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The Competitiveness of the National Jurisdiction: New Directions for Development
14 February 2019
16:15—17:30
KEY CONCLUSIONS
The Russian jurisdiction is becoming more attractive to investors

Russia ranks 16th in terms of levels of foreign investment. A year ago, it was 21st, and the year before that it was 39th. <…> You can’t say that there’s no progress. A lot has shifted because of the changes in the Civil Code. After that comes the fact that the share of companies operating in our jurisdiction according to Russian law has tripled. In five years, the number of businessmen complaining about the inconvenience of Russian legislation has decreased by a factor of two and change — Andrei Nazarov, Co-Chairman, Delovaya Rossiya (Business Russia).

Russia is the leader in Europe and Central Asia across a number of indicators: first of all, there’s the speed of justice. The second crucial factor is the cost of justice. <…> Which ends up being just 15% of the claim. These indicators are largely responsible for facilitating the development of an important institution in Russia, the institution of legal financing and the development of the institution of legal expense insurance, which also increases the competitiveness of the Russian jurisdiction — Boris Boltyanskiy, Editor-in-Chief, Pravo.ru.

Evaluating the competitiveness of the legal environment is complex

General criteria should not be used to evaluate the attractiveness of the Russian jurisdiction. It needs to be measured by taking the number of small and medium-sized enterprises that are created in our country, and especially the number of those that come to our country, into account — Elena Bezdenezhnykh, Vice President for Regional Policy and Government and Administration Relations, RUSAL.

There’s an expanded definition of what a jurisdiction is, that it is simply the general conditions for doing business. Then there is a narrower definition, that it is methods for protecting businesses that are operating in good faith under standard economic conditions. Here we get corporate legislature, control and supervision, regulation, transparency from the point of view of access to information, the law enforcement system — Oleg Fomichev, Director for Strategic Planning and Development, Renova-Holding Rus.

Just 11% of all investments are foreign direct investments. It turns out that all of these changes haven’t had much of an effect on international actors — Andrei Nazarov, Co-Chairman, Delovaya Rossiya (Business Russia).

In general, if we’re talking about administrative disputes, an important trend is the movement of courts away from formalism to reviewing the essence of the economic relations between parties, which affects everyone who participates in the economy — Boris Boltyanskiy, Editor-in-Chief, Pravo.ru.

ISSUES
The growing number of economic disputes is a sign of systematic regulatory issues

In 2018, 21 thousand administrative claims were filed requesting the review of land and structure values in the cadastre. 97.5% of these claims were approved. <…> If so many claims are being approved, you have to wonder: is a systematic approach not working or is it working unfairly? — Vladimir Gruzdev, Chairman of the Board, Association of Lawyers of Russia.

Over 200 thousand criminal cases are filed each year. Last year, 66 thousand cases made it to court, while 166 thousand of them were suspended. <…> In other words, the courts hear no more than 15% of filed cases, and no more than 5% get closed. And where are the rest of the cases? This is not a very uplifting situation, because each filed case is a problem for an entrepreneur and their business — Boris Titov, Presidential Commissioner of the Russian Federation for the Protection of Entrepreneurs’ Rights.

It does not matter to a business who comes knocking — the taxman, an administrative body, a prosecutor, or an investigator. For the business, the end result is the same, they lose everything. And if they do not end up losing everything, they will end up paralyzed — Aleksandr Savenkov, Deputy Minister of Internal Affairs of the Russian Federation – Chief of the Investigation Department of the Ministry of Internal Affairs of the Russian Federation, Full State Counsellor of Justice 1st Class of the Russian Federation, Deputy Director, Institute of State and Law, Russian Academy of Sciences (RAS).

The dialogue between businesses and the government on reducing the administrative burden is slowing down

The initiative to reduce the number of mandatory requirements came from the entrepreneurial community. First, the entrepreneurs prepared a list of unsatisfactory requirements, and then, together with the economic block of the Government, with the Ministry of Justice, we started to convince the controllers that these requirements needed to be pared down. And then the controllers started making arguments against and <…> That conversation is where it all got stuck — Savva Shipov, Deputy Minister of Economic Development of the Russian Federation.

The increased pressure on the economic justice system affects its quality

This is not the first year that the economic justice system’s workload has increased. This can threaten the quality of the system. <…> The number of disputes continues to grow, thanks to a clear tendency towards ‘lawsuits for every last rouble’ — Boris Boltyanskiy, Editor-in-Chief, Pravo.ru.

SOLUTIONS
Creating an economy of trust

It is important to ask ourselves the question: what does a modern, competitive jurisdiction look like? An ‘economy of trust’ allows us to avoid the huge costs of the facts that the government does not trust entrepreneurs and that people do not trust each other. An economy of trust allows us to create a new environment, resulting in a completely different type of economic growth. This is not just a legal issue, it is also a cultural one — Savva Shipov, Deputy Minister of Economic Development of the Russian Federation.

The most important factor in the attractiveness of a jurisdiction is trust. Trust is predictability, reliability, security, and risk sharing — Elena Avakyan, Executive Director, Non-Profit Partnership for Advancement of Corporate Law.

Improving regulations

Requirements should not be tied to an control and supervision body, which can then either act on them or not, they should be tied to business. We need a complete list of requirements for all documents — Boris Titov, Presidential Commissioner of the Russian Federation for the Protection of Entrepreneurs’ Rights.

There needs to be a separate chapter in the Criminal Code that establishes a special procedure for economic crimes — Andrei Nazarov, Co-Chairman, Delovaya Rossiya (Business Russia).

The material was prepared by the Russian news agency TASS