Kehittyvä Venäjän oikeus II. Developing Russian Law II. Направления развития российского права II

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Publication 54

KEHITTYVÄ VENÄJÄN OIKEUS II DEVELOPING RUSSIAN LAW II

НАПРАВЛЕНИЯ РАЗВИТИЯ РОССИЙСКОГО ПРАВА II

Lappeenranta University of Technology Northern Dimension Research Centre

P.O.Box 20, FIN-53851 Lappeenranta, Finland Telephone: +358-5-621 11

Telefax: +358-5-621 7199 URL: www.lut.fi/nordi

Lappeenranta 2008

ISBN 978-952-214-696-0 (paperback) ISBN 978-952-214-697-7 (PDF)

ISSN 1459-6679

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Developing Russian Law II –seminar was held at the University of Helsinki on 9.- 10.6.2008 and at the Lappeenranta University of Technology on 11.-12.6.2008. The seminar was arranged in cooperation with Institute of International Economic Law (KATTI) and Lappeenranta University of Technology (LUT).

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Kehittyvä Venäjän oikeus II Developing Russian Law II

Hаправления развития российского права II

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Foreword

The modernization of Russian law has proceeded during the last years. Particularly this concerns the Russian civil law. After enactment of the fourth (and last) part of the Civil Code in 2006, the Russian civil law has become well-systematic and more comparable with the civil law of western countries. And, particularly regarding internationally important legal institutions, the Russian law has been developed to be similar. Rooted mainly in the Roman- German legal tradition, the Russian civil law, however, has been shaped in different way compared to continental law, due to the fact that the Russian societal and cultural reality is still different. Moreover, even legal discussions concerning Russian law are usually insensible without good knowledge of Russian language, since Russian lawyers are used to communicating in Russian only. However, there are in Russia, particularly in the academic circle, scholars who are language skilled and well acquainted with western law. Owing to them it is possible to get inside problems of the development of Russian law, which was the subject-matter of the first part of the joint seminar held at University of Helsinki and arranged by the Institute of International Economic Law.

Developing enterprise activities and exploiting innovations in Russia was the theme of the second part of the joint seminar held at and arranged by Lappeenranta University of Technology. The presentations were concentrated on legal regulation of innovation activities in Russia, the subject-matter which seems to be regarded as important at least on the public level in Russia as well as in Finland. Both countries in particular are facing de- industrialisation problems brought about by globalisation, particularly financialisation of economy resulted in current economic crisis. And in order to escape the worst consequences of the global crisis, a healthy real economy with innovative enterprise activities aimed at producing real commodities is necessary. Both sides of the Finnish-Russian border offer good opportunities for creating proper infrastructure, the essential part of which legal regulation is, to support such activities.

The seminars, the presentations of which are included in this publication, were the continuation of the seminars on Developing Russian Law held in Helsinki and Lappeenranta in June of 2007.

Pia Letto-Vanamo Vladimir Orlov

Director Professor Institute of International Economic Law Lappeenranta University of Technology

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HELSINKI 9.-10.6.2008

Tania Borisova: Foreign influences in Russian law

State University Higher School of Economics, St. Petersburg branch

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Foreign Influences in Russian law: Some preliminary thoughts

C Tania Borisova

OState University Higher School of Economics, St. Petersburg

Draft: notfor citation withoutpermission

CThis presentation is based on recent research of the author published in:

c; Russian "Bor'ba za russkoe 'natsional'noe' pravo v pervoi chetverti 19 veka: izobretenie novykh smyslov starykh slov", in Nikolai Koposov led.), Istoricheskie poniotiia i politicheskie idei v Rossii (Izdatel'stvo Evropeiskogo universiteta v Sankt-Peterburge, St.

Petersburg, 2006), 123-151, and

c English "Russian National Legal Tradition:Svod versus Ulozheniein Nineteenth Century Russia", in^{Review of}

Central and East European Law(2008) forthcoming

4~In evaluating foreign influences in RL, one needs to keep several main points in mind :

From the beginning of XVIII century Russia was involved in exchange of legal ideas and technologies

Position of Russian jurisprudence on a world arena was more "receiving" than "producing"

., Foreign models were taken as a legal technology for borrowing institutions of development ., There were two modes of legal borrowings -

"open" and "hidden"

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Openversusclosed

C"Open" mode of legal borrowing implied a transfer when a foreign source of legal transfer was evident

"Open" character of borrowing could be embodied in Russian legal terminology:

kommanditnye tovarishchestva - Kommonditgesellschaft (limited partnership)

Closed versus open

O "Hidden" when legal transfer was presented as a continuation of Russian legal tradition

CFor example a legal transfer could receive an original Russian name: tovarishchestva no vere instead of kommanditnye tovarishchestva

How did?

. .. these modes of legal borrowings appear?

. .. the open or hidden character of borrowings imprint on practice of their implementation?

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Speranskii's two codification efforts . ..

... examples of open and hidden legal transfer

CSperanskii 1 :

CBy 1809 five drafts of Russian branch codes were prepared by Speranskii under Alexander

CThe primary reason of its successful finalization was open mode of institutional borrowings during reforms of young Alexander I

This was possible due to several factors

C(A) Ideology of Enlightenment and rationalism shared by elites, including the Monarch

CAccording to rational approach to legislative policy, Law was seen - first and foremost - as a technical matter ...

C as a means-if not to the modernization, then at least - to a certain optimization of state rule

Enlightenment and rationalism ...

