THE CIVIL CODES OF CENTRAL EURASIA--A COMPARISON
Paper presented at the
Central Eurasian Studies Society Fourth Annual Conference
Cambridge, Mass., USA
4 October 2003
Peter B. Maggs
Professor of Law
Clifford M. & Bette A. Carney Chair in Law
University of Illinois at Urbana-Champaign
College of Law
504 E. Pennsylvania Ave.
Champaign, IL 61820 U.S.A.
tel. +1 (217) 333-6711
WORKING PAPER: Not for citation or distribution without permission of the author.
The breakup of the Soviet Union and the emergence of market economies necessitated the rapid adoption of civil codes in the newly independent states. Overlapping efforts included the drafting of the Russian Civil Code, the drafting of a Model Code under the auspices of the Interparliamentary Assembly of the Commonwealth of Independent States, and the translation and transplantation of the German Civil Code. Although all the countries of Central Eurasia shared the Soviet legal tradition, they differed widely with respect to the amount of local drafting talent, attitudes toward a market economy, and susceptibility to foreign donor influence. The codes reflect these differences. The codes play a dual rule. They guide the local courts in the handling of both routine and major cases. They form the basis for important international arbitration decisions.
In countries with a civil law system, the civil code is the fundamental document setting out rules for the market economy. It covers the important areas of property, contracts, compensation for harm, and unjust enrichment. In some civil law countries, civil codes also regulate business entities, the legal capacity of natural persons, guardianship, family relations, inheritance, and private international law. The breakup of the Soviet Union and the emergence of market economies necessitated the rapid adoption of new civil codes in the newly independent states. Overlapping efforts included the drafting of the Russian Civil Code, the drafting of a Model Code under the auspices of the Interparliamentary Assembly of the Commonwealth of Independent States, and the translation and transplantation of the German Civil Code. Although all the countries of Central Eurasia shared the Soviet legal tradition, they differed widely with respect to the amount of local drafting talent, attitudes toward a market economy, and susceptibility to foreign donor influence. The codes reflect these differences. The application of the codes in practice also reflects differences among the states in such matters as degree of judicial sophistication and level of corruption of the judiciary. The largest and most important cases applying the codes are arbitration cases involving foreign investors brought before arbitration tribunals outside Central Eurasia.
First, consider the history of drafting of Civil Codes in the Russian Empire and the Soviet Union. Given of the central role of civil law in a market economy, it is not surprising that civil law flourished in Russia during the late nineteenth and early twentieth century, almost disappeared under War Communism, returned during the New Economic Policy, played a limited role from the late 1920s until the late 1980s, and returned to importance in the 1990s. The basic system of civil law in effect in Imperial Russia was found in the Collection of Laws (Svod zakonov) of the Russian Empire adopted in 1835 and frequently amended thereafter. Volume X of the Collection of Laws of the Russian Empire provided a comprehensive codification of Russian civil law, but important civil law provisions were also scattered through other volumes. The this civil legislation brought important clarity and unity throughout almost all the Empire. (1) The Russian legislation, based upon a combination of Russian tradition, Roman law, and Western European models, provided an adequate basis for the protection of property and contract rights, but the law of corporations and other business entities was seriously underdeveloped. (2) To a limited extent custom supplemented legislation as a source of law. Judicial decisions by the Ruling Senate played an important role in concretizing the law and in providing guidance to the courts and the public. Civil law was an important subject in legal education and legal writing. Legal scholars and practitioners pointed out many flaws in the system. In particular they argued that the scattered civil law provisions should be modernized and consolidated into a comprehensive civil code. A commission worked from 1882 to 1905 to create a draft codification of civil law, based upon existing Russian, Polish, and Baltic legislation, but drawing heavily from the best foreign codifications. (3) The draft was a major improvement over existing legislation in many respects. But the difficult political situation from 1905 to 1917 prevented its enactment.
