Russia. At the same time, in practice the acts that are widely used acquire informal short names. The short names can appear as abbreviations (for example, FL on Joint Stock Companies is called “FL on JSC”).

iv) The date of adoption

The date of adoption of the federal law is the date of the adoption of the law by the State Duma.

v) The number

Sometimes federal laws are simply named by number, for example "law No. 99-FL". However, this method of naming the law does not allow accurate identification of the law. The issue is that the number 1-FZ is assigned to each law adopted, as the first in a row in the current year. The next law that is adopted is assigned the number 2-FZ, and so on. With this method, since 1993, 21 federal laws were adopted with the number 99-FZ. Therefore, for the unambiguous identification of the law, in addition to the number, it is also necessary to know the date (or at least the year) of its adoption. In practice, for reference on a concrete act, it is recommended to use five requisites at a time: the type of the act, the adopted body, the name, the date of adoption, and the number.

vi) The date of the last amendments (edition)

The date of the last amendments is usually specified in brackets.

vii) The source of official publication

The sources of official publication of the federal laws, the acts of the President of the Russian Federation and the Government of the Russian Federation are:

“The Russian Newspaper”

“The Collection of the Legislation of the Russian Federation”

“The Parliamentary Newspaper”

The official internet portal of legal information, at the following website: pravo.gov.ru

The international treaties within the EEU and decisions of the Eurasian Economic Commission are published on the following website: eaeunion.org

The source of official publication is usually separated from the other requisites with a double backslash. In practice, it is usually not indicated.