CThe creation of a code was perceived as a rational task that required the most modern legal solutions

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Several factors ... continued

C(B) Availability of: (1) western formal models

4~ I.e., recent European codes - five branch codes of France, civil codifications of Austria and Prussia

CAnd of: (2) actors, promoting them - Bentham; German and French scholars, Russian graduates of European universities

Rapid success followed by sharp decline

CSperanskii's Draft Civil Code - Grozhadanskogo Ulozheniia

Part 1, 2 were adopted by the State Council by the Spring of 1812

Proekt

CHowever in March 1812, Speranskii was banished from SPb

C Speranskii's codification efforts, especially Draft Civil Code, were considered as evidence of parricide

Remarkable similarity of structure and contents

Oarticles of Speranskii's Draft CC and Napoleon Civilcode

Borrowings from Napoleon Civil code Speranskii project were revealed and attacked C Nikolai Karamzin, the historian, father-founder of

Russian conservatism, Memoir on Ancient and Modern Russia (Zopiska a drevnei i novoi Rossii,) - 1811

in

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The message :

Institutional changes based on western models are irrelevant and even harmful for great Russian Empire

CEven partial transfer of Napoleonic Civil Code is impossible for Russia and can be desired only its enemies

First reason: in the sphere of international politics

tiKaramzin: (a) called French borrowings in Speranskii's Draft Civil Code a threat to international prestige of the state; and C(b) stressed that adoption of the French

Code was the fate of conquered nations

"Thanks to the Almighty, we have not yet fallen under the iron scepter of this conqueror-[Russia] is not yet Westphalia, not the Italian Kingdom, not the Duchy of Warsaw, where the Napoleonic Code, translated through tears, serves as the Civil Code."

Borrowing a legal technology

C- Can be a challenge for a national sovereignty

CFrench Civil Code, as a modern intellectual product, was not simply

., a technocratic instrument

va legal technique accessible to others

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French Civil Code: (A)

Cfirst and foremost, a national product Osuperior in its essence to the legal acts of

other states

Ca unique modern instrument of subsequent national expansion

C- Article 8 of Book 1 of Code Napoleon ("On persons") : "Tout Frangais jouira des droits civils" (Every French citizen enjoys civil rights)

. . . French Civil Code : (B)

Sources tell us that Karamzin was right in his view of the Napoleon Code as a means of French expansion

Second reason:

political argument

Legal transfer is disgraceful for Russian elite

IiL)a blow to prestige of ruling class in Russia

"Have we been laboring for some hundred years on the composition of our own complete code in order to solemnly admit in the face of Europe that we are fools and to shove our heads under a book thrown together in Paris by six or seven ex-lawyers and former Jacobites?"

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Third reason : practical irrelevance of alien models

li~In Karamzin's mind, legislation created under foreign conditions could not be borrowed from the practical point of view C)He was convinced that the legal regulations

of revolutionary France would not work in Russia

Karamzin . .. (B)

CIn Russia, the existence or absence of civil rights was:

C(a) determined by belonging to a particular social group;

C(b) not guaranteed by the national status of being "Russian" (Russkii)

Karamzin ... (C)

4) "Would it be appropriate to begin a Russian code with, for example, a chapter on civil rights that have never actually existed, and do not exist, in Russia? We have only political [rights] or the particular rights of various state ranks; we have noblemen, merchants, the petty bourgeois, etc.- they all have particular rights-they have nothing in common except that they are called Russians."

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CMost likely, it was the diversity of legal rights in the hierarchy of Russian society that - for Karamzin - was the basic

"concept" of Russian law

CThis diversity was a base of autocratic rule, since the hierarchical, disjointed Russian society fragmented into numerous groups .: each with a separate legal status, would hardly

produce any alternative for it

Karamzin's national program for codification . (A) His motto:

4"An old nation [narod] doesn't need new laws."

Inspiration for codification should be sought not in foreign models but, rather, in the adaptation of existing law

Karamzin's national program for codification . (B) His procedure :

CHe described the procedure of creating "a consolidated book [svodnaia kniga] of Russian laws" as a very simple matter:

CCombine scattered legislation under defined topics and add whatever was necessary

.; He called this collection of laws not a code (ulozhenie)but, rather, a consolidated book of laws (svodnaia kniga) or svod (usually translated as 'digest')

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Speranskii 2

CHe learned the lesson of patriotism given to him by historian Karamzin

CIn 1826 Nicholas I appointed Speranskii to once again codify Russian law within the Second Section of His Majesty's Own Chancellery

created especially for this purpose

Nicholas

O underlined that the aim of codification was not to produce new legislation but to systemize existing rules

i~ Speranskii

(a)promised to fulfill the Tsar's will

c (b)proclaimed the procedure of codification proposed by Karamzin as the right one

c:From scattered existing legislation, create a slim system of Russian law and embody it in a Digest

IiHOWever, my research on codification efforts of the II Section demonstrate that:

C Speranskii used the same practices of work as he did drafting codes for Alexander by 1809

CDespite official rejection of borrowings, they were still used in practice

CBoth structure of the Digest and contents of its articles did not come from original

Russian legislation

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General impression of national originality

OSperanskii and his colleagues managed to convey this general impression in the Digest of Laws of the Russian Empire

CThe borrowings were hidden by several technical means

Hidden borrowings

The very form of codification -

Svod/Digest - as a specific Russian product based exclusively on Russian legal tradition CVisible antiquity of the Digest, which was a

necessary outward sign of legality CDigest did not cause any doubts about the

existence of sources

Detailed analysis of Digest's articles prove that "national stylization" played a role of

"smoke screen" for transfer of western models

Already in late XIX century, the legal scholar (and politician) Maxim Vinaver produced a detailed study of the similarity of the institutions of domestic civil law - which had been systematized in Volume Ten of the Digest (Svod zakonov grazhdanskikh) -and the Napoleonic Code

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CThe subjects in question concerned matrimonial and family law, proprietary interest, obligation, and specific forms of legal relations: the demarcation of property and ownership, the concept of easement, types and sources of pledges, and the principle of the freedom of contract and equality of parties

CIn theSvod(Volume X), the rules regulating the above-mentioned institutions were provided with references to XVIII century domestic Russian legislation

. . . But

CA check of these references demonstrates that the "sources" had almost nothing in common with the provisions of theSvod Cmost likely, they have been used by

Speranskii and the II Section to hide borrowings

CThus, unlike Speranskii's 1 1809 Draft Civil Code, direct and indirect borrowings were hidden behind the outward appearance of their domestic roots

CHidden mode of borrowings helped an easier implementation of western legal models

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Problem of practical relevance of western models

OAs said, Karamzin's strongest argument4 .;irrelevance of western models for Russians

OTo the contrary, western economic institutions were received with great enthusiasm

helped to overcome traditional stereotypes of society Kommandit G . was called in the Svod as "partnership on belief" (trust) (Arts .55-76, Commercial Ustav, Book 1, Part 2, Volume X, Svod)

allowed the nobility to engage in business and still retain their noble standing while capitalists could receive interest/dividends (forbidden by the Church)

Conclusions : 1 - 7

C1 : Digest of laws had become a particular form of legal reform which was meant to accent the continuity of Russian legal traditions.