The 1917 Bolshevik revolution brought about massive changes in civil law. At first, courts continued to apply the pre-revolutionary civil law. In 1917 and early 1918, government decrees recognized the validity of contracts concluded between private parties and the government. While bonds of the pre-revolutionary state were dishonored, an exception was made for very small bondholding by citizens. Sales transactions continued between private parties and, increasingly, between government sellers of food and goods and private buyers. However the People's Court Act of November 30, 1918, forbade references to Tsarist-era legislation. The increasing shift to a war economy with direct requisition and distribution of goods left little room for contract. While a basic principle of civil law in the Russian empire was stability of property rights, the new regime confiscated a high percentage of private property, including land, buildings, factories, banks, and copyrights. It left a limited zone of private property including small homes, household goods, clothing, and equipment of those small businesses that were still allowed to function. It restricted, but did not entirely abolish inheritance. Some provisions were made for compensation for workers injured on the job. While black markets flourished in the aftermath of the revolution, these were outside the law in general and outside civil law in particular. Given the fact that civil law had rapidly withered away, there was no thought of creating a civil code.
In response to the economic crisis brought on by the destruction of the market economy, legislation in 1921 began a revival of civil law. The legislation explicitly authorized contracts for the exchange and sale of various types of goods. State enterprises were put under a regime of "economic accountability" under which they had to pay for their inputs and received payment for their outputs. Private partnerships were allowed to lease state enterprises. Sole proprietorship were legalized. A may 1922 decree regulated "Basic Private Property Rights." However, the restoration of market economy relationships envisioned by Lenin's New Economic Policy required more comprehensive legislation. A small drafting commission prepared a civil code in the summer and fall of 1922. The new Code took effect in the Russian Soviet Federated Socialist Republic on January 1, 1923. The speed of drafting was amazing--normally it takes years or even decades to draft a civil code. The members of the commission drew on their knowledge of the 1905 draft and borrowed heavily from German and Swiss law, adding some peculiarly Soviet elements. In many ways the Code was an improvement on the poorly-organized civil law provisions of the Code of Laws of the Russian Empire. The Code was concise, well-organized, and used simple, clear language. Thus it was ideal for a time when war, revolution, and terror had created a shortage of educated lawyers and judges. The Code generally followed the principles of organization of the 1900 German Civil Code. It began with a general part stating principles applicable to all parts of the Code. This section included subsections on dealing with natural and juridical persons, things (property), transactions and periods of limitation. A section on obligations included subsections on general principles of obligations and on contracts. It also included subsections dealing with particular types of contracts such as sales, barter, loan, rental, and insurance. Further subsections dealt with different types of business entities--partnerships, joint-stock companies, etc. Also included in the section on obligations were obligations resulting from unjust enrichment and from causing harm. There was a separate section on inheritance. The vast majority of the Code provisions were similar to those in Germany and Switzerland and thus fully suited for the limited private economy allowed during the New Economic policy. With the formation of the Soviet Union in 1923, the other republics either adopted the Russian Civil Code or followed it almost verbatim in their own codes. This set a pattern that was to be repeated in the 1960s and, to a considerable extent, in the 1990s.
With the elimination of private businesses by the end of the 1920s, civil law took on a new role, that of facilitating the operation of the planned economy. Credit reform legislation in the early 1930s required state enterprises to pay their obligations on a more businesslike basis. With the growth of state planning contracts between state enterprises became a mechanism for implementing the state plans. After the completion of collectivization in the 1930s, property relations remained largely stable until the late 1980s. Thus Soviet civil law, which had been a mechanism for the revolutionary transformation of property relationships became the legal basis for preservation of existing system. A number of radical legal theorists had argued that civil law was a feature of the capitalist market economy that was doomed to wither away with the victory of socialism. However, this did not happen. Instead Stalin called for a strengthening of law. The radical theorists lost their jobs and, in a number of cases, their lives during the purges of the 1930s.
