Doing business in Russia

Doing business in Russia

03.10.2007

Prof. E. Stroganova

THE RUSSIAN LEGAL SYSTEM

LEARNING OBJECTIVES

This section outlines the key features of the Russia legal system and shall facilitate comprehension of sources of law ,explain how laws are administered and how rules emerge and work in the legal system. Bu the end of this chapter you should have learned the following:

What the legislation system in Russia is

How it develops

What the sources of law are

How laws are adopted

What the structure of acts subordinate to law is

What the structure of court power is

a)  Sources of law, the general principles of their implementation

b)  Laws ( statutes) and other legislative ( normative ) acts; their hierarchy and implementation.

c)  General and special rules, their implementation.

d)  National legislation and international treaties and conventions, their implementation.

e)  Court structure and the administration of justice.

RECOMMENDED TEXT

The following Acts will give the Students the idea of the main principles of Russian Law:

• The Civil Code of the Russian Federation ( Part 1 -# 51 - F3; dated 30.11.1994 ; Part 2 -#
14-F3; dated 26.01.1996)

e The Act on Company Limited by Shares #208 - F3; date 26.12.1995

•  The Act on Limited Liability Company #14-F3; dated 08.02.1998

•  The Insolvency and Bankruptcy Act #6-F3; dated 08.01.1998

•  Accounting and Book - keeping Provisions ( e. g. #633 dated 29.06.1979 etc)

•  Employment Code dated 09/12.1971 ( amended 30.04.1999)

•  The Civil Procedure Code ( optional) dated 11.amended 07.08.2000)

•  The Arbitration Procedure Code ( optional) #70-F3; date 05.05.1995.

SELF-TEST QUESTIONS

What are the differences between the public and private law?

Why are legal norms divided into substantive and procedure provisions?

What is the source of law in a formal juridical meaning?

What sources of the law exist the Russian Federation?

What is the order of adoption of federal laws?

Are decrees of the RF President deemed to be acts subordinate to law?

What are the ways of settlement of conflict of laws in terms of law implementation?

If an international treaty of the RF and a federal law of the RF stipulate different provisions,

what act has the supremacy?

What courts consider penal cases?

Does an arbitration court have jurisdiction over a dispute between a store and its customer who is

not an individual entrepreneur?

What court (in terms of geographical location) shall deal with bankruptcy proceedings?

THE RUSSIAN LEGAL SYSTEM

7 LEARNING OBJECTIVES

This section outlines the key features of the Russian legal system and shall facilitate comprehension of sources of law, explain how laws are administered and how rules emerge and work in the legal the end of this chapter you should have learned the following:

What the legislation system in Russia is

How it develops

What the sources of law are

How laws are adopted

What the structure of acts subordinate to law is

What the structure of court power is

1. INTRODUCTION

Juridical provisions composing the law of the Russian Federation are tightly interconnected, conformed and compose a single system. This system can be subdivided on large component parts, the law branches.

Branches of law

The law system in Russia includes the following major branches:

•  Constitutional law

•  Administrative law

•  Financial law

•  Civil law

•  Family law

•  Labour law

•  Land law

•  Ecological law

•  Penal law

•  Civil-procedure law

•  Penal-procedure law

•  Civil-executive law

•  Arbitrary-procedure law
Public and private law

There are two major areas hi the Russian law system: public law and private law. Public law regulates relations between a citizen and the society (State). These are relations of power-subordination. Constitutional, administrative, financial, penal law and branches of the procedure law are the part of these relations. Private law regulates relations between subjects of the law on the bases of their mutual obligations, where the participants of relations are equal. These relations include civil, labour, family and other branches of the law.

Substantive and procedure law

Law branches may be:

•  Substantive - those that regulate social relations directly

•  Procedure - those that regulate the order and the cover of the law regulation of
substantive branches.

Examples of substantive branches are civil, penal, and administrative laws.

Examples of procedure branches are civil-procedure, penal-procedure, and arbitrary-procedure law.

2. SOURCES OF LAW, GENERAL PRINCIPLES OF THEIR IMPLEMENTATION

A source of law serves as the basis for deciding (ruling) on juridical matters.

One should differentiate between kinds of sources of law in the formal juridical meaning and that concrete set of sources of law that exists in the Russian Federation.

