Judiciary systems in Russia and other CIS countries are going through major revisions. L.R. had already touched upon a topic of reforms in Ukraine and Belarus. However, those cases should be seen in a context of the similar processes that are happening in the judiciary of other post-Soviet countries.
Kazakhstan, Turkmenistan, Kyrgyzstan
Kazakhstan was the first CIS country that discarded its independent economic court. Arbitral tribunal was established in accordance with the Act of 1992 “On the Arbitration Court” and Procedure Act of 1992 “On the procedure for the settlement of economic disputes by arbitration courts”. It existed for 3 years and was eliminated.
Turkmenistan was the second country that got rid of Supreme Economic Court. It happened in 2000. After its abolishment, the supreme body in settling economic disputes is the Supreme Court. Arbitral tribunal of Turkmenistan is the original jurisdiction on economic disputes though and cases follow the order established by the Arbitration Procedural Court.
In Kyrgyzstan, the Act of 2003 “On a new version of the Constitution of the Kyrgyz Republic” was adopted, which defined a new direction for the development of the judiciary system. Arbitration courts were merged into the system of courts of general jurisdiction. Procedure of appointment the judges was changed too: they are appointed by the President of the Kyrgyz Republic with the consent of the Parliament.
In other post-Soviet countries (except Kazakhstan and Armenia, but including North Ossetia and Abkhazia) independent jurisdiction system on economic disputes continues to operate. Every country has its own way of integrating economic courts into judiciary.
According to the Act of 1997 “On Courts and Judges” and President’s Decree of 1999 “On the organization and support of the activities of the courts of the Republic of Azerbaijan”, economic court system consisted 5 original economic courts, appellate court (Economic Court of the Republic of Azerbaijan), and apex court (Judicial Collegium for Economic Disputes of the Supreme Court of the Republic of Azerbaijan).
In 2010 there were some changes made to the Law “On Courts and Judges”. Now economic disputes are resolved in administrative and economic courts (7), general appellate courts (6), and court of cassation (Judicial panel on economic disputes of the Supreme Court). It should be noted that the procedures are still conducted according to the rules of Civil Procedure Court of 2000.
In Moldova there were two major reforms: in 1996 the State Arbitration Court was reorganized into specialized economic courts and in 2003 those courts made up the Chisinau District Economic Court, the Economic Appeals Chamber and the Economic Collegium of the Supreme Court of Justice. The Economic Court resolves civil disputes between legal entities, issues of insolvency and the privatization of economic agents.
In November of 2009 the Government drafted a bill on the liquidation of specialized courts. In January of 2010, the initiative was supported by the Supreme Council of the Magistracy – the judicial self-government body. However, next year the Constitutional Court ruled out that the complete liquidation of specialized courts would be unreasonable and excessive. The court ruling read that the parliament should not interfere with the implementation of the act of justice, and blocking of judiciary procedures is unacceptable. Judges also concluded that the arguments about the ineffectiveness of specialized courts are not based on comprehensive studies with convincing conclusions. According to statistical data, economic courts resolve more cases than any other court in the country.
In 2012 a new law was adopted and the new District Commercial Court appeared as the original court for economic disputes. The Economic Appeals Chamber was disbanded, most of the authority transferred to the Appeals Chamber of Chisinau. The Supreme Court of Justice, as the cassation instance, began to take up on cases of economic disputes in the general collegium for civil, administrative and commercial matters. (After the reorganization, the judges of the original court were complaining about the issue of one single judge taking up on civil, administrative, criminal and commercial matters.)
In Uzbekistan, there is a unified system of economic courts – 15 economic original courts and the Supreme Economic Court. Economic courts operate according to the Economic Procedural Code of 1997. The website of the Supreme Economic Court states that economic courts examined 348,198 cases just in 2015, which should indicate its relevance. Moreover, there is a possibility of filing applications online (over 57,000 received that way in the past year), as well as the possibility of video conferences during the case.