The 1922 RSFSR Civil Codes and the other republic codes based on it remained in effect until the early 1960s. Numerous published court decisions, textbooks, and commentaries greatly aided in the application of these codes. The vast majority of publications concerned the Russian code. However, because the other codes were virtually identical, commentaries on the Russian code were used in interpreting all of the codes. But in many ways the codes lost their importance. The bulk of legal provisions regulating state enterprises and their relations were in legislation and administrative regulations outside the code. Market relations of the type the Code was designed to govern persisted, but only in limited areas: transactions between citizens, between state enterprises and citizens, and between Soviet and foreign enterprises. The 1936 Stalin Constitution had envisioned the drafting of a single USSR Civil Code to replace the various republic civil codes. After Stalin's death this provision was revised to provide for the adoption of Fundamental Principles of Civil Legislation at the USSR level that would state general principles of civil law. Each of the 15 Soviet republics was then to adopt a civil code following and elaborating on these general principles. There was a major debate in the late 1950s among Soviet scholars as to whether civil law and the proposed new civil legislation should or should not include the planned economy. Some argued for the creation of a new branch of law, "economic law," for those areas of the economy not based on market relationships. Others argued for the traditional comprehensive scope of civil legislation. The latter group prevailed. The 1961 Fundamental Principles of Civil Legislation and the new civil codes enacted in the early 1960s covered both the planned economy and traditional civil-law relations.
The 1961 Fundamental Principles and the new civil codes of the 1960s did not make significant changes in civil law. The new legislation, unlike the 1922 Code, had no provisions for business partnerships and joint-stock companies, but these provisions had lost all importance three decades earlier with the end of private businesses. It added coverage of copyright law that had previously been the subject of a separate statute. The period of stability of civil law continued until the late 1980s. During this period the importance of the Code as a regulator of private property rights grew, because of the growth in the general standard of living and with it the amount of privately owned property. As with the first generation of codes, a large number of published court decisions, textbooks, and commentaries aided in the application of the codes. And, just as with the first generation of codes, publications on the Russian code were used in interpreting all the codes, because of the extreme similarity among the codes. As the result of Soviet accession in 1973 to the Universal Copyright Convention the civil codes were amended to strengthen copyright protection.
Major changes in civil law came with Gorbachev's "perestroika" in the late 1980s. Soviet legislation at first allowed "cooperatives" as a private business forms. By 1990s it had restored other private business forms such as partnerships and joint stock companies that had existed in Imperial Russia and during the New Economic Policy of the 1920s. It was clear that these major changes required recodification. In 1991 the USSR adopted new Fundamental Principles of Civil Legislation. These Fundamental Principles recognized the existence of a private market economy alongside the state planned economy. They also modernized the law in a number of areas, such as intellectual property and private international law. The Fundamental Principles were scheduled to take effect as Soviet law on January 1, 1992. However, the Soviet Union dissolved in December 1991, so the principles never took effect as Soviet law. Russia, and some, but not all, of the other newly independent states put the Fundamental Principles into effect, either by statute or by judicial interpretation. Many of the newly independent states also passed a number of specific laws regulating business entities and commercial transactions. The combination of surviving Soviet law of the late 1980s, laws adopted in the newly independent states in early 1990s, and the Fundamental Principles of Civil Legislation brought about a counterrevolution in civil law, restoring it in many ways to its status in 1917 on the eve of the Bolshevik revolution. However, the multiplicity of legal acts, which often contradicted one another, was unsatisfactory. Drafting began in each of the newly independent states on a new civil code that could provide a comprehensive, unified basis for civil law.
Like the RSFSR Civil Code of 1922, the Russian Civil Code of the 1990s became the model for other codes. One of the greatest problems in civil code drafting in Central Asia and the Caucasus was the lack, except in Kazakstan, of a substantial number of civil law experts. The new Russian code was adopted in three separate parts because of practical and political considerations. Drafting a civil code is an immense task. Mobilizing support in the new, powerful Russian Parliament was expected to be difficult compared to the automatic, rubber-stamp passage of laws by the former Supreme Soviets. To speed the drafting process, the Russian President created a Private Law Research Center, and enlisted a large drafting team including Russia's leading experts on civil law. Because of the urgent need for new law, the Russian drafters decided to prepare the Code in several parts and to present each part to Parliament when it was ready. The Russian Parliament adopted the First Part of the Code in 1994. It covered general principles of civil law, property, business organizations, and general principles on contractual and other obligations. The Second Part of the Code became law in 1995. It covered specific types of contracts, liability for causing harm, and unjust enrichment. The Third Part of the Civil Code was adopted in 2001, and took effect in 2002. As each part was adopted, the corresponding parts of the 1964 Civil Code and the 1991 Fundamental Principles were repealed. Each part was governed by a transition law that dealt with the complex problems of movement from the old law to the new, while preserving the rights of those who had relied on the old law.