02 : Traditional arguments appeared to be the most efficient for legal elites in promotion of their initiatives. Calls to tradition have been used as a means of protection against political intervention.

Conclusions .. . continued (B)

IL)3: Declarations of a national legal traditional paths should be taken as a part of political rhetoric and not as a rejection of legal orjudicial cooperation .

OL)4: Not withstanding political rhetoric about a national legal tradition, Russian legislators cannot help but consider Western institutional framework(s) .

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Conclusions .. . continued (C)

C5 : However, evaluation of foreign influence is impossible in the level of institutional framework.

CTo evaluate western borrowings, we should study practice of implementation of western legal institutions in Russia.

Conclusions .. . continued (D)

C)6: Institutional borrowings are challenged by misuse on the level of practice. This misuse is embedded in the very hierarchy of legislation .

C

.Planned to be on the top of the hierarchy of norms, statutory law in practice (often) turns out to be at the bottom of the legal pyramid.

Conclusions . . . continued (E)

IThe provisions and, most important, values fixed in statutory law, often can be disregarded by executive regulations and administrative decisions of individual cases first and foremost, a national product.

C7 : Studying the practice of implementing western models via informal cooperation of various actors where there is much more at stake nowadays.

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Vladimir Orlov: Concept of contract in western and Russian law

Lappeenranta University of Technology

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1 Basic concepts

The legal definition of a civil law contract – according to which it is an agreement between two or several persons on establishing, changing, or terminating civil law rights and duties, included in the Russian Civil Code (art. 420) – can be regarded as universal. Agreement (consent) as a ground of the obligatory relation between the parties is included in the concept of contract first and foremost in civil-law countries, but it can be found also in the common law system.

All the conceptions that we have on contracts are rooted in Roman law, however their conceptual formation took place in the post-Roman period. In the countries with developed civil-law regulation, the concept of contract is based in the first place on such concepts of Roman law as consensus or consent, conventio or agreement, obligatio or obligation. Each obligation corresponded to its own action formula, which included the requirement of causa.

Causa as well as bona mores regarded as a general rule. In Roman law we can also find the origins of the concept of transaction.

The concept of contract as a bilateral transaction is also one of the results of the doctrinal development of the conceptual basis of Roman law. The advance of market economy in Rome led to obligationes consensu contractae begetting legal protection by good faith actions (actiones bonae fidei). Initially only nominated contracts (contractus nominate): sale (&

purchase) (emptio venditio), lease (& hire) (locatio conductio), delegation (mandatum) and partnership (societas) were recognized. The right of action regarding (purchase and) sale e.g.

was granted in cases where the plaintiff had at least started his performance. However, other contracts, non-nominated (non-type) contracts (contractus innominati) were not excluded from law in Rome. In classic Roman law atypical agreements entailing performance and counterperformance were recognized as contracts, and the expectation of both parties was accepted as causa obligationis for them. Furthermore, pactum as agreement intended to change or rescind the prior legal relation became a contract protected by good faith action (actio, iudicium bonae fidei).

The formation of the modern concept of contract based on the consent of both parties thereto is related to the period of the second discovery of Roman law in Europe when it became subnational (universal). Pactum was understood by the glossators as the general term comprising all agreements between two or more parties aimed at creating obligations.

Furthermore, according to the canonists all informal contractual agreements were directly enforceable by means of condictio ex canone (unjust enrichment). Also in the doctrine of

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natural law (ius natura), it was regarded that any promises must be kept, whether they had been made in a specific form or not. Thus, all pacta were recognized as binding. The concept of contract based on the consent of the parties, consensual contract found its expression in the principle pacta sunt servanda, and consequently, promissory contracts became legally shaped.

Due to the fact that the modern concept of contract is based in the first place on the idea of consensual contract, contracts became subject to the regime of bona fides, with its requirement of legal ground (causa) as a criteria of seriousness of the parties' intents.

The period of ius commune ended up with the birth of national states in the XVIII century, starting from France, where law became codified, and it led to the shift to law based on national statutes. Thus, the period of adaptation of Roman law, including contract-law concepts, to the national state level started. The main European codification, the French code civil as the first (1804), and then the German Bürgerlichen Gesetzbuch (1896) differed from each other substantially. The reformatory spirit of the natural-law ideas inspired the code civil. As to the Bürgerlichen Gesetzbuch, it was elaborated during the reign of the historical school, and is conservative by nature and based on positivistic approach and idea of one right solution. The heat of enthusiasm of codification did not, however, reach all European countries, and so England with its common law system, supplemented in the XV century by equity, was left outside. Codification did not touch the law of the Scandinavian countries either, where however the statute books came into force starting from the XVII century.

Thus, all that we have as the general theory of contract is based on the contribution of lawyers within the last three centuries, and it concerns particularly the natural lawyers. So the belief in existence of some kind of a uniform European contract law is groundless. Regardless all the similarities, the contract law in western countries still continues to contain substantial differences even on the conceptual level. And this is a consequence of the development of modern civil law in Europe as well as in other countries with advanced normative legal system, which still continues on a national state level.

2 Differences in contract law regulation

The most obvious differences are between the continental law and (Anglo-American) common law. The principle differences are partly a consequence of those in legal thinking.

