Capital Legal Services has summarised the most recent amendments to the Russian Civil Code.

Deep reform of civil law reached another landmark on 8 March 2015, when the Russian President signed another set of changes to the general provisions of the Civil Code of the Russian Federation, which are to become effective on 1 June 2015.

The most notable changes are the following:

  • new types of agreements are introduced to the civil law and certain provisions of general regulation of contractual relations are being changed;
  • provisions on securing obligations are changing. In particular, new forms have been introduced and the regulation of old ones is changing;
  • new rules are being introduced for compensating damages and collecting penalties;
  • approaches to practical issues in the law of obligations that have been developed by courts are being added to the code;
  • changes are being made to provisions governing obligations, grounds for obligations, performance and termination of obligations. Certain types of obligations are described in greater detail.

The new changes enforce the existing practice of the courts with regards, for example, the regulation of accession agreements, recovering damages and unilateral refusal of an obligation. The new changes are intended, among other things, to bring Russian law closer to the provisions used in English law, making it more transparent for foreign companies and giving business a set of tools it is accustomed to in other jurisdictions. For these purposes, in particular, Russian civil law will now have the following provisions new to Russian law, and typical for Western legal systems:

  • fine for not fulfilling a court order (astreinte);
  • contractual indemnity;
  • estoppel;
  • liability for bad faith negotiations (culpa in contrahendo);
  • warranties and guaranties. 

The new changes also amend the legal regulation of certain institutes, such as independent guaranty, assignment and interest for using another person’s money. For Russian lawmakers, the main goal of this reform is to eliminate archaic norms and to form a progressive civil law system in Russia which is in line with contemporary business requirements and realities.

With the current economic sanctions and general tension between Russia and certain foreign states, the increased transparency and effective regulation of civil relations, along with the introduction of legal tools to which foreign business is accustomed, are all aimed at increasing Western partners’ confidence in the opportunity to safely do business in Russia.

It is expected that the changes will have a beneficial impact on the country’s investment climate and will entice business to structure its projects under Russian law. This, in turn, should also help to fulfill the deoffshorization policy being steadily implemented in Russia.