Like the 1922 and 1964 codes, the structure of the new Civil Code of the Russian Federation follows a pattern common to European civil codes, in particular the German Civil Code. This structure involves a "General Part" of the Code, stating general principles applicable throughout the Code. There is then a hierarchy of substructures dealing, for instance, with the general principles of the law of obligations, general principles of the law of contracts, and the specific details of particular contracts, such as the contract for the sale of goods.
The First Part of the Russian Civil Code begins with basic provisions on matters such as the relationship of civil legislation to other legislation and good faith. It then goes on to define natural and legal persons. It is important to note that much more detail on the two economically most important types of legal persons, the limited liability company and the joint stock company, are provided by separate statutes, which (because they are referenced in the Code and are later than and more specific than the Code) prevail over the Code in case of conflict. The First Part also contains a number of divisions that follow the typical pattern of European civil codes: objects of civil law rights, transactions and representation; time periods and limitation of actions; general provisions on obligations, general provisions on contracts. When the Code was originally passed, resistance to private land ownership led to suspension of the effectiveness of Chapter 17 on land ownership, pending the adoption of a new Land Code. Finally in 2001, a Land Code was adopted and Article 17 was put into effect, but only with respect to non-agricultural land. Then, in 2002, with the passage of a Statute on Agricultural Land Transactions, Article 17 was put fully into effect. However, in view of the principles mentioned above, the courts may be expected to apply provisions of the Land Code or the Statute on Agricultural Land Transactions where they contradict the Civil Code.
The Second Part of the Civil Code deals with individual types of obligations. Most of the second part is devoted to provisions on specific types of contractual obligations. In applying the Civil Code of the Russian Federation to a particular contract, it is essential to keep in mind the formal structure of the Code. In cases involving contracts governed by the Code, lawyers trained in Anglo-American common law tend to make the mistake of looking only at the general principles of contract law in the Code, because they are used to thinking of contract law as consisting only of general principles, such as those found in the United States in the Restatement (Second) of Contracts. Instead, in dealing with a contract law issue under the Russian Code, lawyers must look at the very general principles at the start of the Code, at the general principles of the law of obligations in the Code, and at the specific Code articles dealing with the specific type of contract. The final chapters of the Second Part deal with liability for causing harm and liability for unjust enrichment. There is relatively little in the Second Part to surprise the foreign lawyer, though those trained in the common law should note the extremely broad definition in Article 1079 of a "source of increased danger" for which there is liability without fault.
The Third Part of the Civil Code has two divisions: Inheritance Law and Private International Law. (Private international law deals with legal relations that have a foreign element, including, but not limited to, international business transactions.) Both provide legal regulations urgently needed for the new Russian market economy. Soviet law had simplified inheritance rules, suitable for a society where private property ownership was severely limited, but unsuitable for current Russian society, where property ownership is unrestricted. Russia's private international law legislation was partially reformed in the early 1990s, but fell short of the requirements of a modern market economy. The long delay from the adoption of the Second Part of the Code until the adoption of the Third Part was due to a continued debate between supporters and opponents of the inclusion of detailed intellectual property provisions in the Third Part. In 2001, the stalemate was broken. The intellectual property provisions were removed from the Third Part of the Code and given to a new drafting group with a broader membership, including both supporters and critics of the original draft. Without the intellectual property controversy, the Third Part of the Code easily became law.
While the new Civil Code is a great advance, it has some shortcomings. It retains provisions for Soviet-style state enterprises, which it calls "unitary" enterprises. These enterprises have no property of their own, but rather merely administer state property. It limits freedom of contract by providing an excessive number of mandatory terms for specific types of contract. It overlaps with other legislation by providing summary provisions on many topics that are covered more thoroughly in other laws. These overlaps have led and will lead to litigation meant to clarify contradictions between the code and other legislation.