The continental law we tend to regard as a system that requires codified legislation. And as an aim of the legislation we tend to see the removal of disorder or at least the solution of problems arising in the social life. Furthermore, the legislative activities are separated from the application of the law, and the legal decisions represent ideally deductive conclusions.

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Opposite to that, the system of common law is based on the idea of the public power interfering with individual freedom, the basic civil rights of citizens. And therefore citizens need legal protection. Furthermore, the law is considered to exist a priori, which continues to exist in the developed legal traditions and praxis, in the social process in which the law is applied as well as created. The decision-making process is founded on inductive reasoning, where the legal systematic is usually meaningless.

The understanding of the specific feature of legal thinking makes it possible for us to understand the way contract is traditionally comprehended at common law. At first, the concept of obligation is not used in the traditional definitions of contract, and the term obligation means only duties, not rights. In principle, the legal evaluation of a contract takes place only in case of a breach of the contract provided the action is brought against the party guilty of the breach. Then, by using the concept of consideration it is possible to exclude unenforceable transactions. It means that a promise to do something is binding or considered serious only if it is provided with the consideration. Thus, consideration can be seen as criteria of seriousness of the parties’ intents. However, a promise without consideration is not considered invalid under common law, and the executed performance is not to be returned.

Additionally, a contract is understood both in the positive law and doctrine as a promise (promise basis of contract). And it is contrary to the concept of contract in continental law requiring convention, more precisely consent reached between the parties to create an obligation (consensual basis of contract). It is, however, to be noted that a promise given obviously to achieve some legal result is regarded as binding also in continental law.

Differences, some of them essential, exist even between the continental law countries. It concerns apart the specific features of Scandinavian law, even the differences between the German and French law. The French civil code e.g. requires causa as the condition for validity of a contract. As to the German law, the way duties of good faith and loyalty are interpreted, a court may recognize unfair terms of the contract as invalid and even modify them is specific feature.

3 Comparison of the Scandinavian and Russian contract law

When comparing Scandinavian and Russian law attention must be paid to similarities in contract-law terms and institutions. It owes to the fact that both Russian and Scandinavian law have developed under the influence (although in different ways) of German law based on the Roman law as preserved in the Justinian's Digests, Digesta (Pandecta) Iustiniani. Such terms,

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concepts and institutions in Russian law as obligatio, imperative (compulsory) and dispositive norms and customs, freedom and binding force of contract, as well as the basic concept of contract, have analogues in the Scandinavian law. But if we go into comparison in detail, there is also an essential difference in the meaning of a contract in the Russian law.

A contract used in enterprise activities that arises (is concluded) in Russia must be done in written form, and in general, must meet the requirements of the law (the written norms). This means that the legal control on it, i.e. the control of public authorities, is accentuated directly in the norms of the law functioning as a certain pre-control of the conclusion and conditions of contract. By comparison, e.g. in Finland, a contract is regarded as a flexible organisation due to the rules prioritising the intention of the parties in interpretation of contract. And it can be subject to not just pre- but also after-control in case of its unfairness. As a flexible organisation, a contract is understood in Scandinavian law as a developing system of legal relations (between its parties), which is in force for a definite time and also dependent on the views and activities of the parties, and which is aimed to achieve a certain result. And all this means evolutive nature of the contract.

So in Russia the flexibility of contract is very limited, and its static nature is even emphasised by the interpretation rules on contract prioritising the expression of will, as well as by favouring the statute-positivistic approach to law in legal doctrine and practice. Thus the rules on form and interpretation of contract in Russian law directly strengthen the stability of the contract and to some extent also its independence from the will of the contracting parties.

4 Reduction of the conceptual differences

With the aim to reduce conceptual differences, many international acts harmonizing contract law are developed, including particularly the Vienna Convention on International Sale of Goods (CISG; 1980), the UNIDROIT Principles of International Commercial Contracts and Principles of European Contract Law. Although it is still unclear how binding the Principles of European Contract Law are, we can see them as well as the UNIDROIT Principles as the direction in the development of contract-law regulation.

As a modern lex mercatoria, the UNIDROIT Principles mean a release of the contract-law regulation from the requirements of causa and its common law analogue, consideration, as well as from form requirements, which belong to the traditional pre-control measures to ensure seriousness of the parties' intents. Also the interpretation of contract based on the intention of the parties is clearly expressed. On the other hand, the concept of contract in the

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principles recons with the application of mandatory rules of national law as well as the requirements of good faith and fair dealing. And the principles are obligatory in this respect, so the parties may not exclude or limit the duty to act in accordance with good faith and fair dealing. It is important to note that principles are included also into the Principles of European Contract Law. Additionally, the Principles of European Contract Law include the duty to co- operate, and this emphasizes the significance of the parties’ consent in their contract relation.

All these requirements concerning international trade contracts are in accordance with the concept of preventive jurisprudence playing an important part in modern contract practice.

The modern commercial-contract theory, which is in harmony with the idea of preventive jurisprudence, has broken away from the understanding of contract as a means of a discrete and separate deal presupposing first of all that parties follow contract-law provisions.

According to the modern approach, contract is more regarded as a means to organize long- term relations between parties, in which co-operation and good faith behavior, as well as the understanding by the parties of their interdependence and necessity of flexibility, are to their mutual benefit.

As to other contracts that are not related to business, as well as to the European integration issues, the question of necessity of their rapid supranationalisation arises. As such, the European legal integration is problematic, which is connected first of all with that pluralism is the basic feature of the European culture, as well as with favouring legal solutions on national or even local level in Europe. It is important to notice here that our knowledge and the concepts we use, as well as what they reflect, do not exist outside the concrete language and culture we live in, and such a cultural link concerns particularly legal concepts and institutions.

Regarding the legal regulation of contract in Russian law, the objective interpretation and written-form requirements concerning particularly foreign trade contracts, together with the obvious domination of the positivistic approach in Russian law, could be seen as obstacles to its development to the modern western model.

5 In conclusion

The development of western contract law can be summarized as started by using (stipulation), causa and consideration rules (and form requirements) as criteria of seriousness of the parties' intents to differentiate contracts from ordinary social interaction and ending in the possibilities to seek legal protection by means of unfairness after-control.

