Don't play Russian roulette with law

Where there is judgement there is injustice.

Russian Proverb.

It is quite a trivial observation that the law is the principal instrument of social regulation in Western society. Eminent English lawyer Sir Henry Sumner Maine believed that the developed legal system reflected the superiority of the West. Russians seem to have a different view.

It may be interesting to discuss whether literature shows the nations as they are. What appears very likely is that literature reflects how the nation sees itself.

Russian classical literature does not give examples of a lawyer as a positive character. Tolstoy, Dostoevskiy, Pushkin or Chekhov saw lawyers as a somewhat irritating but unimportant fact of life. In Dostoevsky's famous novel 'Crime and Punishment' a secondary character, a lawyer, is pictured as a narrow-minded and despicable man who deserves little attention. Similarly, Shabashkin an attorney or a 'strypchii' in Pushkin's "Dubrovsky" is a dishonest and insignificant person. It appears that Russians make a clear distinction between the law as a legal institution and justice in a wider sense, the truth. Law is seen as an instrument, a sword in the hand of a fighter, which does not have a moral foundation of its own.

Russian social and legal institutions emerged from a background very similar to that of the Western European's. The Slavic peoples, predecessors of Russians, seem to have had a social order not essentially different from that of the Germanic peoples who settled in the West. However, if we view Russian history as a whole and compare it with the history of the West we see that perhaps the most striking difference between the two histories is the relative deficiency of the role of law in Russian social relations. The historical choice of Russian society was that the law as an institution of formal rules and procedures did not completely supersede other forms of regulation.

When the Bolsheviks came to power as the result of the Social Revolution in 1917 they considered law as an instrument of class exploitation. The People's Commissariat of Justice enacted "The Leading Principles of Criminal Law" in 1919, which stated:

"only with the final smashing of the opposing overthrown bourgeois and intermediate classes and with the realization of the communist social order will the proletariat annihilate both the state as an organization of coercion, and law as a function of the state."

Moreover, they expected that with the abolition of market and economic individualism they would bring about "the withering away of law in general, that is the gradual disappearance of the juridical element from human relations" (Evgeniy Pashukanis, The General Theory of Law and Marxism).

Despite the fact that the Communists soon laid aside the idea of the inevitable withering away of law in the Soviet Union, a large part of social relations was outside of legal regulations. Furthermore, many forms of commercial or social activity were directly outlawed. For example, for private entrepreneurship one could be imprisoned for up to five years with the confiscation of all property; for speculation, which was effectively a trading operation, where profit is made on the margin between purchase and selling prices, one could be imprisoned for up to seven years; for transactions with foreign currency, up to eight years. Law prohibited private property of land, machinery and any production facilities. Until recently the state actively interfered in inheritance.

In Russia law competes with other forms of social regulation to a much larger extent than that in Western countries. This conflict is a part of everyday life and it influences the way business is done in Russia. For those doing business in Russia or with Russians the understanding of the role of law in society is of important practical value. What advice can be given to a Westerner engaged in commercial activity in Russia?

Deal with people not structures.

The good old rule 'do business with people not structures' is ten times truer in Russia. Over reliance on legal instruments can be a recipe for disaster. Russia is a large and growing market in which perhaps every sector of the economy has available niches. In many cases the key question is not the market opportunities but the people. Remember what Josef Stalin once said: 'Cadres determine everything'. It is important to ask yourself simple questions like 'Is my prospective partner capable of doing what he claims?', 'Is he what he says he is?', 'What are his actual intentions?'. Before touching legal arrangements ask yourself whether your partner understands the true value of contractual obligation or he is only going through the motions.

Western businessmen like stories of drinking vodka with their Russian partners. They would probably prefer tales of dancing with a bear in the middle of the Red Square should such story have a small chance to be believed in. I do not see why drinking must precede a business arrangement. Quite the contrary, the days when a business decision could be based on such grounds are long gone.

It is however important to understand that through different informal activities Russians try to understand their foreign partners, to see beyond smart suits and polite smiles.

However, I am ready to accept the fact that some drink simply because they like it.

Do legal work properly.

Some Westerners consider Russia the Wild West where the law is mere window dressing. This is simply not true. Russian law exists and stands on determined and clear principles contiguous to the legal principles of western society.

I would put my money on those who do their legal work properly. At the end of the day, law was invented as a universal instrument for regulation among people of different nationalities or cultural backgrounds. In fact, I would recommend Westerners to be meticulous.

Western businessmen are normally better prepared to play legal tricks and should keep to the field they know. Those who try playing 'Russian games' with the law step into a territory they know very little of and can soon find themselves playing 'Russian roulette'.

Keep safe side of the law.

Law reminds me of a net. The net has cells of different sizes. Some cells are small and the situations such cells cover are well regulated and predictable. Some cells are large and we cannot say for certain how a particular problem is to be resolved. The Russian legal system is a developing organism and it can be ineffective or unpredictable where the legal system of a home country is very good and unequivocal.

As a rule of thumb the following general considerations should be kept in mind.

Contract versus Ownership. It is a general rule that ownership or possession of a thing is better protected than contractual right. It is especially true in Russia.

Defendant versus Plaintiff. The onus of proof lies with the plaintiff who must prove his case. This universal rule received some practicalities of the Russian law and procedure, which make the position of a defendant more advantageous.

The law versus what they think about law. Many government bodies have a reputation of being difficult and bureaucratic organizations. As a partner in a Big 4 company once said: 'Dealing with the Russian customs is a matter of psychiatry not law'. A state official without hesitation would refuse an important approval if you miss a comma on a form. Attempts to understand which public interests they protect by this is a waste of time. The pragmatic businessman has to work in the world as it is.