2.1. Sources of law in the formal juridical meaning

•  Lawful custom

•  Legal precedent

•  Regulatory treaty

•  Regulatory legal act

Lawful custom - a behavioural rule applied for a long time and eventually recognised by the State to be obligatory. Is extremely rare in the Russian law system.

Judicial precedent - a decision of a legal body that becomes the model for the future decisions on similar trials. Given decision acts as an obligatory rule spreading on those judges, who examine similar cases in the future; it does not act as a recommendation. Judicial precedent is one of the major sources of law in Anglo-Saxon law family (Great Britain, USA, Canada, Australia, New Zealand, etc.). Roman-Greek (continental) law family including Russia rejects the judicial precedent as the law source.

Regulatory treaty is also ranked among sources of law. It acts directly, and it is obligatory. Example - Treaty on the formation of the USSR of 30.12.1922, Federation Treaty of the RF of31.03.1992.

Regulatory legal act - the principal law source in the continental States, including Russia. Regulatory legal acts are documents that set provisions enacting themselves, and amending or abolishing general rules. That is their difference from law implementation acts (see section 2.3) and from other individual acts, made for the one-time use and "tied" to definite subjects and to specific circumstances, time and place.

2.2. Sources of law in Russia

Sources of law in Russia are:

•  Universally accepted principles and provisions of the international law

•  International treaties of the RF

•  Regulatory legal acts:

-  Constitution of the RF

-  Laws (federal laws and legal acts of the subjects of the Federation)

-  Act, subordinate to law

-  Acts of the bodies of the local self-government

• Treaties of the RF with its subjects. *

Chapter 1 | The Russian legal system | 3

Universally accepted principles and provisions of the international law - official guidelines and fundamental regulations of the international law, admitted by all subjects of the international law; these regulations do not allow deviation In particular, these are the respect of governments' sovereignty, no forceful actions or threat with force, territorial unity of states, inviolability of their borders, peaceful settlement of disputes, non-interference in the internal affairs, and respect of human rights and liberties.

International treaties of the RF. The Russian Federation concluded several thousand international treaties pertaining to a wide range of issues - political, economic, social, etc. According to p. 4, art 15 of the Constitution, regulations of the international treaties hold the advantage over the law of the RF, if they have been ratified by the State Duma (Federal law, 1995 "On International Treaties of the RF).

Constitution - the supreme regulatory legal act holding the highest juridical power, superiority, and direct action on the Russian territory. All laws and other legal acts adopted in Russia must comply with the Constitution The currently effective Constitution of Russia was adopted - unlike the previous ones - after All-Russia referendum held on December 12, 1993. Principal provisions of the Constitution (art. 1,2, and 9) may be reconsidered only in the special order - by convening the Constitutional Assembly and holding national voting (art 135). Other chapters of the Constitution are also amended in a special order.

Constitution sets origins of the constitutional system, human and civil rights and liberties, Russian federative system, powers of the President of the RF, system of bodies of the legislative, executive and legal powers, and starting provisions of the local self-government

Laws - regulatory legal acts that are adopted by the supreme representative body and that possess the highest juridical *****ssia is a federative state and laws adopted in it include federal laws (adopted by the Federal Assembly) and laws of the subjects of the Federation (adopted by the bodies of the legislative power of the subjects of the Federation). Laws can also be adopted directly by the people by referendum

Laws of the subjects of the Federation pertaining to jurisdiction of the Federation or joint jurisdiction of the Federation and an RF subject may not contradict federal laws. According to the general rule, set by p. 5, art 76 of the Constitution, in case of contradiction between a federal law and another act adopted in the Russian Federation, the federal act has the juridical supremacy. For details on law regulations see section 3.1.

Acts, subordinate to law are elaborated on the basis of laws and are to comply with those laws. Acts, subordinate to law include:

• Decrees of the President of the RF (certain exceptions are discussed below in section

32.)

•  Decrees and other regulatory legal acts of the heads of the subjects of the Federation

•  Acts of the Government of the RF

•  Regulatory legal acts of federal bodies of the executive power

•  Regulatory legal acts of bodies of the executive power of subjects of the Federation.
Regulatory legal acts of local self-government System of regulatory legal acts of local
self-government is relatively independent, free from the influence of state authority bodies,
but subordinate to the Constitution of the RF, to the federal laws and to the laws of subjects
of the Federation. Such acts are adopted by the municipalities, by the councils and heads of
self - governed territories (cities and villages), and also by the population directly. Regulatory
legal acts are documents issued by the heads of the municipalities, districts, cities, villages,
and closed administrative-territorial formations.