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Contrary to that, Russian contract law can be regarded as based form requirements as pre- control means to separate legally binding obligations from ordinary social interaction. Such a formal, dogmatic approach has also a very interesting practical aspect. In the Russian judicial practice the cases of invalid contracts are distinguished from those of unconcluded contracts.

If a contract is recognized invalid, then the restitution rules provided for invalid transactions in the Civil Code (art. 167) shall be applied automatically. But in a case of unconcluded contract restitution shall be claimed in a separate unjust enrichment action provided by the Civil Code (art. 1102).

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Anton Rudokvas: Doctrinal and practical problems of a good faith acquirer’s protection in Russia

St. Petersburg State University

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How to protect good faith in legal traffic is one of the eldest and most complicated questions in civil law. Whatever way you look at it, you meet a contradiction. On the one hand, law must ensure the right of ownership against every possible infringement. A concrete logical consequence of the thesis is the old Roman law maxim – Nemo ad alium plus juris transferre potest quam ipse haberet. It supposes that acquisition of property from a person who did not have right to alienate it is null and void. Therefore, an owner can act according another Roman law rule – ubi rem meam invenio, ibi eam vindico. In other words, he has the right to vindicate his property regardless of good or bad faith of the acquirer.

On the other hand, the consistent realization of this concept results in destruction of the legal traffic and in undermining of property rights in the long run. Nobody acting in good faith can be sure of being safeguarded against eventual nullity of the transaction and therefore against restitution of possession to a real owner.

The European civilian tradition proposed two solutions for this problem. The first one is the institute of acquisitive prescription, which has its origin in Roman law.

The second one is a product of Medieval Germanic law, which permits acquisition of ownership from a person who did not have right to alienate it, if the owner has left possession to the last one by his own will. In the Modern legal systems this ancient Germanic rule was modified by it’s combining with the principle of the protection of a good faith acquirer. As a result, the right of the owner to recover his property is excluded only if the acquirer didn’t know and couldn’t have known that the alienator didn’t have right to alienate, and if the owner left his possession to alienator (or to his predecessors in possession) by his will.

It is worth noting that such differentiation exists only in the law of chattels corporeal. On the contrary, good faith is protected unreservedly in the law of real property.

Russian civil law borrowed main principles and constructions of the good faith acquirer’s protection from German law, but nevertheless it’s rather original.

Art. 301 of the Russian Civil Code say: the owner has right to recover his property from another’s illegal possession. If we take this rule isolated from the systematical context of the Code, one could suppose that it reflects the Roman law’s principle of unlimited vindication.

But the next article 302 of the Code makes the owner’s right to recover his property dependent of some additional conditions. In its point 1 we can read that “if property has been acquired for compensation from a person who did not have the right to alienate it, of which

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the acquirer didn’t know and couldn’t have known (a good faith acquirer), then the owner has the right to recover this property from the acquirer in the case when the property was lost by the owner or by a person to whom the property was transferred by the owner for possession or was stolen from one or the other, or left their possession in another manner against their will”.

So we can find by means of grammatical interpretation, that the owner in Russian law doesn’t have right to recover his property from the good faith acquirer who has acquired for compensation the property, the possession of which had been left by the owner itself or by a person to whom the owner transferred it. A classical example of the situation is that case when a leaser arrogates to himself the property taken on lease and sells it as his own to a good faith acquirer. If it’s impossible for the owner to recover his property, the leaser is responsible for damages caused by the breach of the lease contract. There exist different doctrinal explanations of this construction. In one opinion the impossibility of vindication is a sanction sui generis for culpa in eligendo, because it is the lessor, and not the good faith acquirer, who is responsible for choosing of the bad faith leaser. In case if a property was lost against owner’s will, his negligence is lacking and therefore he has the right to recover property also from a good faith acquirer. But this view is inadequate to the conditions of the modern commercial traffic, which is depersonalized in a very high degree.

From the other point of view the mechanism of the limitation of vindication is due to the distribution of the commercial risks. If a thing was lost against owner’s will, he can hardly find a person responsible for that, but he can probably find an acquirer of the property. On the contrary it is more likely that the last one could find the alienator to demand compensation for losses suffered by him because of the eviction. And quite the reverse: if the property was sold by a dependent holder, the owner normally knew him better then the good faith buyer knew his seller. Surely this second conception isn’t always adequate to the depersonalized commercial traffic, but it is more rational in comparison with the previous theory.

If the property was acquired without compensation from a person who did not have the right to alienate it, the owner has the right to recover the property in all cases regardless of the good faith of the acquirer (p.2 art. 302 of Russian Civil Code). The theoretical background of this rule is an idea that a person who acquired gratis doesn’t suffer any real damage in case of recovering property from him.

There are also special provisions about the fate of money and of bearer commercial paper and securities. This kind of property may not be recovered from a good faith acquirer by all

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means. So the Russian legislator paid attention to the high traffic ability of merchandise of this sort of paper currency.

It is worth noting the lack of any special provisions about the protection of the good faith acquirer of the real estate in the Code. Recovering of immovable from a good faith acquirer is impossible for owner only at the same circumstances, when vindication of moveable estate is excluded by law. There were many attempts in Russian civilian doctrine to substantiate increased protection of the good faith acquirer of the real estate. They were proved by references to the Federal Law “About the registration of immovable property titles and transactions with it”, which prescribes a rule that the record evidence of title in the State Registration book can be unique evidence of the right of a record owner to the real estate and that this record title could be contested only in court. But these words really mean only that if the title is registered, the record owner doesn’t need to present another evidences of his title in litigation with somebody, who infringed his right without having actual adverse possession.

But if the defendant proves in proceedings the actor’s registered title to be based on a null transaction, the court must deny the claim of the record owner. It is a logical consequence of the art. 166 of the Code, which states: “a claim for the application of the consequences of the invalidity of a void transaction may be brought by any interested person. The court has the right to apply such consequences on its own initiative”. The actual Russian law requires

“material consensus” of the record in the Registration book and of the transaction, which caused registration of title. If the transaction is null, the record in the Register can’t create the title by itself. It produces only a reputable presumption of the presence of the record owner’s title.

