Law and Modern States, 2015, No. 1


                LAW
                AND MODERN
                STATES




Comparative Studies Journal







2015 / No 1

                 LAW AND MODERN STATES
                 Comparative Studies Journal


FOUNDER: Consulting and Legal Protection of People Foundation

ISSN 2307-3306

DOI: http://dx.doi.Org/10.14420/en.2015.1











Certificate of Registration: ПИ № ФС77-49248
issued by Federal Service on Supervision at the Field of Communication, Information Technology and Mass Media

Subscription Index in the United Catalog “Press of Russia”- 41290

E-mail: law_and_modern_states@mail.ru

Journal is included into the Russian Cite Index:
(http://elibrary.ru/publisher_titles.asp?publishid=10666)

Journal «Law and Modern States»
is published by Graphic Visions Associates,
Gaithersburg, MD, USA 20877
and is located on the official website of the Founder: www.bar-association.ru

If texts reprinted, reference to Law and Modern States Journal is compulsory. All the published materials may not express standpoint of the Founder and the Editorial Board.

EDITORIAL BOARD:


        JURISPRUDENCE

Svetlana Boshno, Doctor of Legal Sciences, Professor (Moscow) Elena Vinogradova, Doctor of Legal Sciences, Professor (St. Petersburg) Marina Davydova, Doctor of Legal Sciences, Professor (Volgograd) Ekaterina Dogadailo, Doctor of Legal Sciences, Professor (Moscow) Nataliya Mamitova, Doctor of Legal Sciences, Professor (Moscow) Marina Markhgeim, Doctor of Legal Sciences, Professor (Rostov-on-Don) Olga Tsybulevskaya, Doctor of Legal Sciences, Professor (Saratov)

        ECONOMICS

Olga Belousova, Doctor of Economics, Professor (Moscow)
Anatoly Doctorovich, Doctor of Economics, Professor ( Moscow)
Bogdan Zbyshko, Doctor of economic sciences, professor ( Moscow)

        POLITICAL SCIENCES

Valery Bakushev, Doctor of Political Sciences , Professor ( Moscow) Aleksey Kononov, Doctor of Political Sciences , Professor ( Moscow) Alevtina Shevchenko, Doctor of Political Sciences, Professor (Moscow)

        PHILOSOPHY

Andrey Vassoevich, Doctor of Philosophical Sciences, Ph.D (Economics), Professor (St. Petersburg)
Kadyrbech Delokarov, Doctor of Philosophical Sciences, Professor, Honored Science Worker of Russian Federation (Moscow)
Galina Komissarova, Doctor of Philosophical Sciences, professor

        SOCIOLOGY

Elena Nazarova, Doctor of Sociological Sciences, Professor (Moscow)

        PSYCHOLOGY

Galina Vasyuta, Ph.D., associate professor (Volgograd)

        FOREIGN MEMBERS OF THE EDITORIAL BOARD

William E. Butler, John Edward Fowler Distinguished Professor of Law Dickinson School of Law, Pennsylvania State University (USA)
William E. Pomeranz, Doctor of Legal Sciences, Ph. D., Deputy Director Kennan Institute (USA)
Valery Rybalkin, Doctor of Philology, Professor Kiev National University, Head of Division of National Academy of Sciences (Ukraine)
Abulfas Guseinov, Doctor of Legal Sciences, Professor Baku State University (Azerbaijan)
Jenny M.T. Hardjatno, Doctor, Professor University of Indonesia, Director of Center of European Studies University of Indonesia, Jakarta (Indonesia)

            CONTENT


JURISPRUDENCE (12.00.00)
RUSSIAN AND FOREIGN SUBJECTS OF LAW IN THE NATIONAL SYSTEM OF LAW
Sergey Nosov CONCERNING CERTAIN ASPECTS OF RESTRICTIONS ON ACTIVITIES OF THE FOREIGN ENTITIES WITHIN A COUNTRY (RUSSIAN AND FOREIGN PRACTICES) (DOI: http://dx.doi.Org/10.14420/en.2015.1.1)...............6
Mikhailov Victor CRITICAL ANALYSIS OF THE POSTION OF THE CONSTITUTIONAL COURT ON THE CRITERIA OF REGISTERING A NONPROFIT ORGANISATION AS A FOREIGN AGENT(DOI: http://dx.doi.org/10.14420/en.2015.1.2)............15