The new civil codes of Central Eurasia codes fall into two groups. The codes of Armenia, Kazakstan, Kyrgyzstan, Tajikistan, and Uzbekistan are derived from the Civil Code of the Russian Federation and the closely-related Model Civil Code of the Commonwealth of Independent States. The Codes of Georgia and Turkmenistan are derived from the nineteenth-century German Civil Code. However, since the Russian codification tradition, from the 1905 draft code through the 1922 RSFSR Code, the 1964 RSFSR code and the current Civil Code, also draw from the German tradition, there are many similarities between the two groups of codes.
There was a conscious effort by the Russian president's office to provide Russian assistance in the drafting of civil codes in the newly independent states. As mentioned above, the Russian President's Private Law Research Institute played a key role in the drafting of the Russian code. (4) Sharing premises and overlapping in personnel with the Private Law Research Institute is the Commonwealth of Independent States Consultation Center for Private Law.
As explained by Professor A.L. Makovskii, head of the drafting committee for the Russian Civil Code, (5)
In 1994, on the base [of our Center], by decision of the Council of Heads of Government of participant states of the CIS, the CIS Private Law Research-Consultation Center arose. Its appearance was connected with the necessity of unification, before all, of the civil legislation of the states of the Commonwealth, which support and always inevitably will support close economic ties.
Scholars not only from Russia, but also from Ukraine, Armenia, Kazakstan, Belorussia, Uzbekistan, and Kyrgyzstan, had already started to think about various aspects of civil legislation.
By their joint efforts in 1994-1996, a Model Civil Code was created, and as a result today, in six states of the CIS there are civil codes very close to one another.
This, result, which by world standards was colossal from the point of view of economics, politics, and law, unfortunately has remained almost unnoticed by our politicians. We also prepared model statutes on limited liability companies, on bankruptcy, and on the securities market. All these, as well as the Model Civil Code have been approved by the Interparliamentary Assembly of the Member States of the CIS and have been the basis of respective normative legal acts of CIS countries.
To what extent did the countries of Central Asia and the Caucasus blindly follow the Russian Civil Code and the closely-related Model Civil Code? Since all these countries had decided to have a code following the German branch of the European civil law tradition, inevitably there would be many similarities among the codes. And in the Russian Code / Model Code offshoot of the German branch, there were many good provisions. The real test of the closeness with which the Russian / Model Code was followed is the extent to which these countries copied the bad provisions of the Russian code that were peculiar to the Russian code. Consider a number of aspects of the Russian code that were widely-criticized by foreign observers: (1) the failure of the code as originally enacted to provide for private land ownership; (2) possible broad liability of parent companies for subsidiaries; (2) treatment of a pledge as a contractual obligation rather than a property obligation; (3) the "public contract"; (4) the partial duplication of laws on various forms of enterprises; (5) retention of Soviet style state enterprises as "unitary enterprises"; (6) inclusion (in the Model Code) of provisions on intellectual property overlapping and contradicting other intellectual property laws ; (7) inclusion of private international law;
Private Land Ownership
The First Part of the Russian Civil Code as originally drafted included a chapter on private land ownership. However, an amendment was made during enactment in 1994, which postponed the effective date of the land ownership chapter until the passage of a new land code. This new Code was not adopted until 2001. Russia's delay providing legal support for private land ownership was, of course, severely criticized by free market advocates. There was no such delay provision in the land ownership chapter of the Model Code. All of the countries of Central Asia and the Caucasus provided in their civil codes for private land ownership, with the exception of Tajikistan, whose Constitution prohibits private ownership of land. The provisions on private land ownership, except for those of Georgia and Turkmenistan were based on the draft Russian Code and the Model Code Provisions.
The provision of the Russian Civil Code that caused the most consternation among the foreign investment community was one that appeared to greatly increase the risk that shareholders would be liable for a company's debts. The Russian government took measures to allay these fears, including an invalid presidential edict (since the president had no power in 1995 to amend the Civil Code by edict), and a provision in the Law on Joint Stock Companies (whose validity was unclear at the time because the courts had not ruled on the effect of provisions in ordinary legislation contradicting the civil code). Russia had realized its mistake and had attempted to repair it. However, neither the Russian Civil Code nor the Model Code were amended. Kazakstan, Tajikistan, and Uzbekistan followed the dubious language of the Russian and Model Codes. Armenia, Azerbaijan, and Kyrgyzstan on the other hand altered this provision so as to allay fears of foreign investors. One of my few successes in attempting to influence civil code drafting was persuading the drafters of the Armenian Code to fix this problem. Since the codes of Georgia and Turkmenistan do not include the law of business entities, they do not deal with the issue.