The same situation is in German law. But the difference between Russian and German immovable property regimes consists in fact that in Germany a good faith acquirer of the real estate has valid title in any case owing to his good faith. On the contrary according to the art.

223 of the Russian Civil Code a good faith acquirer of the real estate becomes owner from the moment of the registration of his title only in case if recovering of the property from him is impossible by the rules of the art. 302. Consequently, if he acquired it gratis, or if the owner or his tenant had lost possession of it against his will, the acquirer’s good faith isn’t protected by law. In such case the record owner doesn’t have the right of ownership, and really has only

“possession by book” which bears the name Tabularbesitz in Austria or Buchbesitz in Germany.

So for acquisition of the right of ownership by a good faith acquirer of the real estate in Russia is required a complex of legal facts, which consists of following elements:

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I) A bilateral transaction of alienation which is valid in all aspects excepting the lack of the right of alienator to alienation. Persons who don’t have the right to alienate are:

a) those persons who were not owners of the alienated property;

b) owners restricted in the right to alienate property (e.g. in case of arrest on civil process).

So, e.g. if a transaction is void because of lacking of alienator’s dispositive capacity, the acquisition of the right of ownership can’t take place neither on the base of this transaction, nor on the base of the complex of legal facts, there good faith of acquirer is one of the elements.

In case of avoidable transaction which could become invalid by virtue of its being declared as such by court, it can be in itself an element of the complex of legal facts which gives the right of ownership to a good faith acquirer. But in that case the right acquired by the last one could be annulated by an effective subsequent declaration of the transactions invalidity by court.

II) A compensated contract of alienation. A legal definition of this concept one can find in the art.423 of the Code. Its first point states: “A contract under which a party must receive payment or other counter performance in return for the performance of its duties is a compensated contract.

III) Possession of property must be left by the will of the owner or of a person whom the last one transferred the property for possession. If we speak about the real estates, such situation really can take place only in two cases:

a) If the property was alienated by the will of the owner, but the transaction was invalid, and the person who acquired possession from the owner subsequently alienates the same property to a third person, acting in good faith.

b) If alienator isn’t an owner, but he has another limited real right, which includes right for disposition of the property. Now there exist two limited real rights of this type in Russia:

1. The right of economic management which belongs to a state or municipal unitary enterprise to the state or municipal property. An

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enterprise has the right to dispose of the immovable property belonging to it by right of economic management with consent of the owner. If the property is necessary for exercising by the enterprise of that activity which is a purpose of its creation, the enterprise doesn’t have right to alienate it also with consent of the owner. So if a transaction of the real estates alienation took place without consent of the owner, it is null, but one can say that the property was left by the will of the owner. The same case would be if the property was alienated with consent of the owner, but without this alienated object the enterprise couldn’t exercise that activity, which is a purpose of its creation.

2. The right of operative administration which belongs to a treasury enterprise and also to an institution. Such a legal person exercises the right of disposition with respect to property secured to it within the limits established by a statute, in accordance with the purposes of its activity, with tasks from the owner and the designation of property.

There exist different regimes of operative administration, because the limits above mentioned depend of the type of the institution which has the right of operative administration. So if a transaction of the real estates alienation infringed restrictions established by law, the transaction is null, but there could be no doubt that the property was left by the will of the owner, who delivered it to the institution or to the treasury enterprise.

In cases when representation takes place, the rules of the art. 174 of the Civil Code should be applied, which guarantee protection to every good faith acquirer. It states that if the power of a person to making a transaction is limited by contract or the authority of a body of a legal person is limited by its founding documents in comparison with how they are defined in a power of attorney, in a statute, or how they could be considered obvious from the situation in which the transaction is made, and if at its making such a person or body went beyond these limits, the transaction may be declared invalid by a court on suit of a person in whose interests the limitations were established only in the cases when it is proved that the other party to the transaction knew or clearly should have known of these limitations.

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If the alienator didn’t represent the owner and didn’t have an appearance of the right to dispose the real estate, given to him by the owner, the good faith acquirer should be unprotected, because the owner left possession against his will.

The most debatable cases in Russian jurisprudence are those when the owner had delivered to alienator physical possession of the real estate by his will, but that possessor couldn’t have an appearance of the right to dispose it. E.g., an owner of an apartment delivered keys of it to a lessee, with whom he has a contract of lease of housing premises. If both them are physical persons, the state registration of the contract is unnecessary. Thereafter the lessee by forgery sold the apartment to a third person, as it would be his own. If we think that delivery of the keys meant delivery of possession, a good faith acquirer should be protected. But it is evident, that the “possession by book” wasn’t delivered to the lessee, and he took it by forgery, that is – against the owner’s will.

So, the question is the meaning of the term possession. In the system of the state registration it would be natural to understand possession of the real estates as the “possession by book”, because in many cases physical possession of the real estates isn’t enough evident to be regarded as a manifestation of the supposed right of ownership. Only the record title creates such appearance of the right of ownership to immovable, which in Roman law created physical possession.

Naturally in the proposed case with forgery, made by a lessee of apartment, the Supreme Court of Russian Federation in 1999 decided that the possession was lost against the will of the owner. But unfortunately this reasonable approach to the problem of possession isn’t popular in Russian doctrine and practice today. They pay much attention to the physical possession as a translative fact, and insist that without delivering of the physical possession the record title is void. It is interesting to notice that this view doesn’t have any base in positive law. Russian legislation doesn’t require evidences of the delivery of immovable physical possession for registration of the transfer of ownership. But Russian civilians speak about that in such a manner if it be a rule of natural law.

This is a good example of the latent influence of Pandectism in the Russian civilian doctrine.

The law of state registration with its concept of “possession by book” is a product of

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Germanic law, alien to the Russian doctrine, formed at the end of XIX-th century under the influence of German Pandect law.

