ECHONOMICS: The affiliation provisions will be introduced into the Civil Code of Russia despite discussions in the experts’ community

The government of Russia completed the process of renewal of the Civil Code of Russia. The introduction of the so-called affiliation provisions into the Civil Code of Russia provoked many disputes. The suggestion was elaborated by the Ministry of Economic Development of Russia and aimed at increasing the level of transparency and openness of the business, but gave rise to serious questions by a number of leading Russian lawyers.

Expert’s commentary

Evgeny Zhilin, Associated Partner of the Law Firm "YUST"

The modern-day legal regulation, which we currently see in various laws – for example, Competition Law, JSC Law, the Tax Code etc., – does not include any uniform definition of “affiliation”. This is while approximately 40 laws and by-laws regulate, in some way, the relations involving affiliation of persons, in particular – when preventing damage to the interests of minority shareholders or other members of economy companies. Therefore, it would be useful to define what affiliation is and when a conflict of interests occurs. In this connection, the law that amends the Civil Code is a good attempt at solving the matter. Moreover, despite the fact that the law contains no description of the signs of affiliation, the court will still be able to ascertain it. Much has been said about how reasonable it is to entrust Russian judges with such a delicate matter. In my opinion, the judicial system is quite ready for such powers, and we have seen precedents of such approach in the settlement of tax disputes. I also hope that the courts will be able to recognize the absence of affiliation, when actual circumstances of the case are indicate of that, even if formal criteria are present.

The source of the publication: “Echo Moskvy”, Echonomics, 28.06.2013 (on air on 19:45).