Another feature of the Russian and Model Codes that has been criticized by foreign observers in the retention of Soviet-style state enterprises, which the Russian and Model Codes call "unitary enterprises." Kazakstan, Kyrgyzstan, Tajikistan, and Uzbekistan all have this type of state enterprise in the Code. Armenia and Azerbaijan do not. And again, since the codes of Georgia and Turkmenistan do not include the law of business entities, they do not deal with the issue. Obviously each of these countries had state enterprises and could not privatize all of them immediately. However, the inclusion of the Soviet -style state enterprise form in the Civil Code gives an undesirable permanence to this form.
One of the most serious drafting defects of the Russian and Model Codes is that of overlapping drafting. In the First Part of Russian Code there is a substantial section on business entities--limited liability companies, joint-stock companies, etc. This section contains a small number of articles on each type of company. Then there are separate, much longer laws on limited liability companies and joint stock companies. These laws contain provisions that contradict the more limited provisions in the civil code. Good legal drafting would have required either including the whole texts of the company laws in the Code or leaving the substantive provisions on companies outside the Code, with either no mention of companies in the code or a simple cross reference to these laws in the Code. Drafts of the Third Part of the Russian Code followed a similar procedure for copyright, patent, trademark, and other areas of intellectual property law, with even more significant contradictions between the Code provisions and the separate intellectual property laws. For various reasons, which will be discussed below, intellectual property provisions were relegated to a draft Fourth Part of the Russian Code, which is still under discussion. However, the Model Code does include the overlapping intellectual property provisions.
All of the codes based on the Russian and Model Codes include the overlapping provisions on business entities. However, the treatment of intellectual property varies. Armenia, Kazakstan, Kyrgyzstan, and Uzbekistan have followed the Model Code and have included an intellectual property section that overlaps and contradicts other intellectual property legislation. There are similar provisions in the draft Third Part of the Civil Code of Tajikistan. Georgia and Turkmenistan have incorporated full copyright provisions, but no other intellectual property provisions in their codes. This approach avoids the negative features of the Model Code, since there is no overlap, with copyright entirely in the Code and patent, trademark, etc., entirely outside the Code. However, because international copyright law changes frequently, it will be necessary to make frequent amendments to the copyright provisions of the Georgia and Turkmenistan Civil Codes.
The Third Part of the Russian Civil Code has two divisions: Inheritance Law and Private International Law. (Private international law deals with legal relations that have a foreign element, including, but not limited to, international business transactions.) Both provide legal regulations urgently needed for the new Russian market economy. Soviet law had simplified inheritance rules, suitable for a society where private property ownership was severely limited, but unsuitable for current Russian society, where property ownership is unrestricted. Russia's private international law legislation was partially reformed in the early 1990s, but fell short of the requirements of a modern market economy.
The long delay from the adoption of the Second Part of the Code until the adoption of the Third Part was due to debates on the intellectual property division of the original draft of the Third Part. The drafters of this intellectual property division were proceeding from the assumption that it is in the Russian legal tradition to include provisions on intellectual property in the Civil Code as it was done in the Russian Civil Code of 1964. By including intellectual property in the new Civil Code the drafters also wanted to achieve the goal of modernizing existing law as expressed in separate statutes on patents, trademarks and other types of intellectual property insofar as the respective relations fell in the scope of civil law. They also may have wished to use the Code to balance the public interest against the special interests of intellectual property owners. They did not question the necessity of existence of separate legislative acts in the area of intellectual property law. The drafters knew that the individual laws needed to be modernized and hoped that in the course of this modernization the laws and the Code could be harmonized. However, the draft intellectual property provision met with heavy opposition both on technical and political grounds. Those in opposition argued that the draft Code provisions overlapped with and contradicted existing legislation both in terminology and in substance. Furthermore, the draft Code necessarily omitted the important provisions of the patent and trademark laws dealing with examination of patent and trademark registration applications by Russia's Patent Office, because these provisions were considered to be administrative law, not civil law (and thus unsuitable for inclusion in a "civil" code). The most influential Russian government officials working in the area of intellectual property law have opposed the inclusion of an intellectual property division in the Civil Code for three reasons. First, they objected to the failure of the Code drafters to coordinate their work with existing intellectual property legislation. Second, they believed that intellectual property provisions in the Civil Code would be too inflexible. Civil Codes are meant to provide a highly stable basis for property and contract relations and so Civil Codes are and should be difficult to amend. Intellectual property legislation, in contrast, needs frequent amendments to deal with new technological developments, such as the Internet. Third, the Code drafting process threatened their previous monopoly on the drafting of intellectual property legislation. For five years, opponents were able to block the adoption of a third part of the Code containing intellectual property provisions.