IV) So, the doctrinal interpretation of law added an additional element to the complex of legal facts, which gives the right of ownership to a good faith acquirer. It is delivery of the physical possession.

V) The next element is the state registration of the title. Art. 223 of the Civil Code states expressis verbis that the good faith acquirer becomes owner from the moment of the state registration of his title. But the devotion of doctrine to the concept of physical possession prompts some of Russian civilians to deny this norm, and to insist that the registration is only fixing the title already acquired at the moment when physical possession was delivered. Surely, they are wrong, because “in cases when alienation of property is subject to state registration, the right of ownership for an acquirer arises from the time of such registration, unless otherwise established by statute” (p.2 Art. 223).

VI) Good faith of the acquirer. As regards positive law it is necessary up to the moment when accumulation of the complex of legal facts, giving the right of ownership to a good faith acquirer, is completed. Therefore, good faith is necessary up to the moment of the state registration of the title acquired. It is worth noting, that the judicial practice denies the presumption of the good faith of the acquirer, and require him to prove that he didn’t know and couldn’t have known of the nullity of his acquisition.

It is very popular in doctrine and judicial practice up today an old view that an additional element of the complex of legal facts, giving the right of ownership to a good faith acquirer, is the decision of court, which denied the claim of the previous owner. The conception was born in the Soviet times. In Soviet civil law didn’t exist any norms about acquisition of ownership by a good faith acquirer, but there were rules about limitation of vindication from him. Soviet civilians refused to admit the possibility of the figure dominium sine re. They thought that an existence of any right unprotected by court is impossible. It is because of this that they regarded the right of ownership lost in case if the claim for recovering of the property from a third person is denied. Consequently they decided that a good faith acquirer becomes owner

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after the claim of the previous owner is denied by court, because if court protects a good faith acquirer, it means that the legal order gives him right of ownership. Now this concept survives by its own momentum, because it doesn’t have any legal background. As regards art.

223 of the Civil Code, the accumulation of the complex of legal facts, giving the right of ownership to a good faith acquirer, should be completed before an eventual litigation with the previous owner, and the good faith acquirer becomes owner also without such litigation.

Surviving of the old doctrine in the passed years created serious problems for the good faith acquirers. The point is that Russian law knew a special remedy for recovering of property, unknown in Western doctrines. This remedy is formulated in Code as “a claim for the application of the consequences of the invalidity of a void transaction” (Art. 166). In doctrine it bears the name “restituzia”. It differs from vindicatio and condictio of Roman law, because it supposes obligatory bilateral restitution of the property, and because the claim for restitution may be brought not only by a party of a void transaction, but also by any other interested person.

In 1990-s Russian jurisprudence admitted competition of restituzia with rei vindicatio, regarding this claim as absolutely independent from the claim of vindication. This doctrinal approach resulted in the forced restitution of the alienated property to alienator from the acquirer regardless of his good faith, if owner brought the claim of restitution. The explanation of such circumvention consisted in doubtful thesis, that art. 302 deals with vindication, but restituzia is absolutely independent claim. So, e.g. vindication is impossible if a lessee have sold to a third person as his own an object delivered to him by owner on the base of the contract of lease, and its acquirer acted in good faith. But instead of vindication the owner brings “a claim for the application of the consequences of the invalidity of a void transaction”, that is a claim for restitution of the object to the lessee as a party of the void transaction. After the restitution of the object to the lessee the owner can bring a claim to recover the object from him because of the breach of the contract of lease. This operation is possible only if the good faith acquirer isn’t regarded as owner in the lack of the denied vindication of the previous owner.

After some years passed it became evident absurdity and injuriousness of this practice to the commercial traffic. Therefore after all the Constitutional Court of Russian Federation in 2003 gave its interpretation of the art. 167 of the Civil Code and explained, that the competition of

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the claims of restituzia and rei vindicatio is impossible, because against a third person the owner can bring only the claim of vindication.

After that the legislator amended point 2 of the art. 223 of the Code by the second paragraph, which fixed that a good faith acquirer becomes owner if the acquired real estate couldn’t be recovered from him according to the art. 302 of the Civil Code.

Therefore now it’s impossible to recover a real estate from a good faith acquirer not only because the competition of the claims of restituzia and rei vindicatio is inadmissible, but also because the acquirer becomes owner if vindication is impermissible by the art. 302.

It is worth noting that in the project of this amendment to art. 223 it included all types of property regardless if it was moveable, or immovable. But in its final version the amendment have protected only a good faith acquirer of the immovables. Many Russian jurists are puzzled by such differentiation, because they can’t understand its motives. But it becomes understandable, if we pay attention to the fact, that already in the Soviet civilian doctrine it was acknowledged the presumption that the right of ownership belonged to the plaintiff in vindication, if he could prove his possession earlier than that of the actual adverse possessor.

Such presumption permits to avoid the so-called probatio diabolica in vindication. But its reverse is that a result of such litigation defines only relative position of the parties. In other words, the res judicata can produce praejudicium only inter partes. Transformation of this relative juridical position in an absolute one can take place only after the termination of the acquisitive prescription for the possessor.

Thus in case of movables Russian law volens-nolens produced the construction dominium sine re for the owner and a position similar to in bonis habere of Roman law for the good faith acquirer. The last one is a possessor ad usucapionem, protected against the owner’s claim.

The situation of the possession ad usucapionem occurs in every case, when an acquisition in good faith took place, but is lacking those legal conditions, which in complexu produce the right of ownership of the good faith acquirer. So the good faith acquirer of moveables is always possessor ad usucapionem regardless of the possibility or impossibility of recovering from him by vindication of the object acquired. The person who acquired a real estate in good

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faith is also only a possessor ad usucapionem in case of lack of any element of the complex of legal facts, giving the right of ownership to a good faith acquirer. If he acquired gratis, or if his title is invalid because of any other defect of the transaction except lacking of the right of alienator, or if the possession of the object was unwillingly lost by owner or by a person whom the owner delivered it – in all these cases the record title is really null and reflects only possession ad usucapionem of the record owner.

