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Economic Rights and the Russian Constitution

William E. Pomeranz

The introduction of property rights represented one of the major accomplishments of the 1993 Russian Constitution. In a speech in St. Petersburg marking the 20th anniversary of the Constitution, Kennan Institute Deputy Director William Pomeranz addressed the evolution of economic and property rights in Russia as part of an assessment of the country’s constitutional development over the past two decades

Photo by Антон Фандофан
Constitutional Court of Russia

The following remarks were delivered by Kennan Institute Deputy Director William Pomeranz on September 21st at the conference “Direct Effect of the Constitution: 20 Years of Russian Experience,” marking the 20th anniversary of the Russian Constitution. The conference was organized by the Law Faculty of St. Petersburg State University, with the support of the Constitutional Court of the Russian Federation.

It is a great honor to be here today to mark the 20th anniversary of the Russian Constitution.  I would like to thank the organizers for supporting this conference and for gathering such a distinguished group of Russian and western experts. 

From an outsider’s perspective, the last five years have been a difficult time in Russia’s constitutional development.   The apparently fundamental division of powers between the president and prime minister have been flipped and flipped again, in the process undermining the status of both offices within the constitutional order.   Moreover, the Constitution underwent its first major amendment, increasing the president’s and legislature’s terms of office to six and five years, respectively.   Although presented at the time as just a minor change, we subsequently have learned how even small revisions can upset the entire balance of power within a political system.

A second major constitutional amendment is now under active consideration – the proposal to merge the Higher Arbitrazh (Commercial) Court with the Russian Supreme Court.  This also has been portrayed as a technical change – to prevent the different court systems from issuing conflicting opinions – although the two courts have, on numerous occasions, issued joint plenum decisions to ensure that such conflicts do not arise. 

The commercial courts have played a critical role in Russia’s constitutional evolution over the last 20 years, for they have interpreted and upheld, in a transparent and thoroughly progressive manner, the broader economic and property rights enshrined in the Russian Constitution.   These fundamental rights include the right to possess, use, and dispose of property, the freedom of the land market, the freedom of contract, and the protection of intellectual property, just to name the most prominent.

These economic rights have subsequently been given additional structure and substance through the passage of the Civil Code and other pieces of civil legislation.   How this all works in practice is the subject of another conference.  One should not rush over, however, the historic nature of what the 1993 Constitution accomplished in terms of property rights.   It did not simply overturn 70-plus years of socialism, which clearly discriminated against most types of private ownership.   The 1993 Constitution further crossed a threshold that Imperial Russia failed to cross in the decades leading up to 1917, namely the broad recognition of property rights as a fundamental civil right.

The antipathy of the prerevolutionary Russian left-wing intelligentsia to notions of property rights is well-known and in no need of further analysis today.   What perhaps is even more interesting in retrospect was the ambivalence of Russia’s major liberal political party – the Constitutional Democratic (Kadet) party – towards property rights as well, especially as these rights related to the ownership of land.   Pavel Miliukov, the leader of the Kadets, rejected Stolypin’s attempt to expand peasant land ownership, instead reserving the right to nationalize the land in pursuit of the party’s egalitarian principles.

The Provisional Government in 1917 would also hesitate on the question of land ownership at the height of the Russian Revolution.  Although it did so for objective political and military reasons, the failure to make a decision ultimately opened the door to the Bolsheviks and the promise of peace, land, and bread.   So the inclusion of property rights in Chapter 2 of the Constitution’s rights and liberties of man and citizen represented a great intellectual leap in Russian history.  It came about as part of a major political compromise – property rights were balanced by certain fundamental social rights.   Nevertheless, the Constitution should be recognized for peacefully resolving an issue that had divided Russian society for centuries.

The 1993 Constitution also heralded the return of private law to Russia.   Lawyers raised in common law jurisdictions always need to tread carefully when talking about the division between private law and public law, since this distinction does not draw the same scholarly attention in the United States or Great Britain as it does in civil law countries.   This is partly because property rights have always been considered a fundamental civil right under Anglo-American law and therefore immediately cross over into the political – and public - realm.  Moreover, when the United States sought to enforce this distinction in the early 20th century, it did so in such rigid terms that once the boundary was broken, it lost much of its resonance under American law. 

Although the Soviet legal system clearly marginalized the private realm, it should be noted that private law flourished during the tsarist period as people regularly turned to the courts to defend their individual economic interests.   So the 1993 Constitution did not create something new but instead restored a genuine space for private law, where the individual rights of citizens and businesses could theoretically be resolved without the direct participation of the state.

The revival of private law – and the significant increase in the number of people availing themselves on the courts - represents one of the underlying accomplishments of the economic rights articulated under Russian Constitution.  Admittedly, the numbers do not tell the whole story – indeed a recent poll in Russia suggests that people are losing faith in the courts, a discouraging development that confirms that much work still needs to be done.   Nevertheless, when looking over a 20 year span, the demand for law – and accompanying exercise of economic and property rights – has increased dramatically.

The process by which people turn to the courts has also become more regular, and here, the Constitutional Court, in response to the prodding of the European Court of Human Rights, has played a critical role, most notably by removing the excesses of supervisory review [nadzor] from the civil process.  Supervisory review, as inherited from Soviet times, allowed the state (in the form of the procuracy) to interfere in private law disputes at any time and without the consent of the parties.   After years of reform, nadzor has now been whittled down under Russian civil law to an exceptional appellate process that can only be pursued after all other appeals have been exhausted.  The procuracy’s role has also been substantially diminished.