Acts of the municipal bodies and of heads of local administrations set law provisions that are deemed obligatory for the population of the territories, and/or for institutions and

6 | Chapter 1 | The Russian legal system

Draft laws on introduction or abolition of taxes, on exemption from tax payment, on issuance of state loans, on changes in the financial obligations of the State and other draft laws that stipulate expenses covered by the federal budget, may be submitted for the Duma's consideration after the Government's conclusion (approval) exclusively.

Adoption of the law

Federal law is deemed adopted if more than half of deputes of the State Duma (226 persons) voted positive. After that, it has to be approved by a simple majority of the members of the Federal Council. Following that, the federal law waits for the signature of the President, who, in case of disagreement, has the right to decline the law. In case of a decline, State Duma examines that law again, and either amends it according to the remarks of the President, or leaves the law in the old version In the second case, the Duma may override the veto of the President, if not less than 2/3 of the deputes of the State Duma and members of the Federal Council vote for the adoption of a law. Afterwards, the President must sign the federal law within seven days (ait 107 of the Constitution of the RF).

Official publication and enactment

Federal laws are enacted 10 days after their publication in an official edition (e. g., "Rossiyskaya gazeta"), if the laws themselves do not stipulate another order of enactment The laws are published within 7 days following the, day of their signing by the President

3.2. Decrees of the President of the RF

Decrees of the President of the RF concern wide range of issues covered by powers of the head of the State, that are stipulated by the Constitution (chapter 5, section I of the Constitution), and issues in the joint jurisdiction of the Federation and its subjects. Decrees of the President may not contradict Constitution of the RF and federal laws. On the basis of this regulation decrees of die President sometimes are defined as acts subordinate to law. However, in this case, the principle of power division is forgotten as well as the powers of the President of the RF, who acts as a guarantee of the Constitution of the RF, of human and civil rights and liberties, and who takes measures to provide a co-ordinated functioning and interaction of bodies of state power. The President is authorised to take these measures not only "basing on laws" (a principle formula of the acts subordinate to law), but also in the absence of law. The situation when the process of law-making does not catch up with the reality happens considerably often. Actually the President issues his decrees on all the important issues of economic life, of administrative and social problems (for example, decree of the President of 21.11.1995 # 1163 "On Priority Measures for Toughening the System of Foreign Currency Control in the RF"). In case there is no appropriate law considering one or another issue, a decree of the President may eliminate the law lacuna because there is no contradiction with the law. That is why such decrees of the President occupy special position in the system of regulatory legal acts of Ihe Russian Federation Such decrees of the President are abolished along with adoption of appropriate laws, as for example, in case of the decree of the President of 08.05.1996 "On Principal Directions of the Tax Reform in the RF, and Measures on Strengthening Tax and Payment Discipline", whose individual provisions became null and void after adoption of Part One of the Tax code of the RF. Other decrees of the President are usually subordinate to law.

3.3. Acts of the Government of the RF

According to the Constitution of the RF, acts of the Government are issued on the basis and in pursuance of the Constitution, federal laws or regulatory decrees of the President of the RF. Acts of the Government are deemed obligatory on the entire territory of the RF. The RF President may abolish acts of the Government contradicting the Constitution, federal laws or decrees of the President (art. 115 of the Constitution).

Chapter 1 | The Russian legal system | 5

• Eliminating the lacuna by the law-enforcer.

In the latter case, principal ways to eliminate the law lacuna are:

• Application of analogy of law - law lacuna is eliminated by application of a law

provision, regulating similar relations (such law provision serves as a law basis for court ruling)

• Application of analogy of legislation - in the absence of a law provision regulating

similar relations, the law-enforcer eliminates the law lacuna in accordance with general

principles and the meaning of the legislation.

Given ways (analogy of law and analogy of legislation) take place in Russian law-enforcement practice, but are prohibited in the administrative and penal laws.

3. LAWS (STATUTES) AND OTHER LEGISLATIVE (REGULATORY) ACTS, THEIR HIERARCHY AND IMPLEMENTATION

Hierarchy of legislative (regulatory) acts, basic sources of the legislation in Russia, is established by the RF Constitution.

