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Protecting Investments and Creditors’ Rights in the Russian Far East: Strategic Changes

September 06, 21:29 UTC+3
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Key conclusions

The Russian legal system isn’t perfect, but it has a number of clear advantages

“In the Doing Business rating, which is recognized as an indicator of the business and investment climate in the country, legal indications in the Russian judicial system are certainly not bad and are higher than the European average.  We have a fairly fast justice system, faster than those in most European countries, and we have rather inexpensive due process of law with only 16.5% of the amount of a claim required to ensure the return of debts at court, and that includes legal representation costs,” said Boris Boltyanskiy — Editor-in-Chief of Pravo.ru.

It is necessary to enhance innovation and digitalization in the judiciary branch

Indicators for the Russian Federation in the World Bank rating would be higher if it weren't for the fact that the organization gave Russia 0 points of 4 possible for automation of justice,” Boris Boltyanskiy explained.

“Using cryptocurrency would accelerate the processes of legislation and investment in the Far East and in other remote regions, as well as that of judicial reform.  We wouldn't have any currency differences in relation to what was being sought in the lawsuit," explained Elena Bezdenezhnykh, Vice President and State Secretary of GR Norilsk Nickel.

Challenges

Reducing the number of appeals caused by lack of confidence from businesses

“Entrepreneurs do not always consider it necessary to turn to the courts because they see that this is not always something that is prospective,” said Vladimir Gruzdev, Chairman of the Board of the Association of Lawyers of Russia.

Closed-door courts

“It is very important for us to achieve transparency in the justice system.  That is based on the disclosure of information.  Unfortunately, when it comes to informatization, we rank 0 with Doing Business,” said Elena Avakyan, Executive Director of the Non-Profit Partnership for Advancement of Corporate Law and Counsel at Egorov Puginsky Afanasiev & Partners.

“The sphere of arbitral proceedings in Russia is statistically a whole 'terra incognita'.  When we began the arbitration proceeding reform no one even knew how many arbitration courts there were in the country,” explained Mikhail Galperin, Deputy Minister of Justice of the Russian Federation.

A lack of required levels of competency and representatives of national jurisdiction

“Court professionalism is a very big problem today.  90% of judges come from within the court system, which begins with court secretaries.  That is to say that these are professional workers of the judiciary system and they must be professional workers who are legally savvy as to resolve disputes and make professional decisions.  This is why there need to be advocates and prosecutors, as there are in other countries, who need to see the position of the judge as the top of the career ladder,” said Boris Titov, Presidential Commissioner of the Russian Federation for the Protection of Entrepreneurs’ Rights.

“Sometimes, you know, the lawyers in Russia have difficulties in English.  So, in that case, we have to always negotiate through translators.  So this means that even if we agree on something, we are not sure whether we have the same understanding on the thing,” explained Tanaka Mikio, Partner at City-Yuwa Partners.

High degree of dependency of the judiciary system on the federal executive branch

“One of the fears of the Japanese clients is that the Russian government or authorities have too much power.  Like in China.  So whatever we agree, we are not sure that it will be executed as expected,” explained Tanaka Mikio.

Lack of accountability on the part of judges for decisions made

“Today, unfortunately, the judges we have are not only not independent, but they also don't take responsibility for their decisions,” explained Boris Titov.

Solutions

Increasing the number of independent judges

“We have a concrete proposal - to go the route of electing and rotating judges at least every two years in order to get rid of the pressure on the judges.  We need to create a new instance of cassation, taking into account extraterritoriality,” suggested Boris Titov.

Creating a specialized judicial body for the Far East

“The idea of making a territorial court seems very good to me.  It would be a sort of legal oasis where maybe English law would be used as it is in Dubai,” said Mikhail Galperin.

“We believe that the solution for increasing investment trust in the legal process is to create a separate, specialized court,” Elena Avakyan pointed out.

“We suggest creating a special college of advocates that would deal with appeals and considering cases that are related to the residents of advanced development zones and other special economic zones. This needs to be a special bar with its own judicial corps that would be appointed in a special order. This would be the court of first instance for ADTs and special economic zones,” suggested Boris Titov.

Certifying educational institutions and specialists

“Thanks to the work of the association of lawyers, certification of legal universities that we oversaw has allowed us to reduce the number of law schools that were issuing low-quality diplomas,” said Vladimir Gruzdev.

The emergence of innovation projects

“There is good news here.  The Bank for Reconstruction and Development has allocated $466 million for the creation of artificial intelligence and the digitalization of general jurisdiction courts,” said Elena Avakyan.

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