While the transformation of the nadzor process may primarily be of interest to jurists focusing on the arcane rules of civil procedure, its reform possesses broader due process ramifications that have made a significant contribution to the revival of Russian private law over the past two decades. 

The Russian Constitution further placed a premium on judicial autonomy.   In criminal law, where conviction rates still hover around 99 percent, persistent questions remain about the overall independence of the judiciary.  In the civil process, however, progress has been made, and again, the commercial courts have led the way.  I will leave it to others to decide to what extent precedent can – or cannot – exist within a civil law system, but clearly the Higher Arbitrazh Court has raised the importance of court decisions within the Russian legal system while being increasingly assertive in how it defines its judicial responsibilities. 

So the 1993 Constitution has paved the way for the return of private law  to Russia – with a more active citizenry engaged in defending their economic and property rights, a more independent judiciary overseeing the civil process, and a more constrained state with fewer opportunities to interfere in the civil process due to the revisions of supervisory review.  While all of the above statements, of course, are subject to various caveats and qualifications, the procedural changes of the past 20 years have re-invigorated the civil process under Russian law.   

The broader question that remains, however, is to what extent have these private law practices and procedures led to the realization of Article 1 of the Constitution, namely the recognition of Russia as a law-based state (pravovoe gosudarstvo). 

This question was asked under similar circumstances in pre-revolutionary Russia.   In 1905, Maxim Vinaver, a prominent civil law commentator and specialist, speculated that Russia’s civil process had played a much more significant role in promoting the rule-of-law than originally believed.   He specifically highlighted the “rigorous morals” of the civil court and its reliance on adversarial principles.   “Have not these forms of the aforesaid civil process become the embodiment of the multiple guarantees of freedom of the individual against the unlimited dominion of the administration?”

Is Russian civil law in a position to play a similar role today, to push certain private law values and practices into the public realm?   In this regard, I remain much more pessimistic.   The Russian state retains an overwhelmingly superiority in its public law powers and has used this authority to ensure that emerging civil law principles do not cross over and impinge on the state’s  prerogatives.

This power has been most clearly displayed in the abuse of criminal law in what otherwise would be considered legal transactions under the civil code.  The details of this problem are well-known to anyone who followed the debate in the run-up to the amnesty for entrepreneurs issued by the Duma in July of this year.   Boris Titov, the ombudsman for the defense of the rights of entrepreneurs, has also done an excellent job of highlighting the abuse of criminal law and how it has resulted in the imprisoning of tens of thousands of entrepreneurs on dubious charges. 

So the people who naturally would lead the fight for economic and property rights find themselves under direct assault from the state.   Unfortunately, the much publicized July amnesty for entrepreneurs will not change this current situation; only hundreds, not the promised thousands, of Russian businessmen and women have been released under the amnesty to date.  Moreover, the amnesty itself did not address the underlying legal reasons for the problem in the first place, and so the abuse of criminal law will undoubtedly continue, to the direct detriment to the economic and property rights expressed in the Constitution.

Russia clearly does not need any outside help to understand – and solve – this problem.   The necessary legal expertise is all inside the country – indeed, it is probably inside this room.   What the solution requires is the political will to update existing legislation so that the criminal law does not contradict the economic rights set forth in the Russian Constitution.   

This has proven to be a much more difficult task than originally thought.  As a result, however, it is becoming apparent that Russia’s path to the rule-of-law state may not run strictly through property rights, as occurred in the Anglo-American tradition.  Instead, property rights will probably have to work in conjunction with the social rights included in the Constitution – which are highly valued by the Russian population – to push Russia emphatically in the direction of the law-based state. 

Such an effort will not only require a willing state and an engaged citizenry but also an independent judiciary, and so I close where I began, with the impending reform of the commercial courts. By merging the two high courts, Russia will not only be removing one of the most important defenders of economic rights and legal transparency, it will also be making a major revision to the Constitution.  

Such a procedure may appear to some to be a minor operation, a matter of simply approving some technical amendments to the 1993 Constitution.   As Russian history demonstrates, however, legal institutions are delicate bodies: they are difficult to create, require constant cultivation, and can be easily destroyed at the first sign of political uncertainty. The Russian Constitution itself remains in its infancy and highly fragile, still not ready, in many ways, for even minor surgery, let alone a substantial re-writing of the Russian judiciary.  

So as we contemplate what has been accomplished, and the challenges that remain, I urge extreme caution for the immediate future.   Legal arguments may indeed support the merger of the commercial and general courts, but it is the law of unintended consequences that Russia should be most concerned about in contemplating this next constitutional reform.              






About the Author

William E. Pomeranz

William E. Pomeranz

Senior Fellow; Former Director, Kennan Institute

William Pomeranz, Senior Fellow and former Director of the Wilson Center’s Kennan Institute, is an expert guide to the complexities of political and economic developments in Russia, particularly through the lens of law. He leverages extensive, hands-on experience in international and Russian jurisprudence to address a wide range of legal issues, from the development of Russia’s Constitution to human rights law to foreign investment and sanctions. He is also the author of Law and the Russian State: Russia's Legal Evolution from Peter the Great to Vladimir Putin (Bloomsbury, 2018).

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Kennan Institute

The Kennan Institute is the premier US center for advanced research on Eurasia and the oldest and largest regional program at the Woodrow Wilson International Center for Scholars. The Kennan Institute is committed to improving American understanding of Russia, Ukraine, Central Asia, the South Caucasus, and the surrounding region though research and exchange.  Read more