THE SYSTEM AND FORM OF LAW
Gavasheli Tamara SYSTEMATIZATION OF LEGISLATION IN GERMANY (DOI: http://dx.doi.org/10.14420/en.2015.1.3)....................................27
Adamyan Garnik TO THE QUESTION ABOUT THE CONCEPT, FATURES AND
CLASSIFICATION OF ONE OR THE FORMS OF CORPORATE LAW (DOI: http://dx.doi.org/10.14420/en.2015.1.4)....................................32


PARLIAMENTARISM AND LEGISLATIVE ACTIVITY
Dzhimbinova Irina PARLIAMENTARY CUSTOMS: THEORETICAL BASIS AND

DEVELOPMENT PROSPECTS (DOI: http://dx.doi.org/10.14420/en.2015.1.5)..............39
Magomedov Ruslan LOBBYING IN LEGISLATIVE PROCEEDINGS: NEGATIVE AND POSITIVE ASPECTS (DOI: http://dx.doi.org/10.14420/en.2015.1.6)...................45

PRACTICAL AND METHODOLOGICAL MATERIALS
Tikhomirov Yuri LEGAL REVIEW AS A CONDITION TO ENSURE QUALITY OF THE REGULATORY LEGAL ACT (DOI: http://dx.doi.org/10.14420/en.2015.1.7)...............49
Svetlana Boshno THE STEPWISE ALGORITHM OF ANTI-CORRUPTION EXPERTISE FOR ANALYSTS NOT HAVING SPECIAL TRAINING AND SKILLS
(DOI: http://dx.doi.org/10.14420/en.2015.1.8)....................................55

POLITICAL SCIENCES (23.00.00)

Ilchenko Dmitry, Natalya Smirnova THE PROBLEM OF NATIONALISM AT THE
MODERN STAGE OF THE DEVELOPMENT OF SOCIETY (DOI: http://dx.doi.org/10.14420/en.2015.1.9)................................57

                    JURISPRUDENCE (12.00.00)


                    RUSSIAN AND FOREIGN SUBJECTS OF LAW IN THE NATIONAL SYSTEM OF LAW

                    Concerning certain aspects of restrictions on activities of the foreign entities within a country (Russian and foreign practices)
DOI: http://dx.doi.org/10.14420/en.2015.1.1

Sergey Ivanovich Nosov, Doctor of Legal Sciences, Professor, professor at the Constitutional Law Department of M.M. Speransky Faculty of Law at the Russian Presidential Academy of National Economy and Public Administration, e-mail: sinosov@mail.ru

Abstracts.         This article studies the matters of the statutory restrictions on
                    activities of the foreign entities within a country. The author describes the principle of national treatment of foreigners, looks into the system of restrictive and controlling measures and describes the types of restrictions imposed by the national legislation on the foreign owners. The article contains a research in the forms of governmental regulation of the foreign companies, such as restricting the foreign investor’s share in the capital of the national enterprises, limiting the industrial control, establishing the ceiling at the distribution of profits, governing the conditions of issuance and the effect of licenses and patents.
Keywords:          principle of national treatment, non-discrimination principle,
                    protection of national interests, foreign investors, restrictions on foreign investments, restrictions on transfer of the property to the ownership of the foreign investors, economic sanctions, economic security of the country.