3.1. Laws

Laws of the RF, along with the Constitution, hold the supreme power on the entire territory of the RF and the highest juridical power comparing to other regulatory legal acts adopted in the Russian Federation on issues in the exclusive jurisdiction of the Federation or in the joint jurisdiction of the Federation and its subjects (art. 71-72 of the Constitution). The laws also have a direct action on the Russian territory (p. 1, art. 76 of the Constitution). Federal laws concerning issues in joint jurisdiction of the Federation and Federation subjects are adopted together with the laws and other acts of the subjects of the Federation (p. 2, art. 76 of the Constitution).

In case of contradiction between a federal law and another act the federal law has the supremacy (p. 5, art. 76 of the Constitution). The rule of supremacy provides the unity of law regulation system in Russia.

Laws of the Russian Federation divide into federal constitutional laws and federal laws (not attached to the constitutional laws). Federal constitutional laws cover issues that are directly foreseen by the Constitution. They include the following laws:

•  Law on referendum

•  Law on introduction of military regime and on declaring emergency situation

•  Law on the order of functioning of the Government of the RF and other laws.
Among the laws one may emphasise codified laws (Civil code, Tax code, Penal code, etc).

Legislative initiative

According to the Constitution of the RF (art. 104) the following entities possess the right of the legislative initiative (that is the right to submit draft laws for consideration of the State Duma):

•  Deputes of the State Duma

•  The Federation Council and its members

•  The President

•  The Government

•  Legislative (representative) bodies of the subjects of the Federation

• The Highest legal bodies (the Constitutional Court, the Supreme Court, the Highest
Arbitration court, etc.) on issues pertaining to their jurisdiction.

8 | Chapter 1 | The Russian legal system

5. NATIONAL LEGISLATION AND INTERNATIONAL TREATIES AND

CONVENTIONS, THEIR IMPLEMENTATION

At present time the Russian Federation is a participant to about twenty thousand effective international treaties and conventions.

According to the Constitution of the RF, universally accepted principles and norms of international law and international treaties of the Russian Federation are a constituent part of its legal system. In case an international treaty of the Russian Federation sets rules different from the rules established by the RF legislation, the international treaty is applied (p. 4 of art. 15).

International treaties have supremacy over federal laws, laws adopted by subjects of the Russian Federation and other regulatory legal acts, i. e. any laws, regardless the date of their adoption - whether before or after an international treaty was adopted.

One of the most important acts of the Russian legislation in this area is Federal law "On International Treaties of the Russian Federation" of July IS, 1995. It is based on provisions of the Constitution of the RF and on universally accepted provisions of contractual law stipulated in Vienna Conventions on the law of international treaties with the participation of states (1969) and treaties with participation of international organisations (1986).

The law distinguishes three categories of international treaties depending on a level of parties to the treaty:

•  interstate,

•  inter-governmental and

•  treaties between ministries and state departments.

Interstate treaties are concluded with foreign states and with international organisations, as a rule, at the highest level - on behalf of the Russian Federation.

Second category includes international treaties of the Russian Federation concluded at the level of the Russian Government. Preamble of such treaties contains a reference to the Government of the RF, and on its behalf the treaty is signed. The examples of treaties of that category are conventions on avoiding double taxation.

Treaties of the third category are concluded between Russian federal bodies of the executive power (ministries and state departments) and similar bodies of other states on issues in their jurisdiction.

Those international treaties whose provisions do not require a separate legal act for their application in the RF, are effective directly.

The Law on international treaties of the Russian Federation is also effective with respect to international treaties with the RF acting as the successor of the USSR.

6. COURT STRUCTURE AND ADMINISTRATION OF JUSTICE

Judicial authority in Russia is implemented through civil, administrative and penal court proceedings. Another judicial branch is arbitration (economic) proceedings. Therefore, the judicial system in Russia consists of three components:

•  Courts of general jurisdiction

•  Arbitration courts

•  Constitutional jurisdiction

Chapter 1 | The Russian legal system | 7

Therefore, this constitutional formula clearly shows that acts of the Government of the RF are subordinate to law and even "subordinate to decrees".

Acts of federal bodies of the executive power. Such acts are issued by ministries, by the federal services, and by other departments included in the Government of the RF. Such acts may be divided into two categories:

• Inside-departmental regulatory legal acts, obligatory for the bodies, officials, and

employees of the organisations of a given department

• Regulatory legal acts, obligatory for all citizens and organisations (including those not

subordinate to a given department). Examples: financial accounting provisions that are adopted by the Ministry of Finance, or instructions of the Ministry for Taxes and Charges on the order of filling in tax returns. Issuance of such acts by a specific department is stipulated in a corresponding federal law (in our examples - in the law "On Financial Accounting" and in the Tax code of the RF, respectively).