One should bear in mind that the institute of acquisitive prescription didn’t exist in the USSR.

Therefore this figure of the possessor ad usucapionem, who has actual possession adverse to the owner, is rather cryptic for the Russian doctrine. On the one hand, his possession is illegal from the owner’s point of view. Taking in consideration only this aspect, the majority of Russian lawyers regards this possession as a mere fact of illegal possession.

But on the other hand, the art. 303 of the Code says, that in case of recovery of property from another’s illegal possession, the owner also has the right to demand from a good faith possessor the return of or compensation for all income that he acquired or should have acquired from the time when he knew or should have known of the unlawfulness of possession or received notice by the lawsuit of the owner for the return of the property. In other words, the good faith possessor has the right to income acquired up to the moment above mentioned.

Besides, point 2 of the art. 234 of the Code states that until the acquiring of the right of ownership to the property by virtue of acquisitive prescription, a person possessing property as his own has the right to protection of his possession against third persons who are neither owners of the property nor have the right of possession by virtue of another basis provided by a statute or the contract.

And in the next point of the same article the legislator says, that a person relying on prescription by possession may join to the time of such possession all the time during which the property was possessed by the one to whom this person is a legal successor.

So, the legislator gives petitory action to the possessor ad usucapionem, acknowledges his right to the income of the object in possession, and speaks about legal succession in this

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possession. But succession supposes the right of disposition, and we have to conclude, that the legal state of the possession ad usucapionem could be transferred from one person to another by transactions! Thus it would be natural to come to a conclusion, that the possession ad usucapionem is a real right. This statement finds support in the legal position of the Constitutional Court, which spoke about “the property rights of the acquirers in good faith” in above mentioned interpretation of the art. 167 of the Code, in its alignment with the art. 302.

In the year 2003, when the Constitutional Court said that, any norms fixing acquisition of ownership by a good faith acquirer were lacking in the Civil Code. So the wording of the Constitutional Courts decision meant something different of the right of ownership. One of the judges of the Constitutional Court confirmed in his articles, published in juridical journals, that they really meant a real right different from the right of ownership. The only right that could be in such case is the possession ad usucapionem.

The acknowledgment of the quality of the real right to the possession ad usucapionem lies in the mainstream of the European civilian tradition. It was a point of view of the Roman jurists.

It was communis opinio doctorum in Medieval Europe. This view was accepted also in Natural law school and in Pandect doctrine.

It is also very useful for the legal traffic, because the opposite views lead to absurd solutions of some practical problems. E.g., those jurists who don’t want to acknowledge possession ad usucapionem as a real right deny possibility of representation in possession. They say that self-protection of such possession is impossible, because art. 14 of the Civil Code admits only self-protection of civil-law rights. They have to deny the claim of the possessor ad usucapionem, who pretend to compensation of his damages caused by destruction or damaging of the thing in possession. They radically restrict sphere of application of the claim guaranteed to the possessor ad usucapionem by point 2 of the art. 234 of the Civil Code, because, if the possession ad usucapionem isn’t a real right, this claim isn’t a real action.

Thus as the reasons of the politics of law, as the arguments of its dogma argue for acknowledgement of the possession ad usucapionem as a real right. A peculiarity of this right consists in the possibility of its arbitrary elimination by the owner. Therefore in German doctrine this right is named “relatively real right” or “limited absolute right”. But the existence of such figure in European civilian doctrines demonstrates possibility of its transfer into Russian law. Such legal transplant would have good perspectives because of its practical profits.

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Konstantin Gnitsevich: Doctrine of culpa in contrahendo in Russian civil law

Herzen State Pedagogical University

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The legal institution of pre-contractual liability, the existence of which is recognized in doctrinal conceptions and court decisions of each Civil Law country, unifies all cases of damage causing in negotiations regardless of the validity of a contract or of the fact of its conclusion. The consequences of negligence in celebration of contract can (depending on circumstances) consist in signing of a void contract or in signing of a contract, which is valid, but which results in unjustified loss for the offended party. Moreover, it can happen that a party in fault defalcates its partner by breaking off negotiations. In this situation a party, which had faith in successful outcome of the negotiations, suffers loss, if it made any preparations for performance of obligation.

The starting point of the theory concerning pre-contractual liability is bound with the Jhering's article of the year 1860 about culpa in contrahendo or redress of wrong caused by void or unconcluded contracts. The point of reference for his research was a number of cases, in which one of the parties of a contract suffers damage because of its faith to the validity of a contract concluded, while another party knows or must know any facts which have caused invalidity of the contract, but says nothing to the partner. Jhering concludes that it is unfair to deny aggrieved party the legal protection. He tries to find out a solution of this problem in the light of Roman law, which was an actual law of the German countries in the 19th century, and by virtue of rules contained in Modern codifications. He thought that a rule granting legal protection in such cases was included in the Second Part, Fifth title, Art. 284 of the Civil Code for the Kingdom of Prussia from the year 1794, due to which in cases of culpability in formation of contract it was necessary to use rules determining the legal effect of fault in performance of contract. Before Jhering this legal norm was understood as to be applied only in cases of guilt in formation of a valid contract. Reasonableness of Jhering's opinion concerning this rule was avowed in Pandect Law, for instance by Heinrich Dernburg.

But the hardest argument adduced by Jhering for the existence of such liability in the law system is bound with the Roman law material. He demonstrates that in Corpus Iuris Civilis there is a lot of means for the redress of wrong arisen in the negotiation stage in any special cases. For instance, Roman jurists gave right to compensation of damages suffered by purchaser, who had bought a res extra commercium (non-negotiable thing) or a non-existent hereditas (legacy):

D. 18.1.62.1. Modestinus libro quinto regularum…Qui nesciens loca sacra vel religiosa vel publica pro privatis comparavit, licet emptio non teneat, ex empto tamen adversus venditorem experietur, ut consequatur quod interfuit eius, ne deciperetur.