Chief Justice Ivanov of Russia’s Supreme Arbitrazh Court believes that adherence to international legal norms will boost investor confidence

The Courts of Arbitrazh in Russia are set up to handle economic disputes of regulatory authorities, organizations, and individuals who are engaged in commercial activity.   

The court system is comprised of regional courts, appeals courts, and the Supreme Court of Arbitrazh that operate independently from other tribunals of general jurisdiction. The Supreme Arbitrazh Court settles commercial disputes initiated in lower-level courts, exercises supervisory functions over those judicial bodies, and issues instructions related to judicial practice. 

Courts of Arbitrazh also have jurisdiction to hear cases involving joint ventures, whose participants are foreign citizens or entities. Arbitrazh Courts recognize and apply the rules of foreign law upon presentation of adequate proof by the proponent of the foreign legal norms. Grounds for personal jurisdiction over foreign respondents include the presence of a representative entity of a foreign company in Russia, past or future contractual obligations on Russian territory, or causing property or other damage through activity in Russia.

In April 2009, the Chief Justice of the Supreme Arbitrazh Court of the Russian Federation Anton Ivanov visited Washington, D.C., where he was hosted by judge Stephen F. Williams of the United States Court of Appeals for the District of Columbia Circuit. Chief Justice Ivanov attended a briefing with the U.S.-Russia Business Council and met with officials from the U.S. Justice Department.

Anton Ivanov is a close friend of President Dmitry Medvedev. The two attended Leningrad State University together and have co-authored law textbooks. After graduation, Anton Ivanov worked as an assistant in the Department of Human Rights at St. Petersburg State University and as editor of the school’s law review. He went into practice with his law school classmates Dmitry Medvedev and Ilya Yeliseyev, founding a private law firm Uranus in 1993. Anton Ivanov worked at the Russian Ministry of Justice for many years and taught human rights law and civil law at St. Petersburg State University. In 2005, he was elected Chief Justice of Russia’s Supreme Arbitrazh Court.

The theme of Justice Ivanov’s presentation in Washington was the establishment of legal order in Russia that would guarantee harmonious development of business and investment activities in the country. Justice Ivanov spoke at length on the protections Russian law accords to intellectual property rights. The Chief Justice explained to the American businessmen that Russian courts are becoming more independent. The Russian legal system is also witnessing the emergence of new ethical norms.

Even though Justice Ivanov acknowledged a number of issues with the current structure of Russia’s court system, directing the attention of the audience to several recent cases indicative of systemic problems, he noted that the reforms started by the government will in due course address all negative aspects of the legal machine.

According to Justice Ivanov, the articulation of the concept of private property itself is a relatively recent development in Russian history. The independence of the court system also constitutes a departure from what used to be the norm in Soviet society. In light of these historical realities, the advances made by Russian judicial reforms appear on the whole quite remarkable. In Justice Ivanov’s opinion, courts in Russia are no different than courts in Europe or the United States. The state has very little formal authority to revise decisions made by judges in legal matters. Adherence to the institutional separation of power principles is essential for Russian courts to maintain independence.

Instead of seeking to rework the Russian court system in its entirety, modern reformists, in the view of Justice Ivanov, should concentrate on such practical tasks as raising the compensation of judges and making provisions for granting courts greater autonomy in deciding on matters of internal organization. All of these changes cannot be accomplished overnight. 

With regard to honoring intellectual property rights, Justice Ivanov is convinced that Russian courts should strive to promote a homogeneous legal framework and follow the rules of procedure. Resorting to the reliance on judicial precedent used in a common-law legal system would help ensure uniform application of the law.

Another aspect of the Russian legal culture that requires attention is the reluctance of lower courts to recognize international legal norms and the decisions of international tribunals. The Russian Supreme Court of Arbitrazh is prepared to extend greater recognition to the judgments of foreign courts and international law in general.

In the eyes of Justice Ivanov, the recognition of international law will allow foreign investors in Russia feel greater safety and predictability.

– What is your view on cases against the government of Russia that are initiated in other countries?

– First of all, I must emphasize that I am not pleased at all when proceedings against Russian state and commercial entities take place in other countries. International arbitration trials with Russian parties need to take place in Russia. At the same time, Russian courts, especially at the lower level, need to recognize and enforce decision rendered by foreign tribunals. We at the Supreme Court of Arbitrazh extend greater recognition of foreign judgments that come to us in first instance.

– In the case of parallel imports, would Russia require the complaining manufacturer to exhaust all intellectual property rights claims in order for the state authorities to prohibit the movement of goods?

– From a purely technical perspective, goods that are being imported in violation of trademarks registered by a manufacturer are subject to seizure. From a legal standpoint, however, it is more complicated. The answer must be determined on the basis of Russian legal rules and the amendments to the Civil Code that are presently undergoing review by the government.  

– What about intellectual property rights protection for automobile manufacturers in the context of parallel imports? Ensuring the protection of these rights is fundamental to building an innovation-based economic system. 

– This problem in general would require the balancing of interests – those of the manufacturers and those of the government. The government has a compelling interest in resolving the issue of parallel imports. The European model for dealing with parallel imports is worthy of imitation. Parallel imports should be permitted only under the circumstances where manufacturers don’t have a monopoly in the mark

– In considering the issue of transfer prices, how is this practice regulated in Russia?

– I would view this matter as essentially a question of tax law. It is very difficult for tax authorities to establish in court that transfer prices were indeed fixed. Proving overreaching on the part of the directors of two companies and showing that they abused the system is not an easy task. We are, however, aware of the gravity of this problem. The Civil Code decree drafted by the Russian President at the end of 2008 targets this issue.