Tajikistan has not yet disbanded its Supreme Economic Court. There are economic courts of the regions, which are original courts, and Supreme Economic Court. However, experts note that economic courts deal with a very small number of cases. Statistical data on the number of economic cases reviewed by the economic courts shows that in 2002 they considered 439 cases; in 2003 – 492 cases; in 2004 – 517 cases (which is, according to experts, is insignificant). The website of the Supreme Economic Court seems not to be supported anymore.
However, in the “Program of Judiciary Reform in the Republic of Tajikistan for 2015-2017” there are no plans of merger of any kind. Judiciary itself does not have the right to initiate legislative initiatives, so if a decision to merge the Supreme Court and the Supreme Economic Court is ultimately made, this will be done on the initiative of the executive branch.
Different paths to the same destination
As has been pointed out, only Uzbekistan and Tajikistan support parallel jurisdictions. In Azerbaijan economic courts had become a distinguished part of the courts of general jurisdiction, with the economic collegiums at the higher level. Kazakhstan and Kyrgyzstan do not give “special treatment” to economic disputes anymore. Turkmenistan and Moldova saved some elements of specialization in economic disputes with separate procedural acts, but it is not entirely clear how the higher courts resolve those cases.
There is no correlation between the number of jurisdictions and the size of the country, or its population. It depends on the demands of a particular society. In Luxembourg, which has a population of 500,000 people, there are four separate jurisdictions and the Constitutional Court – same as in a much bigger France.
Possible motivation for the merger of jurisdictions – mainly the abandonment of independent economic courts – is explained by the need to eliminate contradictions in judicial practice and ensure the overall unity of judiciary practice. During the reform in Moldova it was noted that economic courts are the most corrupt ones.
Recently, cases of economic commitments and their fulfillment have been developing through the functioning of arbitration courts (In Armenia, for example, Arbitration Court is operating alongside with the Financial Court), and at the regional level – through the CIS Economic Court.
In the interests of the budget
Economic courts acted as an accessory regulator of economic relations when there was a transition to a market economy. Over time, the demand for legal expertise on economic activities has declined (it can explain the silence of the business community when Russian Federal Arbitration Courts was eliminated), or countries started to save money by focusing on the unity of judicial practice.
Merge of the Supreme Courts (first in Kazakhstan and Turkmenistan, later in Russia, Belarus, and Ukraine) is a rejection of a holistic autonomous approach to economic disputes and a step towards imminent loss of specialization.
According to Sergei Pepeliaev, 66% of cases in arbitration courts from 1999 to 2015 were ruled out in favor of taxpayers (76,7 % in 2008). After the liquidation of the Supreme Arbitration Court the influence of the judiciary on tax system has greatly weakened (SAC examined an average of 120 tax cases per year. The Supreme Court of the Russian Federation resolved only 29 cases in 2015).
The number of tax cases reviewed by the highest court instance has decreased. The Presidium of the Supreme Arbitrazh Court examined an average of 120 tax cases a year. The Supreme Court of the Russian Federation in 2015 – only 29.
I suppose that the issue of the dissolution of the Supreme Arbitration Court of the Russian Federation was caused, inter alia, by economic reasons. In order to increase tax collections, SAC, as the consistent advocate for the independence of economic entities, was eliminated, and authority to initiate tax inspections and criminal proceedings was returned to intelligence and security agencies. Since the start of financial crisis in 2014 the government became more interested in replenishing the budget in any possible ways than in strengthening the protection of businesses. It seems that other countries were driven by the same interest: Kazakhstan took the risky step of elimination of specialized economic courts in the midst of a serious decline in the economy; Turkmenistan, adopts the “Strategy of social and economic transformations in Turkmenistan for the period until 2010” in 2000, in order to overcome an economic crisis.
Political crisis in Kyrgyzstan in 2003, and the economic recession that followed, led to some unpopular measures adopted by the government. Similar things happened in Moldova.
Ultimately, the economic recession in Uzbekistan and, especially, in Tajikistan (which was caused by the depreciation of local currencies and a decrease in the flow of money from Russia) may lead to the dissolution of economic courts. Tajikistan might do it sooner, because the crisis there is much more severe.
By Denis Primakov,
CEO and founder at Risk Consulting