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. Last Updated: 07/27/2016

Land Ownership Vote Moves Process Along

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Land reform in Russia continues to be one of the country's more controversial issues, and given the conflicting initiatives from both reformers and conservatives, many observers are confused. "Can land be held in full ownership?" remains a commonly asked question. As is so often the case in Russia, there is as yet no simple answer, although a vote in the State Duma on Jan. 25 may be a significant step forward.

There are several existing federal, municipal and regional laws and decrees that purport to be the basis for land ownership in specific circumstances. Still missing from the law, however, are two critical measures: provisions bringing Chapter 17 of the Civil Code into force and a new federal land code. Chapter 17 of the Civil Code clarifies a number of principal and procedural issues connected with the ownership of land, but under current law it will not be effective until a federal land code has been passed.

There are now many regional land codes in existence, some of which declare the right of ownership to land. In practice, therefore, ownership rights to certain categories of land plots are available, but not everywhere. A new federal land code is needed, once and for all, to establish the key principles of land ownership on a federal level — as is required by the Constitution. It would clarify issues such as the ownership of land by foreign individuals and entities and the types of land that could be held in ownership. The latter is a particularly sensitive issue for the Agrarian Party and others in the Duma. Fearing speculation on farmland and the resulting damage to the agriculture sector, they argue passionately that land should not be placed into free circulation. This is an argument against full ownership.

Despite several attempts, the reformers have yet to secure the passage into law of a new federal land code and, therefore, the principles of land ownership. So, just as federal tolerance of the existing regional land codes is part of a political strategy, the aim of which is eventually to make the reformist principles of ownership a foregone conclusion, the recent vote is part of a campaign to make inevitable adoption of a reformist federal land code.

In the recent decision, Duma deputies voted in favor of the first reading of a draft law that alters the conditions for bringing into force Chapter 17 of the Civil Code. If ultimately passed, the law would make the adoption of a federal land code a prerequisite to the effectiveness of Chapter 17 in respect to agricultural land only. This means the principles and procedures contained in Chapter 17 would apply to nonagricultural land. The idea of progressing reforms by differentiating land types is not new. Earlier suggestions were to have separate federal land codes for different types of land. The new draft law follows this logic but attempts more modestly only to tackle Chapter 17. At best, the draft likely will take some to time to pass into law. Duma deputies will have the opportunity to vote on second and third readings. Thereafter, both the Federation Council and the president will have to approve the law.

If the law does pass, what will have been achieved? Various fundamental questions on ownership will remain to be resolved in a federal land code. Once resolved, however, the legal basis for transactions with nonagricultural land will be in place. Secondly, not drafted to have retroactive effect, the law will strengthen the case of those who have acquired land ownership on the basis of regional and local laws and regulations.

Adrian Moore is a partner at Baker & McKenzie.