How the transition to precedent law is driving Russian legal reforms

In the early 1990s, there were great expectations that Russia would evolve into a full-fledged Western-style democracy with a market economy and a developed rule of law within a few years.  This transition continues to prove to be long and hard. Twenty years after the dissolution of the USSR and a quarter century after Mikhail Gorbachev launched perestroika, Russia remains in many respects a country in transition and the Russian legal system is no exception.

However, despite continued criticism of Russia’s rule of law and problems with corruption, Russia’s legal system as a whole is evolving in the right direction and becoming more flexible, dynamic, and transparent.  This is largely due to the fact that, since the start of the twenty-first century, Russia’s legal institution has been gradually shifting from a Continental codified law-based legal system to the Anglo-Saxon precedent-based system, where courts base their rulings on previous court decisions. 

This precedent-based system is helping to strengthen Russia’s rule of law in the following ways:

• It compensates for the deficiencies in outdated or contradictorily written laws, making legal rulings more predictable, relevant, and responsive to the changing environment.
• It acts as a safeguard against attempts to wield justice through corrupt practices and informal rules.
• It allows the judicial branch to become more independent, especially in commercial and constitutional spheres, where precedential court rulings often weigh more than laws themselves and statements of state authorities.

The evolution to a precedent-based system is particularly evident in commercial law, where the system remains nominally Continental, but court decisions are driven increasingly less by the letter of the law and increasingly more by precedents.  It can be said that Russian commercial law has in fact developed into a mixed model, with elements of both the Continental and Anglo-Saxon legal systems present, evolving, and increasingly complementing each other.  Anton Ivanov, the chairman of Russia’s Supreme Commercial Court, is a strong proponent of the precedent system, which he addressed along with other Russian legal reforms in a recent interview to Vedomosti newspaper.

How the precedent-based legal system will affect Russia’s economy

The development of commercial law is especially important for driving forward Russia’s economic modernization and improving the country’s investment climate.  In the 1990s, foreign investors were cautious to set up anything more than small representative offices in a few of Russia’s major cities, and always included clauses for arbitration in Stockholm or London.  Now, contrary to the Western preconception that it is impossible to win in Russian court, there is a growing number of cases where companies, both Russian and foreign, successfully defended their positions in commercial courts. These cases include various property, anti-monopoly and tax disputes, involving Russian companies, joint ventures, and foreign enterprises of various sizes.

Despite recent high-profile cases that may indicate the opposite, evidence is mounting that Russia’s judiciary on the whole is evolving and becoming increasingly impartial and independent from other branches of government.  As Russian legal reforms continue to be implemented, foreign investors should have greater confidence that their investments will be secure, their rights guaranteed, and disputes, should they arise, will be fairly resolved in the precedent-based Russian legal system.

Igor Danchenko is a Washington, D.C.-based independent consultant and Russia-trained lawyer with advanced degrees in political science and regional studies.  He has extensive industry and research experience related to Russia and Eurasia, and served as Senior Research Analyst at the Brookings Institution in Washington, D.C. from 2005-2010. For more information, see http://www.linkedin.com/pub/igor-danchenko/3/993/332/.