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. Last Updated: 07/27/2016

Civil Code: Now for Part Two

Following the passage of the first part of the Civil Code -- most of which entered into force Jan. 1, 1995 -- the Research Center for Private Law has continued to work with a group of high-profile attorneys from numerous agencies and institutions to finalize the remaining sections.

The drafters have divided the remainder of the code into two separate parts. Part two covers such areas as purchases and sales, lease arrangements, bank accounts, independent contractors, agency agreements, franchising, insurance contracts, and other "individual types of obligations."

Part three contains the final three sections, dealing with intellectual property law, inheritance law, and private international law, respectively.

The decision to divide the remaining sections into two parts was made to facilitate the passage of part two, which, as restructured, is not expected to engender heavy debate in the State Duma, the lower house of parliament, and the Federation Council. In contrast, the drafters feel that part three may encounter more resistance, particularly in the area of inheritance law.

The current draft of part two represents a significant break from the Civil Code of 1964. The drafters have added extensive details to chapters dealing with purchases, sales and insurance, and have included a new chapter regarding franchising agreements, nonexistent in the 1964 code.

Perhaps the most significant change in part two is in the area of banking. The 1964 Civil Code contained a mere five articles dealing with "settlement and credit relationships." Part two now contains four chapters on loans and credits, deposits, accounts and settlements. Provisions on letters of credit, drafts and checks have also been included. While the final content of these new provisions remains to be seen, their very existence reflects an important shift in the economic environment of Russia and represents a key step forward in creating a true market environment.

The drafters are expected to present part two of the Civil Code to Yeltsin's administration in August. While the administration reserves the right to make changes, the drafters do not expect it to make significant alterations to the draft.

Following the Duma's return from recess at the beginning of October, the president will submit part two of the Civil Code to the Duma. Barring unforseen delays, part two should be passed by both chambers of parliament and signed by the president by the end of 1995.

The drafters will continue work on part three to resolve any remaining issues. If all goes as planned, part three should be presented to the Duma in late October or early November. Due to this later date, however, part three will not likely be passed before the end of 1995.

Another key development relating to the Civil Code is the anticipated passage of a new Land Code. While most provisions of part one of the Civil Code have been in effect since the beginning of the year, the implementing legislation accompanying part one stipulates that chapeter 17 (dealing with rights and land) will only take effect "from the day the Land Code of the Russian Federation comes into effect."

On July 14, a draft Land Code passed the first Duma reading. It is expected to move through the Duma, the Federation Council and be signed by the president without significant obstacles.

Eric Anderson is a summer associate at the law firm Baker & McKenzie.