In 2001, the stalemate was broken. The intellectual property provisions were removed from the Third Part of the Code and given to a new drafting group with a broader membership, including both supporters and critics of the original draft. Without the intellectual property controversy, the Third Part of the Code easily became law. Given the continued opposition to the inclusion of intellectual property rules in the Civil Code, it is uncertain when an intellectual property division will be added to the Code and unclear what form such a division might take.
The treatment of pledge--the creation of a security interest in goods to ensure payment of a debt--gives a good gauge of the willingness of drafters to listen to foreign advice rather than blindly following the Russian and Model Codes. Those Codes treated pledge as a contractual interest. However, foreign observers and foreign model pledge legislation agree that pledge should be treated as a property interest, because it is meant to create rights against all the world, not just between parties. Like Russia, Kazakstan, Kyrgyzstan, Turkmenistan, and Uzbekistan followed the contract theory. In contrast Armenia, Azerbaijan, Georgia, and Turkmenistan used a property rights approach.
The "public contract" is another area where the Russian and Model Codes adopted a principle contrary to that overwhelming recommended by foreign advisers. The First Part of the Russian Code introduced this principle. It provided that all types of contracts offering goods and services to the general public had to be offered to all on the same terms. Probably this was a reaction to a particular negative feature of the Soviet system - the sale of goods and services to the nomenklatura and far below market prices - and the unavailability of similar opportunities for the general public. The drafters could not be convinced that his problem would not exist in a market economy. Nor could they be convinced that a ban against undercutting published prices would be contrary to anti-monopoly policy because it would facilitate the policing of price-fixing by cartels. All of the countries except Georgia and Turkmenistan incorporated the "public contract" principle into their codes.
There are some topics on which there is disagreement as to whether or not they should be included in a civil code. It is not surprising that there are some differences in these areas. These include in particular family law and private international law. Both are closely related to civil law; both have some differences. Family law is concerned not just with property rights, but also with interpersonal relationships. Private international law - the law dealing with matters with a foreign element deals not only with property and contract rights, but also with issues of international relations. Because these areas are not purely matters of civil law, many countries worldwide have decided to treat them in legislation separate from their civil codes. However, because these areas have strong civil law elements, other countries have included one or both of them in their civil codes.
Only Georgia includes family law in its civil code. Armenia, Kazakstan, Kyrgyzstan, Tajikistan, and Uzbekistan include private international law. The draft of the Third Part of Tajikistan's Civil Code also includes private international law. Unfortunately, there are serious problems with the all the private international law sections. A draft Russian private international law civil code section and a private international law section for the Model Code were prepared in the mid-1990s. These drafts adopted a formalistic approach contrary to the modern trend in private international law, which generally looks not to the formal characteristics of a transaction, but rather to its most significant contacts in determining applicable law. The private international law rules of Armenia, Kazakstan, Kyrgyzstan, Tajikistan, and Uzbekistan are based on the Russian draft and the Model Code. The private international law provisions of the Russian Code were adopted only in 2001. They were considerably improved over those in the early draft that became the basis for the Codes in the other countries.
New civil codes are in effect in all of the countries of Central Eurasia. In some of the countries there have been successful retraining programs for judges in the use of the codes. Unfortunately, however, application of the codes suffers from the general problems of the judiciary in these countries, including low pay that makes recruitment and retention of qualified personnel difficult; supply of housing and benefits by government authorities that are also often parties to cases; ineffectiveness of efforts against judicial corruption. In the most largest cases, where the most is at stake, however, the codes are applied by skilled, independent, and honest jurists. These are the international arbitrators who decide the bulk of major disputes involving large foreign investments.
