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News
05.09.2019

Improvement of national jurisdiction and protection of the rights of investors

KEY CONCLUSIONS

The legal system must respond flexibly to changes in the economy

“The law needs to be flexible and responsive to the new environment so as to facilitate the optimal development of new types of economic activity,” Alexander Konovalov, Minister of Justice of the Russian Federation.

“The rapid growth of the economy, of which investment is an important component, is impossible without a clear and modern regulatory framework,” Yuri Chaika, Attorney General of the Russian Federation.

“New projects are changing the structure of the global economy, and the legal system should clearly and efficiently respond to these challenges,” Stanislav Alexandrov, Executive Director, Chief of Staff and Member of the Board, All-Russian Public Organization Association of Lawyers of Russia

Russian jurisdiction is competitive

“Russian jurisdiction [for the investment process, – Ed.] is incredibly competitive. <...> [According to the Russian Union of Industrialists and Entrepreneurs, – Ed.]. Most investors believe that their rights are well protected – 92%,” Roman Trotsenko, Founder and Chairman of the Board, AEON Corporation.

“Russian courts have a huge advantage over the courts of most foreign jurisdictions, and this is the speed at which cases are adjudicated. For business, the speed by which decisions are taken is sometimes more important than the decision itself,” Kirill Udovichenko, Partner, Monastyrsky, Zyuba, Stepanov & Partners.

PROBLEMS

The emergence of new forms of administrative pressure on business

“The supervisory authorities have found other ways to circumvent the supervisory control of the prosecutor’s office, and today they perform supervisory control in other ways, referred to as monitoring, raids and administrative investigations <...> and they are all carried out <...> outside the supervisory control of the prosecutor’s office and are not included in the audit register,” Boris Titov, Presidential Commissioner for Entrepreneurs' Rights.

Inadequate supervision of the prosecutor's office over the investigation

“The prosecutor’s office, which supports state prosecution, should initiate the investigation, and this investigation should work for the prosecutor’s office <...> Today this is not the case and as a result the prosecutor’s office is practically unable to control and supervise investigations,” Boris Titov, Presidential Commissioner for Entrepreneurs' Rights.

Imperfect legislation

“The economy is developing through projects. <...> Now we have no legislation related to project management. <...> Many legislative and regulatory acts are difficult to read as they are fragmented and mutually exclusive, and they duplicate the functions of legislation in the federal executive branch and in localities,” Elena Bezdnezhnykh, Vice President for Regional Policy and Government and Administration Relations, RUSAL.

“Very often we focus on the pursuit of fashion trends. But for business mere consistency and perseverance is not enough to accomplish its goals. <...> There are many laws and they are written down as guidelines,” Alexey Chichkanov, First Vice President, Gazprombank JSC.

“The Ministry of Justice is doing a great job in improving legislation to protect the rights of Russian investors abroad, but some agreements on the protection of investments require revision,” Dmitry Dyakin, Partner, Egorov Puginsky Afanasyev & Partners.

Society has a negative attitude towards entrepreneurs

“The problem of protecting the rights of entrepreneurs is broader. <...> Our society displays a distinct lack of tolerance towards entrepreneurs, and entrepreneurship is not promoted in our country,” Igor Drozdov, Chairman, Skolkovo Foundation.

SOLUTIONS

Optimization of Regulations

“On 1 September, the law on arbitration in the Russian Federation celebrated its three-year anniversary. The system of pocket arbitration proceedings, which flourished for many years, has essentially been destroyed <...> The law over the past three years has revealed a number of weaknesses in the regulatory environment related to these relations, and these weaknesses have been ironed out,” Alexander Konovalov, Minister of Justice of the Russian Federation.

“The investigation, the prosecutors who support the state prosecution, and, of course, the judges need to understand that if you want to bring the accusation of fraud against someone based on 159 [article of the Criminal Code of the Russian Federation, – Ed.], you must prove intent – a premeditated violation of the law and the rights of its counterparty. <...> There should be a special clarification from the Plenum of the Supreme Court,” Boris Titov, Presidential Commissioner for Entrepreneurs' Rights.

“Now in Russia they are continuing to develop a proven flexible system of fire regulations in order to prevent the introduction of additional, unreasonably burdensome requirements,” Alexey Serko, State Secretary and Deputy Minister for Civil Defense, Emergency Situations and Disaster Relief.

Strengthening the role of prosecutors in protecting business rights

“The prosecution authorities annually adjudicate on more than 6 million applications from citizens <...> As for the complaints of entrepreneurs, every second complaint is satisfied, with this figure reaching 70% in some regions <...> We talk about the effectiveness of the role of the prosecutor’s office in the protection of human rights <...> I decided to hold meetings [with business, – Ed.] not only at the Forum, but at least once a month, once every two months through entrepreneurial communities,”  Yuri Chaika, Prosecutor General of the Russian Federation.

“Polls suggest that the prosecutor's office of the Russian Federation is recognized as the most effective institution and is considered by business as the main body that protects property rights and the interests of business,” Roman Trotsenko, Founder and Chairman of the Board, AEON Corporation.

“We need to prohibit the initiation of administrative proceedings on <...> quasi-checks <...> which means you can conduct verification procedures, but you cannot administer punishment until you have permission from the prosecutor’s office. This would be a really good move, and it could lead to a sharp reduction in the number of control and supervision measures,” Boris Titov, Presidential Commissioner for Entrepreneurs' Rights.

Application of positive foreign experience

“We always bring in experts with international experience to perform collaborative work. By default, the courts apply the pre-trial settlement procedure, and the expert committee acts as a mediator. This mediation leads to positive results in the form of positive judicial decisions, and this practice can be transferred to other judicial systems,” Wenhua Shan, Dean, Professor of the School of Law, School of International Education, Xi'an Jiaotong University.

“The international integration of law is very important,” Elena Bezdenezhnykh, Vice President for Regional Policy and Government and Administration Relations, RUSAL.

Digitalization of the regulatory framework

“We can see that the regions of the Russian Federation need to take wide-ranging measures to digitalize the entire regulatory framework that is being established in these regions,” Roman Trotsenko, Founder and Chairman of the Board, AEON Corporation.

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