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. Last Updated: 07/27/2016

Privatization Law Holds Up in Court

This column frequently refers to the difficulty of resolving disputes in Russian courts. Courts can be an obstacle partly because some of them, especially the general, or "people's" courts, have little experience in commercial disputes and partly because some of the new laws are expressed in very general terms, allowing for many different interpretations.

One area where the law is relatively well-developed is in connection with the decisions of authorities, for example made in the course of the privatization process. Courts make decisions based upon decisions to transform state enterprises into open joint-stock companies, decisions to separate out sub-divisions of an enterprise, and generally decisions of the Property Management Committees at the federal and regional level. Applications to the courts would involve disputes about the actual decision taken, but they could include complaints about the way the decision had been taken, for example if the work collective had not been given an opportunity to consent to a course of action requiring their consent or if there had been other breaches of procedure.

The privatization law contains a general state guarantee that the rights of all the parties concerned will be observed, and provides that in the case of a breach individuals may initiate proceedings to rescind the transaction, to correct any violations and to hold the guilty parties accountable.

In addition, the Law on the Arbitration Court provides that the court can hear claims made by individuals or groups arising out of the exercise of administrative functions, and can declare that actions and decisions of state, local or other authorities -- such as the militia -- are void. The grounds for such a claim include infringing of the applicant's rights, curtailing his freedom, putting obstacles in the way of the exercise of his rights, unlawfully obliging the applicant to do something or unlawfully creating an obligation for him.

In the past there was some doubt as to which court had jurisdiction to hear which types of claims, but a decision of the Collegia of the Supreme Court clarified the point: Claims alleging a breach of the rights of specific individuals or groups are heard by the Arbitration Court, while claims alleging a breach of the rights of an unspecified group (like a class action) are heard by the Courts of General Jurisdiction.

Whichever Russian court hears a case, its task is made all the more difficult by the fact that many laws raise more questions than they solve. The Supreme Arbitration Court and Supreme Court have referred to the lack of clarity and absence of procedures in their decisions.

Marcia Levy, an attorney with Norton Rose, has been practicing law in Moscow for three years.