      Activities of the foreign entities are effected within the Russian Federation in compliance with the provisions of the Constitution of the Russian Federation and Federal Laws.
      In modern Russia, the right of property and ownership for foreigners and foreign entities is subject to the principle of national treatment. In general, it is recognized in part 3 article 62 of the Constitution of the Russian Federation:

LAW AND MODERN STATES

2015 / No 1

7

«Foreign nationals and stateless persons shall enjoy in the Russian Federation the rights and bear the obligations of citizens of the Russian Federation, except for cases envisaged by federal law or international agreement of the Russian Federation». Such laws include the Federal Laws of 9 July 1999 № 160-FZ «Concerning foreign investments in the Russian Federation», of 8 December 2003 № 164-FZ «Concerning the principles of state regulation of foreign trade activities», of 29 April 2008 № 57-FZ «Concerning the procedures for foreign investments in companies of strategic importance for national defense and security» and others.
      Under the general rule, foreign entities can carry on business activities in the Russian Federation, enter into transactions, establish new companies with or without participation of the Russian entities and individuals. A foreign investor can participate in a Russian company both as part of newly incorporated entities and by means of attracting foreign capital to the existing Russian companies.
      In the sphere of civil and commercial law, the provision on granting the national treatment is contemplated in article 2 of the Civil Code of the Russian Federation, whereunder the rules established by the civil laws shall also be applied to the relations involving foreign nationals, stateless persons and foreign legal entities, unless otherwise provided by the Federal Law.
      Under the existing Russian laws, the principle of national treatment in respect of the property rights granted to the foreigners is unconditional and does not require ascertaining any reciprocity towards the country of origin of such foreigner. An exception to this rule is the cases when the statutory provisions require adherence to the principle of reciprocity¹. Thus, the existence of reciprocity with regard to certain kinds of intellectual property used to be established by the prior Law of the Russian Federation of 23 September 1992 № 3520-1 «Concerning the trademarks, service marks and appellations of origin», no such reference being contemplated by the novel legislation (Part IV of the Civil Code of the RF).
      When the national treatment principle is stipulated (which exists in an international treaty), the comparison test is designated to be the business regime or treatment enjoyed by the national individuals and entities. In this context, the national treatment can be laid down as the general non-discrimination principle (in the abstract formula) or expressed in a specific wording as the most favoured nation treatment similar to the treatment granted to national individuals and entities.
      As the general non-discrimination treatment, the national treatment was contemplated in the General Agreement on Tariffs and Trade (in 1995): «The Contracting Parties recognize that internal taxes and other internal charges, and laws, regulations and requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use of products... should not be applied to imported or domestic products so as to afford protection to domestic production»².
      The national treatment in the expanded form is established in the bilateral

¹ Right of property: current issues / Under executive editorship of V.N. Litovkin, E.A. Sukhanov, V.V. Chubarov. - Moscow, 2008. - P. 191.

² See: Doronina N.G., Semilyutina N.G. Private international law and investment. - Moscow, 2012. - P.
71.

Sergey Nosov. Concerning certain aspects of of
restrictions of on activities of the foreign entities...

8

treaties and agreements on protection of investments¹.
       Establishment of the restrictions on the rights of the foreigners as allowed by article 62 of the Constitution of the Russian Federation shall be subject to general approaches to the restrictions and limitations placed on the ownership right. Pursuant to part 3 article 55 of the Constitution of the Russian Federation, the rights and freedoms of man and citizen may be limited by federal law only to the extent necessary for the protection of the fundamental principles of the constitutional system, morality, health, the rights and lawful interests of other people, for ensuring defense of the country and security of the state. The similar provision is settled for the purposes of civil rights by clause 2 article 1 of the Civil Code of the Russian Federation and with regard to land relations by clause 1 article 56 of the Land Code of the Russian Federation.
       When considering a case related to constitutional review of the Land Code of the Russian Federation upon the inquiry of Murmansk Region Duma (Ruling of 23 April 2004 No. 8-P), the Constitutional Court of the Russian Federation explained that the possibility of granting to foreign nationals, stateless persons and foreign entities the right to acquire property on certain terms and to own, use and dispose of the land plots within certain limits is per se consistent with the constitutional legal status of land as the national asset held by the multi-ethnic Russian nation. Along with that, the federal legislator shall rely upon the priority of the right of the Russian nationals to own the land as property, securing sustainable and efficient use and protection thereof, protection of economic sovereignty of the Russian Federation, integrity and inviolability of its territory.
       Moreover, having pointed out that the right of private property is not referred to non-limitable rights under part 3 article 56 of the Constitution of the Russian Federation, the Constitutional Court of the RF cited its prior Ruling² and stated: “Both the possibility that the federal law will establish the restrictions on the right concerned and the nature of such restrictions shall be determined by the legislator not arbitrarily, but in accordance with the Constitution of the Russian Federation, pursuant to article 55 (part 3), whereunder the rights and freedoms of man and citizen may be limited by federal law only to the extent necessary for the protection of the fundamental principles of the constitutional system, morality, health, the rights and lawful interests of other people, for ensuring defense of the country and security of the state”.
       The foreign owners are subject to the restrictions of two types: restrictions imposed on everyone (including the Russian nationals) and those affecting solely foreigners.