All acts of federal bodies of the executive power, concerning rights and lawful interests of citizens, or departmental acts obligatory beyond one department, are subject to state registration with the Ministry of Justice and must be published for the public attention in the set order. Any regulatory legal acts, concerning human and civil rights, liberties, and obligations may not be applied in case they have not been published (p. 3, art. 15 of the Constitution).

GENERAL AND SPECIAL RULES, THEIR IMPLEMENTATION

In case of contradiction (deviations) between individual regulatory legal acts that set rules on same relations, one may speak about conflict of laws. The conflict of laws is settled by one of the following ways:

•  Interpretation

•  Adoption of a new regulatory legal act

•  Abolishing the previous legal act

•  Amending the acts already adopted

•  Consideration in court (of general jurisdiction or arbitration), administrative

consideration

•  Adjustment of the system of the legislation, harmonisation of legal norms

•  Application of Constitutional justice (interpretation of norms constituting the conflict of

laws).

In terms of law implementation the conflict of laws is settled as follows:

• hi case of contradiction of provisions of a general and a specific act of one level (e. g., the

Civil Code of the RF and the Federal law "On Companies Limited by Shares") (horizontal conflicts of laws), a specific legal act is applied. In case of vertical conflict of laws, the general law is applied

• hi case of discrepancies between regulatory legal acts issued by one body (e. g., between

laws), but on different dates, the most recent legal act is applied, even if it does not stipulate that directly.

• With respect to regulatory legal acts issued by bodies of different levels, the hierarchy

principle is applied (e. g., should an ordinance of the Ministry for Taxes and Charges of the RF contradict to an act of the Government of the RF, the act of the Government has the supremacy).

10 I Chapter 1 | The Russian legal system

include the check of compliance with law and validity of court rulings already enacted, and re-consideration of cases whether in the course of planned supervision or in the event of discovery of new case circumstances.

• Supreme level - the Supreme Court of die RF. The Supreme Court acts as a court of first instance with respect to penal cases of extra complexity and any civil cases. The Supreme Court may consider appeals and contests of not enacted yet court rulings either in the course of planned supervision or in the event of discovery of new case circumstances.

6.2. Arbitration courts Disputes considered

Arbitration courts deal with economic disputes related to entrepreneurial activity.

According to the general rule, set by p. 1, art. 25 of the Arbitrary Procedure Code, arbitration courts consider claims of legal entities and citizens engaged in entrepreneurial activity without formation of a legal entity who have a duly registered status of individual entrepreneur, should the dispute have economic nature.

In this particular case it does not matter what kind of legal relations serve as the basis for dispute arisen: civil, administrative or other relations.

Arbitration courts do not consider disputes that - though are related to economic relations - pertain to the penal sphere of legislation

EXAMPLE 1: Bank of Foreign Trade of the RF submitted to the Arbitration court of Sverdlovsk district its claim against the investigation board of the Department of Internal Affairs of Sverdlovsk district on admitting null and void the decision of the investigator on removing arrest from transactions with securities. In its ruling of October 27, 1995, the Arbitration court declined the claim motivating the decline by the fact that legal relations in the given case pertain to the penal sphere of legislation. That position of the Arbitration court was supported by the appellation instance, by the federal arbitration court of the Ural district, and also by the Presidium of the Supreme Arbitration court of the RF1.

EXAMPLE 2: A Department of municipal militia submitted to an arbitration court its claim against a newspaper on protection their goodwill, and demanded to make the defendant refute the published information on planned actions of municipal militia. The plaintiff stated that the published information denigrates its goodwill whose protection shall be regulated by the civil legislation (art. 152 of the Civil Code of the RF). The arbitration court satisfied the claim.

The Appeal instance abolished the decision of the court of first instance and terminated the proceedings on the following grounds.

In accordance with article 22 of the Arbitrary Procedure Code, arbitration courts are entitled to consider cases on economic disputes that arise from civil, administrative or other legal relations.

The article published in the newspaper does not concern business (entrepreneurial) goodwill of the plaintiff and therefore the given dispute may not be considered by arbitration court.

It is advisable to emphasise that arbitration courts do not consider disputes whose parties are citizens not registered as individual entrepreneurs.

