OPINION
Guest Editorial
Alexey Dubinchin, MCIArb, Cand.Sc. Law The Legal Insight Magazine
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t my law school in post-Soviet Russia, the professors told us that only references to statutes were possible and that case law could not be the source of law. We had only one comparative law course there, namely the constitutional law of foreign countries, and it was rather a description of the state structure than information about legal systems of other states. In addition, all that we knew about law-and-order abroad was that the German order was closest to ours. I’m aware of a few stories about some people who wrote dissertations at that time pursuing only one goal, i.e. to obtain a confession as to incorrectness and inappropriateness for entry of Anglo-Saxon legal institutions such as trust and judicial precedent into our law. These days, the latter have a quasi-official recognition as a source of law in Russia, but in fact the lawyers refer to pre vious cases as a base for ‘stare decisis’ over the last ten years. Being involved in the deal concerned with the issuance of additional shares by a Russian state-owned company last year, I was a witness of the issuer lawyers’ supreme efforts to find the possibility for application of the law of England, not the law of Russia, for that deal, and that was in spite of the fact that the Russian law, as one would think, is of undisputable authority for any structure which is closely connected with the state. Well-known Russian entrepreneur Oleg Tinkov is amazed that we not only build, sale and float stock for investors using English law, but even bake bread solely under English law. One powerful lawyer notes that only one in twenty M&A transac tions in Russia will be governed by domestic law; the other nineteen will have English law applied to them. A first-rate Russian law firm managing partner at an eye-catching pro fessional forum speaks in the same vein as one who would insist that the predominance of English law in our market is an example of a national security threat. Newspapers report cases from the UK in which both parties are Russians in sub stance and the disputed property is also Russian every week or so. In one word, this is the tendency… Up until a century ago scholars began to identify the group of countries that we now call mixed jurisdictions. They are legal systems in which the Romano-Germanic tradition has become suffused to some degree by Anglo-American law. These include Scotland, South Africa, Egypt, Province of Que bec in Canada, Louisiana in the U.S. and others.
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RBCC Bulletin · April 2012
But will Russia evolve in this way? The answer is obvious, because the fact that some sectors of economy – investment business and a considerable part of banking and development – are governed by English law speaks for itself. But it is not about what can’t be overcome or cannot be stopped (if such things should be done at all, but that is another story), limit ing, for example, any possibilities of using offshore companies in business or altering the rules of play within the local mar ket for international (English and U.S.) law firms (though it should be stated that the entry into the WTO will restrict the capabilities in this regard). However, there are deeper trends, the results of which are probably not particularly visible or, at least, are not yet visible but could be notable for the degree to which English law will expand its territory here, especially when compared with one’s expectations. To begin with is the structure of Western legal education. These days, journeys abroad to the universities of Great Brit ain or the United States after finishing Russian law school, for studies within the number of master (LL.M) programmes is no longer a matter of prestige; rather, what is of interest for many graduates of leading institutes of higher education. The Univer sity of London opened its doors for external study programmes in Moscow in co-operation with the Russian Academy of Justice and sent over academics for this purpose. Finally, how many of the cleverest Russians have worked for English and U.S. law firms established here in the past twenty years? Could they refuse to follow the ideas which were derived from their practice? Secondly, is the issue of globalisation. With the arrival of the 21st century, the boundaries, essentially those concern ing economic issues and information, were abolished. IFRS perform the leading role and, therefore, the national authori ties are forced to give them preference today. If you want to be allowed the sources of international financing or to be listed on the leading stock exchange you should be working in compliance with the relevant rules and, in particular, with the international rules focused on accounting and financial reporting. Of course, this was not all started from the ground up. There were those who already held an interest in it. This was above all true of “Big Four” companies, Wall Street and City banks, NYSE and LSE, i.e. those who originated from the Anglo-Saxon world. And it is notable that the majority of leading law firms, the global players, were also created there. Why not place the Anglo-Saxon law flush with IFRS? We know which is the best course to take but we can go ahead in a variety of ways. We could proceed forward follow ing the lead of Singapore where the statute on application of English law was enacted, but it is hardly appropriate for our country. We can set up islets or “enclaves” in imitation of Skolkovo liberalising activity in this regard. Alternatively, we can start the same ideas, adopt the institutions and create something which would be similar to the original in order to be drawn closer step-by-step. We are not allowed to say that it is alien to only us. What does it mean to be the mixed jurisdiction? It isn't the best but it isn't the worst either. There is every likelihood that we will be simply faced with the necessity of forming it ourselves.