Russian business law: the essentials

5.2.2. State Corporations

State corporations, being structures of sui generis, can be provided with various powers, including powers on the adoption of normative legal acts (see, for example, Article 8 of FL on Rosatom).

Thus, Rosatom State Corporation on Atomic Energy adopted an order No. 1/19-NPA (as of December 6, 2013), which stipulates the obligatory forms of reports in the field of state registration and control over radioactive materials and radioactive waste, as well as the order and terms of providing reports.

6. Acts of the Subjects of the Federation

So far we have addressed only the federal legislation, that is the acts which are adopted by government authorities at the level of the federation. The subjects of the Russian Federation have the right to adopt legal acts on the matters listed in Article 72 of the Constitution, as well as on any other matters, except for those listed in Article 71 of the Constitution.

Russia is an asymmetric federation; it is composed of different types of subjects. There are six such types in total: the republics (the republic is a name of the subject of a part of Russia), the territories, the regions, the cities of federal importance, the autonomous region, and the autonomous areas. The subjects of all types possess almost identical legal status.

There are three cities of federal importance in Russia: Moscow, St. Petersburg, and Sevastopol. The aforementioned cities are separate subjects of the federation and, respectively, their bodies adopt legal acts of regional level.

6.1. The Competence of the Subjects of the Federation

According to Article 72 of the Constitution of the RF, the subjects of federation can adopt legal acts, particularly on the following matters:

i) possession, use and disposal of land, subsoil, water and other natural resources;

ii) demarcation of state property;

iii) nature utilization, protection of the environment and ensuring ecological safety; specially protected natural territories;

iv) establishment of common principles of taxation and levies in the Russian Federation;

v) administrative, administrative procedure, labor, family, housing, land, water, and forest legislation; legislation on subsoil and environmental protection.

Moreover, subjects of the federation can adopt legal acts on any other matter, except for those listed in Article 71 of the Constitution of the RF.

6.2. The System of Acts of the Subjects of Federation

6.2.1. Constitution (charter) of the Federation Subject

The system of legal acts of each subject of the federation also represents a pyramid, at the top of which is the charter or the constitution of the subject.

6.2.2. Laws of the Subject of the Federation

Thereafter, the laws of the subject of federation are located. The laws of the subjects often play an important role in the legal regulation of entrepreneurial activities in the given region. Thus, in many subjects, separate laws (codes) on administrative offenses are adopted. These laws provide sanctions for offenses. Moreover, the laws of the subjects establish the structures of administrative offenses which are not provided by the Code of Administrative Offences of the RF.

Such an act in Moscow is the Law of Moscow city No. 45 (as of November 21, 2007), "The Code of the City of Moscow on Administrative Offenses." In particular, it provides liability for such offenses, such as:

i) the implementation of small retail trade without documents confirming the right to placement of trade objects;

ii) illegal destruction of green plantations;

iii) excess in terms of design of the objects, and other excesses.

Moreover, in many subjects of the federation, legal acts are adopted with the purpose of supporting of small and medium businesses. The Law of City of Moscow No. 60 (as of November 26, 2008), "On Support of Small and Medium Businesses in the City of Moscow," is such an act in Moscow. This law regulates, in particular:

i) the procedure for providing to the subjects of small and medium businesses property, financial, information, consulting, legal, and other types of support (chapter 4 of the law);

ii) the procedure for rendering additional support to the subjects of small and medium businesses, which are carrying out activities in the field of innovation, industrial production, and other spheres (chapter 6 of the law).

The subjects of the federation adopt another set of laws, somehow affecting the interests of entrepreneurs.

6.2.3. Acts of the Highest Official of the Subject of Federation

The highest official is the head of the subject of the federation. In Moscow, the highest official is the mayor of Moscow. The legal acts adopted by the Mayor of Moscow (decrees) can not contradict the charter and the laws of the city of Moscow (part 8 of Article 41 of the Charter of the city of Moscow).

6.2.4. Acts of Other Public Authorities of the Subject of Federation

Other public authorities of subjects of the federation are the highest executive body of the public authority, as well as various departments, commissions, and similar bodies.

In Moscow, the highest executive body of the power is the Government of Moscow. Decisions and orders of the Government of Moscow can also affect the interests of businesses.

Other bodies of the city of Moscow, such as the Department of Trade and Services, can also adopt acts, which are significant for representatives of businesses.

Finally, in the administrative districts and areas of the city of Moscow, territorial authorities of executive power are formed – this includes the prefecture of administrative districts and councils of areas, which also adopt acts that are obligatory for execution.

7. The Municipal Acts Regulating Entrepreneurial Activities

Acts at the municipal level in the Russian Federation are also built in a certain hierarchy. The charter of municipality stands at the top of the system, the acts of the representative body (local parliament) are located a step below, the acts of the head of municipality are another step below, and finally the acts of other authorities are at the lowest level.

8. Customs

A special source of law in Russia is customs. The custom "is a rule of conduct which has taken shape and is widely applied in a certain sphere of business and other activities, and which has not been stipulated by legislation, regardless of whether it has or has not been fixed in any one document," (Clause 1 of Article 5 of the Civil Code of the RF). The customs cannot contradict the norms of legislation or provisions of contracts (Clause 2 of Article 5 of the Civil Code of the RF). In Russia, customs are sources of civil law only.

9. The Judicial Practice

The legal system of the Russian Federation belongs to the Continental (Roman-German) type. One of the consequences of this system is that there are no judicial precedents in Russia: the courts are obliged to make decisions, being guided by laws and other legal acts, but not by other judicial decisions. The courts can not create new legal norms.

In practice, one should consider the following:

i) The generalization of judicial practice

The highest instance of the judicial system of Russia is the Supreme Court of the RF.[22 - The Supreme Court of Arbitration of the RF, which previously headed the system of arbitration courts, became part of the Supreme Court of the RF. For details, please, see Chapter on Litigation, Arbitration and Other Means of Legal Protection.] The Supreme Court of the RF is given the right to make explanations to inferior courts, concerning judicial practice on matters, with the basis of study and generalization (Clause 1 part 7 of Article 2 of FCL on Supreme Court of the RF). Such explanations are given in the decisions of the Plenum of the Supreme Court of the RF,[23 - The Plenum of the Supreme Court of the RF is a part of the Supreme Court of the RF.] and informational letters of the Supreme Court of the RF.

In the decisions of its Plenum, the Supreme Court of the RF, expresses positions on the most important issues, as well as on those problems regarding which there were serious contradictions among inferior courts (for the purposes of correcting such contradictions and making the practice uniform).

Informational letters are descriptions of concrete cases; a short narrative of the court decisions made on the given cases, and the comments of the Supreme Court of the RF concerning whether the inferior court adjudicated the case correctly or not.

It should be noted that the Decisions of the Plenum of the Supreme Court of the RF, and the information letters of the Supreme Court of the RF, are the result of the generalization of judicial practice, and not the revision of the decision of the inferior court.

However, while interpreting a norm in the decisions of the Plenum the Supreme Court of the RF, it sometimes gives a meaning which is absolutely different from the one resulting from the literal interpretation of the writing.

Formally, the positions stated in the decisions of the Plenum of the Supreme Court of the RF and the information letters of the RF are not obligatory for other courts. However, in practice the situation is very different. The inferior courts strictly follow the decisions of the Supreme Court of the RF, therefore the specified acts have an obligatory character. Thus, the Supreme Court of the RF can actually change the meaning of this or that norm, and sometimes change it quite substantially.

ii) References to the court decisions on analogue cases