EXAMPLE 3: The closed company limited by shares "Insurance company "M-GRATA" submitted its claim to an arbitration court against the company "NB-Trust" on recognising null and void an insurance contract. The court satisfied the claim.

However, the Presidium of the Supreme Arbitration court of the RF satisfied the appeal against
the court ruling on the following grounds. 4

Chapter 1 | The Russian legal system j 9

6.1. Courts of general jurisdiction Disputes considered

Courts of general jurisdiction consider civil, administrative and penal cases. The jurisdiction of the given system of courts has the largest capacity. Courts of general jurisdiction are not entitled to consider only cases whose subjects are in the jurisdiction of die Constitutional Court of the RF (see section 6.4 of this Chapter) or in the jurisdiction of arbitration courts (see section 6.2). All other disputes are considered by courts of general jurisdiction

In particular, citizens and legal entities may defend their rights in courts of general jurisdiction in case these citizens and legal entities are parties to a disputable legal relationship in the form of:

1. disputes arising from civil, family, labour, land, co-operative and other legal relations

with at least one party being a citizen

2. disputes arising from public legal relations based on power subordination of one party to

another with a citizen being the subordinated party

3.  contesting by a citizen (a group of citizens) of regulatory legal acts, if the compliance
with constitutional norms of acts being contested shall not be verified by other courts
(including the Constitutional Court)

4.  contesting refusals to register mass media bodies, to issue licenses to these bodies;

contesting decisions to declare licenses issued to these bodies as null and void or decisions to terminate or suspend the activity of mass media bodies

5. disputes of public or religious organisations (associations) with bodies of state power or

state officials; disputes between public and religious organisations themselves or disputes of these organisations with other organisations.

The above list may be continued: courts of general jurisdiction may also consider other disputes. Having the largest capacity, the jurisdiction of these courts is determined first of all on the basis of p. 1,2, art. 46 of the Constitution of the RF according to which "each person is guaranteed to have judicial protection of its rights and liberties", while "decisions and actions (inaction) of bodies of state power, of bodies of local self-government, of public organisations or officials of these bodies and organisations may be appealed against in court". Therefore, the scope of issues considered by courts of general jurisdiction may only be determined by the method of exclusion - i. e., courts of general jurisdiction consider all disputed except those that pertain to jurisdiction of the Constitutional Court (art 125 of the Constitution of the RF) or (/arbitration courts (art 22 of the Arbitrary Procedure Code). Still, there is the general criterion for determining what cases are considered by courts of general jurisdiction - that is depending on who are participants of disputes. The general rule implies that courts of general jurisdiction consider disputes with at least one party - an individual, a citizen (providing the given dispute is not related to entrepreneurial activity of individual entrepreneur).

The hierarchy of courts of general jurisdiction

The system of courts of general jurisdiction consists of three levels:

• Major level - district (city, municipal) courts. According to the established rule these are

courts of first instance with respect to the majority of cases being considered

• Medium level - supreme courts of republics of the RF, regional courts, city courts of

cities of Moscow and Saint-Petersburg, courts of autonomous districts and regions. These courts may act as courts of first instance when considering specific categories of cases particularly dangerous for the society. In general case they are deemed to be courts of second instance (courts of appeal), i. e. shall consider appeals of lawsuit participants and check die compliance with law and the validity of sentences and other court rulings not enacted yet Presidium of courts of this level acts as supervising body whose functions

Chapter 1 | The Russian legal system | 11

According to the materials of the case, the plaintiff and the defendant had concluded the insurance contract, where the plaintiff insured the responsibility of the company "NB-Trust" for non-fulfillment of its obligations related to fund-raising. The insurance indemnity beneficiaries under the insurance contract were clients of the company "NB-Trust".

Thus, the contract was concluded in favour of clients of "NB-Trust" who transferred monetary funds to the defendant and therefore the given dispute could only be considered with these persons present as actual beneficiaries under the given insurance contract

According to the documents of the case, the clients (investors) of the company "NB-Trust" were j
citizens. However, according to p. 1, art. 22 of the Arbitrary Procedure Code, arbitration courts i
have jurisdiction only over economic disputes between legal entities or citizens engaged in i

entrepreneurial activity without formation of legal entity but duly registered as individual
entrepreneurs. ■ I

Therefore, disputes with the participation of citizens other than entrepreneurs are not in the jurisdiction of arbitration courts.

