In what would appear to be good news for investors, UK newspaper The Guardian is reporting today that the use of a long-disputed legal clause has been forbidden by a top judge. The news, sourced from a story in Russian-language newspaper Vedomosti, casts President-elect Dmitry Medvedev in a positive light, as the judge in question is known to be one of his allies – the two were fellow law students at Leningrad University. Medvedev has spoken widely about the need to encourage domestic investment in Russia amid ongoing concerns about Russia’s investment climate. The clause in question has reportedly been used in recent tax evasion cases against Bashneft, Russneft and PricewaterhouseCoopers to try and confiscate company-owned property.
From The Guardian piece: “Anton Ivanov, chairman of the Higher Arbitration Court, issued an order to other judges narrowing the use of clause No. 169 of the Civil Code, which has provoked investor fears about property rights, the paper said, citing a copy of the order.”The move would appear to be a response to investor concerns and appeals against attempts by officials to secure property rights from companies, using the “vague” basis, outlined in this clause, that certain deals conflict with law, order or morality. The bigger problem with the clause, as investors see it, is that its scope had recently been widened to include tax evasion as a reason for confiscation.The report adds that “Ivanov is expected to play a key role in forming policy under Medvedev.” If the use of this clause is effectively curbed by the move, it would support Medvedev’s insistence that economic freedom is a cornerstone of his planned economic policy.Read the full article here.PHOTO: Dmitry Medvedev meets young soccer players at a sports complex in Kommunarka April 30, 2008. REUTERS/Alexander Nemenov/Pool (RUSSIA)