Russia Legal News Blast, May 9, 2011

One development that is largely missed by Russia observers is the emergence of the Highest Arbitrazh Court (HAC) and its chairman, Mr. Ivanov, as an important political player. HAC is rapidly becoming an important legislator in its own right. Working closely with Presidential administration, HAC recently has come with initiatives that, while going under radar of the political analysts, may have long range consequences that affect both Russian and foreign businesses.

Mr. Ivanov gave an important speech at a recent congress of Russian judges. At various points, he disclosed how HAC plans to change the Russian Civil Code, while relying on novel judicial interpretations of Russian statutes in order to “pierce the corporate veil.” He strongly pushed his pet idea – introducing precedent-based system in Russia, proposing a novel construct of “precedential request” – a lower court, struggling with an interpretation of a statute must, in difficult cases, sent a request for clarification to HAC, introducing a system of specialized courts (tax, intellectual property, etc) under the jurisdiction of HAC.

Recent days brought a spate of other important initiatives of HAC – for example, HAC decided to extend protections available to consumers under the consumer protection laws to borrowers of commercial banks. HAC proposes to reintroduce institution of so-called “private writs” through which Arbitrazh courts would get the power to directly influence behavior of civil servants and lawyers through addressing their institutions in a special kind of judicial order not connected with the decision but meant to address “root causes” of a wrongdoing.

HAC has significantly simplified reimbursement of VAT in an important category of situations
In principle, in a civil law system even less important changes would require a legislative sanction. Obviously, the rubber-stump Russian “parliament packed with non-entities is not up to the task.

A consultant advising on a Russian law without taking account of position of HAC is probably engaged in malpractice.