¹ See, for instance: Agreement between the Government of the Russian Federation and the Government of the Republic of Bulgaria on the Promotion and Reciprocal Protection of Investments dated 08 June 1993; Agreement between the Government of the Russian Federation and the Government of the Hellenic Republic on the Promotion and Reciprocal Protection of Investments dated 30 June 1993.

² Ruling of the Constitutional Court of the Russian Federation of 17 December 1996 № 20-P «In the case of constitutional review of clauses 2 and 3 part 1 section 11 of the Law of the Russian Federation of 24 June 1993 «Concerning federal bodies of the tax police».

LAW AND MODERN STATES

2015 / No 1

9

      Kinds of restrictions for foreign owners:
      -         foreigners are not permitted to have the ownership of the land plots located in the border areas, the list of such areas being defined by the President of the Russian Federation in accordance with the Federal Laws on the State Border of the Russian Federation;
      -         state-owned or municipally-owned land plots can be transferred to foreigners exclusively for a valuable consideration, the amount of such consideration being provided by the Land Code of the Russian Federation (clause 5 article 28, article 66);
      -         land plots designed for agricultural use shall not be owned by foreigners as a property. Foreign nationals, stateless persons and foreign entities, as well as legal entities with the stake owned by foreign nationals, stateless persons and foreign entities exceeding 50 per cent in the charter (share) capital can hold such agricultural land plots on a leasehold basis only (section 3 of the Federal Law dated 24 July 2002 № 101-FZ «Concerning the turnover of the land plots designated for agricultural use»).
      There are certain specificities of the foreigners’ enjoying the proprietary rights to the real estate located in Russia¹.
      The country where the foreign entities are carrying out business activities establishes the scope of restrictive and control measures in order to ensure protection of national interests, economic stability and security. In this case, the forms of government regulation of the activities of the foreign entities include restricting the foreign investor’s share in the capital of the national enterprises, limiting the industrial control, establishing the ceiling at the distribution of profits, governing the conditions of issuance and the effect of licenses and patents.
      Restrictions on foreign investments are widely applied in the legal systems of various foreign countries. The processes of imposing such restrictions have recently intensified in the USA and Western Europe. The OECD (Organization for Economic Cooperation and Development) member countries with the highest level of restrictions on foreign investment include Iceland, Canada, Turkey, Mexico, Austria, Australia, South Korea, Japan. China and Japan had a long-lasting ban on acquisition by the foreign investors of the shares in the telecommunication companies. In Iceland, the foreign investors have no access to fishing and energy industry, while in Mexico they are banned from purchasing shares in the national oil companies. The laws of various countries outline the list of the industries subject to restrictions for the foreign investors².
      The reasons for imposing such restrictions include:
      -       economic reasons (of a protectionist nature);
      -       ensuring national security;

¹ Recommended guidelines on the special aspects of the state registration of the rights of foreign nationals, stateless persons and foreign entities to real estate and transactions thereto, approved by the Order of the Federal Registration Service № 82 of 16 May 2007.