Despite the fact that the Codes derived from the Russian and Model Civil Codes have many of the flaws of their source, they also have a great advantage over the technically-superior codes of Georgia and Turkmenistan. Closeness to the Russian Code will allow the legal community in Armenia, Azerbaijan, Kazakstan, Kyrgyzstan, Tajikistan, and Uzbekistan to draw upon the extensive judicial and academic interpretation of the Russian code for guidance in the application of their own codes. Such guidance is of especial importance in a civil law system. Civil codes, by their nature, state rules in extremely general terms. They have proved a great success in countries such as France and Germany because many decades of judicial practice and generations of legal scholarship have explained the code and filled out its meaning. For each of the 2385 articles of the German Civil Code there have been hundreds or even thousands of pages of judicial interpretation and commentaries published. None of the countries, except perhaps Kazakstan, has a sufficient volume of Supreme Court cases or a sufficient number of academic specialists on civil law, to provide the necessary interpretative materials. There is a particular dearth of qualified legal personnel in Turkmenistan, and the situation may be made worse by the emigration of the non-Muslim population. It will be impossible for Turkmenistan and extremely difficult for Georgia to produce the necessary interpretative materials. On the other hand the other countries will be able to draw on the huge mass of judicial decisions and publications on the Russian Civil Code.
When I was administering a foreign
aid project with money from the United States Agency for International
Development, I successfully, but with great difficulty, managed to use a
substantial amount of money to support the Model Civil Code effort. Opponents
saw the Model Civil Code as a part of a larger and dangerous conspiracy to
reestablish the Soviet Union under the mantle of the Commonwealth of Independent
States. I saw the situation quite differently. I thought it was more like that
after the American Revolution, when the young United States continued for
decades to use not only the English law of property and contracts, but also the
ongoing caselaw of the English courts and the ongoing writings of English
commentators on the law. The continuity of law provided a strong basis for the
extraordinarily rapid economic growth of the United States in the nineteenth
century. Far from making the United States subordinated to England, the strong
legal system and resulting strong economy provided a key underpinning for
1. Other systems of civil law effective in parts of the
Russian Empire included the Napoleonic Code (Poland); the Swedish Code of 1736
(Finland), and Byzantine law supplemented by the Collection of Laws of the
Russian Empire (Bessarabia).
2. Thomas C. Owen, the Corporation under Russian Law,
1800-1917 : a Study in Tsarist Economic Policy (1991).
3. Grazhdanskoe ulozhenie : proekt Vysochaishe uchrezhdennoi
redaktsionnoi kommisii po sostavleniiu grazhdanskago ulozheniia (1910). Copies
of the various codifications are conveniently assembled in Kodifikatsiia
rossiiskogo grazhdanskogo prava: Svod zakonov grazhdanskikh Rossiiskoi Imperii;
Proekt Grazhdanskogo ulozheniia Rossiiskoi imperii; Grazhdanskii kodeks RSFSR
1922 goda; Grazhdanskii kodeks RSFSR 1964 goda (2003).
1. Other systems of civil law effective in parts of the Russian Empire included the Napoleonic Code (Poland); the Swedish Code of 1736 (Finland), and Byzantine law supplemented by the Collection of Laws of the Russian Empire (Bessarabia).
2. Thomas C. Owen, the Corporation under Russian Law, 1800-1917 : a Study in Tsarist Economic Policy (1991).
3. Grazhdanskoe ulozhenie : proekt Vysochaishe uchrezhdennoi redaktsionnoi kommisii po sostavleniiu grazhdanskago ulozheniia (1910). Copies of the various codifications are conveniently assembled in Kodifikatsiia rossiiskogo grazhdanskogo prava: Svod zakonov grazhdanskikh Rossiiskoi Imperii; Proekt Grazhdanskogo ulozheniia Rossiiskoi imperii; Grazhdanskii kodeks RSFSR 1922 goda; Grazhdanskii kodeks RSFSR 1964 goda (2003).