Thus, the given dispute should not have been considered by an arbitration court, and the proceedings were terminated The mistake of the plaintiff in choosing the court of right jurisdiction and the mistake of the arbitration court that considered the claim resulted in waste off erees and time of the company "NB-Trust" who had to initiate new proceedings but this time in a court of general jurisdiction

Arbitration courts may rule on legal matters related to:

a)  a contract concluded in accordance with the requirement of law or disputes arising under
a contract that stipulates the dispute settlement by arbitration court

b)  changing terms of dissolving the agreement

c)  non-fulfillment or not due fulfillment of obligations

d)  acknowledgement of the right for property

e)  the demand of the proprietor or of another legal owner of the property from somebody
else's illegal possession

f)  violation of rights of the proprietor or another legal owner, not connected with

deprivation of the property

g) reimbursement of losses

h) the requirement to admit null and void (completely or partially) of non-regulatory acts of state bodies, bodies of local self-government, and another bodies that contradict laws and other regulatory acts and infringe rights and legal interests of organisations and citizens-entrepreneurs

i) protection of honour, dignity and business goodwill

j) the requirement to admit non-executable a writ of execution or another execution document that stipulates collection of penalty without recourse to court

k) appealing against the decline of application for state registration or against the decision to recognise a legal entity or individual entrepreneur to be evading state registration in due terms or in other cases when state registration is stipulated by the law

1) collection of fines from legal entities and citizens by state bodies, bodies of local self-government, and other controlling bodies, if federal law does not stipulate such collection without recourse to court or without notifying a legal entity or a citizen

m) refund from the state budget of the monetary means that were written off from accounts of legal entities or individual entrepreneurs by controlling bodies without recourse to court or without notifying the account holder - with the violation of regulations of a law or another regulatory act

Chapter 1 | The Russian legal system | 13

*****le number four (agreed jurisdiction). Parties may determine a court's jurisdiction upon their mutual consent stipulated in an appropriate contract (except for jurisdiction over disputes on real estate).

6.4. Constitutional Court

The jurisdiction of the Constitutional Court is the observance over compliance with the Constitution of the RF of federal laws, decrees of the RF President, acts of the Federation Council, of the State Duma, of the RF Government, Constitutions of republics of the Federation and a number of other regulatory legal acts. The Constitution Court may rule on the legal matters when that is stipulated by law "On the Constitutional Court of the RF'.

Among persons that may file their claims to the Constitutional Court are citizens and groups of citizens, including legal entities and public organisations. The named persons may file their claims to the Constitutional Court in case their constitutional rights and liberties were infringed by a law enforced or to be enforced in a particular legal case.

While filing a personal or joint complaint to the Constitutional Court one should keep in mind the following peculiarities of jurisdiction of this court.

First, it must be law and not other legal acts that infringes or has infringed rights and liberties of the plaintiff. Here the law is understood as federal constitutional laws, federal laws and regional constitutions, statutes and laws. Regulatory legal acts of ministries are appealed against in courts of general jurisdiction.

Second, it must be constitutional and not other rights and liberties that are infringed by the law.

Third, the law appealed against has enforced or is to be enforced in a particular legal case already considered or being considered by a court or other juridical body.

The following example demonstrates how legal entities that are set up for execution of constitutional rights of citizens may file the appeal to the Constitutional Court. The Constitutional Court of the RF tried the case on compliance with constitution norms of p. 4, art.2 of the Federal law of March 7, 1996 "On Amending the Law of the Russian Federation "On Excise Tax" (Findings of October 24, 1996). The case was filed by legal entities engaged in business activity - closed company "Alfa - Eco", limited partnership "Centaur", limited partnership "Titan" and limited liability company "Norok". The Constitutional Court explains its decision to consider the claim of business entities on infringement of their constitutional rights and liberties as follows: "According to p. 1, art. 96 of the federal Constitutional law "On Constitutional Court of the Russian Federation" the right to file to the Constitutional Court a personal or joint claim on infringement of constitutional rights and liberties is given to citizens and groups of citizens whose rights and liberties are infringed by a law enforced or to be enforced in a particular legal case. The given regulation implies that citizens and groups formed by these citizens are entitled to file a constitutional claim on infringement of their rights, in particular, on infringement of rights of the group itself in cases when the activity of the group is related to execution of constitutional rights of citizens - members of the given group (participants or founders)."

j