² See: Bortnikov Yu. Restrictions on acquisition of shares with foreign investors abroad // Securities Market. - 2008. - № 15 (366) - http//www.vegaslex.ru/text/31815

LAW AND MODERN STATES

2015 / No 1

10

      -       political reasons.
      Amid criticism poured over Russia for alleged restrictions of foreign participation in Russian mass media, global regulation practices in this sphere are of particular interest. Thus, there are restrictions in the USA on the foreign nationals and entities holding over 25 per cent of shares or stakes in the mass media. In France, a ban is imposed on the foreign ownership of more than 20 per cent share in terrestrial channels and radio broadcasting stations. Canada’s existing laws prevent foreigners from holding over 20 per cent in television and radio broadcasters. No foreign investment to mass media is allowed in China¹.
      The trends traced in the foreign investment policy of the USA and Western Europe are indicative of some «special» attitude to acquisitions of the shares in American and European companies by Russian, Chinese and some other investors. Such trend is especially prominent when the purchaser is partially owned by state. The examples available can suggest some political component towards such transactions: it is the precise reasoning of the amendments introduced to the laws of the Western states imposing restrictions on such transactions (in October 2007, the German laws were altered so that to establish restrictions on the transactions involving strategic entities; the same year, the amendments were enacted as to the US laws with respect to restrictions on foreign investments for national security reasons, while the Italian government de facto blocked the transaction on the sale to Aeroflot of the shares in the Italian state-owned air carrier Alitalia by charging excessive price for the shares therein)².
      The foreign investments practice established abroad demonstrates the core restrictions existing in the strategic spheres, such as natural resources development, defense industry, transport and infrastructure, energy sector, telecommunication, finance and mass media. In the most European countries, such restrictions are provided in the form of requirement to obtain the approval from the authorized governmental bodies to enter into a transaction on purchasing the shares in a strategic entity.
      The accomplishment of the mission related to securing Russia’s national interests in the sphere of economy is helped forward by the institutes of licensing the works involving information classified as the state secret, licensing of the foreign economic operations, maintaining a register of the natural monopoly entities and many others.
      There are statutory restrictions in the Russian Federation on privatization of the federal property. In practice, such restrictions suggest the ban on transferring the ownership of these assets to foreign investors. Such restrictions are settled by the Federal Laws «Concerning the electric power industry» (with respect to reserving the federal ownership of the share in the unified national all-Russian power grid in the amount of 75 per cent and 1 voting share), «Concerning gas supply in the Russian Federation» (aggregate stake of the ordinary shares in the

¹ See: Regulation practices of mass media foreign ownership // Kommersant. 24.09.2014.

² See: Bortnikov Yu. Ref. work.

Sergey Nosov. Concerning certain aspects of of
restrictions of on activities of the foreign entities...

11

Unified Gas Supply System held by the Russian Federation shall not drop below 50 per cent and 1 voting share), «Concerning the specific aspects of management and disposal of the railway transport assets» (in terms of reserving the federal ownership of 100 per cent share in Russian Railways OJSC) and other laws and statutes.
      Another kind of restrictions constitutes the restrictions directly related to statutory reservation of certain assets under the ownership of the Russian entities and individuals.
      In order to protect the national interests of the Russian Federation and to create a predictive and transparent investment climate for foreign investors, the legislator enacted the Federal Law of 29 April 2008 № 57-FZ «Concerning the procedures for foreign investments in companies of strategic importance for national defense and security» and the Federal Law of 20 April 2008 № 58-FZ «On introducing amendments to certain legislative acts of the Russian Federation and annulment of certain provisions of the legislative acts of the Russian Federation due to enactment of the Federal Law «Concerning the procedures for foreign investments in companies of strategic importance for national defense and security».
      The mentioned Federal Laws are based on the concept of what is known as authorization or approval regulation of this issue, conventional for such foreign countries as USA, Iceland, France, Finland and some others.
      The Federal Law of 29 April 2008 № 57-FZ «Concerning the procedures for foreign investments in companies of strategic importance for national defense and security» provides restrictions for participation of the foreign investors or groups of persons in the charter capital of the business entities of strategic importance for ensuring national defense and security. It also entrenches the criteria for qualifying the foreign investors to be not just the foreign entities, but the Russian companies incorporated in the Russian Federation and controlled by foreign investors as well (part 2 section 3).
      The existing laws provide certain restrictions at the stage of incorporating a commercial company with the foreign investments. One such restriction is setting a quota on the foreign participation for ensuring the economic stability of the country. Setting a quota suggests defining a specific ceiling for the foreign participation in a certain industrial sector.
      Russian insurance legislation also contains restrictions for foreign investors. In compliance with the Law of the Russian Federation dated 27 November 1992 № 4015-1 «Concerning the organization of insurance activities in the Russian Federation», as soon as the foreign equity (share) in the charter capital of insurance companies exceeds 50 per cent, the insurance supervisory authority shall discontinue issuing the insurance licenses to the insurance companies being the subsidiaries of the foreign investors (parent company) or having the aggregate foreign share in the charter capital over 49 per cent.
      In the banking sector, provisions of sections 17, 18 of the Federal Law dated 2 December 1990 № 395-1 «Concerning banks and banking activities» (as

LAW AND MODERN STATES

2015 / No 1

12

amended on 21.07.2014) settle the mechanism of defining the size (quota) of the foreign participation along with other requirements as to the credit institutions and foreign investment to Russia’s banking system. Such quota shall be established by the Federal Law at the suggestion of the Government of the Russian Federation approved by the Bank of Russia. For the moment, no foreign quota or share is defined for the banking industry of the Russian Federation¹.
      The Russian laws contain restrictions on the foreign participation in another important economy sector, such as air transport service. For air transport entities (airline companies), the foreign share shall not exceed 49 per cent in the charter capital (part 2 article 61 of the Air Code of the Russian Federation).
      In the energy sector, the administrative authorization procedure for establishing commercial entities with foreign investors was repealed in December 2005. At the moment, no approval is required by the authorized governmental agency for the foreign partners to purchase shares in the energy companies (such as GAZPROM OJSC), such approvals earlier being issued by the Federal Service for Financial Market in line with the decisions by the Government of the Russian Federation.
      It appears reasonable to take the following steps in order to ensure the economic security of Russia:
      -         to consider the issue of introducing an administrative approval procedure for acquisition of the shares in the Russian energy companies;
      -         to perform the review of the laws regulating the matters of the foreign participation and quotas in the sectors of strategic importance for national security (with the view to detailing the kinds of activities that are of strategic importance for national defense and security, as provided in the Federal Law of 29 April 2008 № 57-FZ «Concerning the procedures for foreign investments in companies of strategic importance for national defense and security»);
      -         in accordance with section 18 of the Federal Law dated 2 December 1990 № 395-1 «Concerning banks and banking activities», to determine the size (quota) of the foreign participation in the banking system of the Russian Federation.
      It has recently become a modern reality to apply various sanctions (economic, political) to certain countries in order to compel them to change their line pursued. From mid-March 2014, upon recognition by our country of the results of the all-Crimean referendum and integration into the Russian Federation of the Autonomous Republic of Crimea and Sevastopol), the USA, Canada, Australia, EU member states and some others imposed political and economic sanctions against Russia.
      Sanction measures involve freezing assets of certain individuals and corporations, cutting back communication and cooperation in various fields. They are aimed at substantial restriction of the opportunities of the target state to effect

¹ See: Chekhovskaya S.A. Legal restrictions on the foreign investor participating in the Russian commercial entities // Roundtable of 25-26 October 2013 (Paris, French Republic). http://www.hse.ru/ data/2013/11/07/1282188667/Чеховская.pdf