|Author: Fyodor Podstolnyi|
RUSSIA: BUSINESS FROM A LEGAL PROSPECTIVE
The present work has been written by the author who is well aware of the fact, that it's impossible to give a comprehensive information on the business organization in the Russian Federation, the current legislation, rights and liabilities as well as possible variants of normative (legal) behaviour of the entrepreneur to the interested category of readers within the breif article. Nevertheless business in Russia has been rapidly changing after the default of 1998г. (and one can easily say they are of positive character). That's why any detailed presentation and study of this problem will not be complete.
Media sometimes gives the impression that only the entrepreneurs envolved in the development, extraction and transportation of raw materials come to the Russian market. But it's not true.
However, many branches and trends of economy can be profitable for undertaking. In this connection we can say that construction can be one of the profitable branches. It's not in vain that the Kremlin palaces, the pillars of the Russian State have also received modern restoration technology, provided by European companies.
I'd like to devote a separate part of this thesis to the items of business application and the analisis of certain branches.
The author is addressing the audience of the independent entrpreneurs who can invest into the exploration of the unknown Russian market without a considerable financial collapse to the actual business. It's obvious that this selection of the reader cannot only be explained by the ambitiosity of the person and its capital but in some extent it should be supported by the knowledge: true and real understanding of the current situation.
The thesis pays less attention to monopolic structures, which can use huge financial and human resources to study and seize the market. They use specialized agencies and institutes which collect and process information for them. Nevertheless I'm sure - the contents of this article will be useful and interesting for these structures.
The average European, who wants to start buisiness in Russia, doesn't have too much free time to study this problem thouroughly because he, as a rule is a manager and investor, analyst, politician and the CEO of the project. My task is to help this reader.
I should say before, that despite of their democratic trend the articles will be of business like nature and be based on the actual legislation in the Russian Federation. The author suggests to use the actual court and administrative practices to illustrate the law inforcement.
Another task of the work is to familiarize the reader with business practices in Russia, legislations and norms which regulate the relations of property, possession, inheritance, labour, administrative, fiscal, customs legislation, functional organization of the related state institutions.
A special attention will be placed on the activity of the Russian State in the protection of material property rights with the increased role of court, to the organization of the legislative syst?m of the Russian Federation.
The comments will be given to new legal acts which have been adopted by the Federal Convent, signed by the President of Russia and have been enforced recently. In the first turn these comments relate to the land legislation and the associated relations, to the inheritance, labour and administrative laws.
Another task of the author is to create objective and multilateral vision of the existing advantages and the negative phenomena, which can be present in the organization of industrial, commercial, financial and other business activities in Russia.
I believe this interpretation will help foreign businessmen have a whole and clear idea of the rules and opportunities to do business in Russia. Answers and questions of the readers will serve as a guide point for the subject correction of the discussed problems.
The interpretation of the legislation and the law enforcement is of a non official character, the author expresses his own opinion based on the proper advocate practices in Russia.
Tendencies and problems of the policy of the Russian Federation to attract foreign investment
The Constitution of the Russian Federation, adopted in 1993, has established the right of private ownership of land in Articles 9 and 36. Also this norm has existed and Part 1 of the Civic Code of the RF in Articles 260-287 has regulated the property right and other material rights to land, these long existing articles have left under land legislation practically all items related to limit determination and plot transfer procedure to any property, posession and usage form. It's worth mentioning, that the subjects of the Russian Federation - regions, areas, districts and cities, have adopted their legislations to regulate land relations. In many ways this legislations have carried contradictory character, especially in relation to the ownership of land.
The All State Act has been required which could consider the existing problem equally. The Land Code of the Russian Federation of 2001 has become such an act.
I suppose, there's no need to comment on the whole Land Code of the Russian Federation, but I will only touch upon the aspects which have primary significance for my readers outside the Russian Federation.
II. Land Code of the Russian Federation of year 2001 and the rights of foreigners, persons without any citizenship, foreign legal persons in the field of land relations
The Land Code of the Russian Federation 2001 stipulates that foreign citizens, persons without citizenship and foreign legal persons in the territory of the Russian Federation have in relation to land:
|1.||Property right, i.e. the right to posess, use and dispose of land plots (Article 15, Paragraph 5.
Article 28 Land Code of the Russian Federation) «A land plot » as an object of land relations a part of land surface (including the soil layer), whose limits have been registered and legally verified (Article 6 of the Land Code of the Russian Federation).
|2.||Rent right, i.e. the right to possess and use (Article 22 of the Land Code of the Russian Federation).|
|3.||Right of limited use of other persons' land plots (servitude)( Article 23 of the Land Code of the Russian Federation).|
The Land Code of the Russian Federation (Article 23) establishes two types of the servitude: private and public ones.
The private servitude regulated by Article 274 of the Civic Code of the Russian Federation determines the right of the owner of the real estate (a land plot and other immobility) «to demand the concession of limited usage right over the neighbor plot from the owner of the other plot » otherwise known as the right of easement. «The servitude can be established to provide passage and driving through the neighbor land plot, laying out the electric relay lines, communication and pipe lines, water supply and melioration and also other requirements of the owner of the real estate which cannot be enforced without establishing the servitude ».
I should note that servitude doesn't make special restrictions in relation to foreign citizens, persons without citizenship and foreign legal persons. (Article 23 of the Land Code of the Russian Federation).
The private servitude is established in relation to limited persons at the agreement of the sides, and in the case of dispute by means of court at the legal action of the person who demands the servitude establishing. The owner of the land plot under the servitude will have the right to demand certain fees for the usage of his plot from the persons enjoyng the servitude, if another procedure isn't provided by law. (p.p. 3,5 Article 274 Civic Code of the Russian Federation, p.6 Article 23 Land Code of the Russian Federation).
Though the legal sense of the public servitude action has a general character and is established in relation to all the persons who require a limited usage of the certain land plot, th Land Code introduces considerable additions and differences in its interpretation, enforcement practice, existence and cancellation. For example, the public servitude can be enforced by a Statute of the Russian Federation, of a subject of the Russian Federation, of a municipality in the cases when it's necessary for the interests of the State, municipality and the local people, without the confiscation of land plots. The public servitude is enforced with the consideration of the public opinion research results. (p.2 Article 23 Land Code of the Russian Federation).
The public servitudes are enforced for (p.3 Article 23 Land Code of the Russian Federation):
|1.||passage and driving through the land plot;|
|2.||using a land plot to repair communal, engineer, electrical and other lines and network and also the objects of the transport infrastructure;|
|3.||location of land and geodetic marks at a plot and approaches to them;|
|4.||drainage works in in the plot;|
|5.||water excavation and supply;|
|6.||cattle driving through the plot;|
|7.||hay making and cattle pasting on the plots in the terms whose duration corresponds to the local traditions and with the exception of plots in the limits of forest fund lands;|
|8.||using the plot to hunt and fish in the ponds on the plot area, to collect wild herbs within the established terms and order;|
|9.||temporal using of the plot to carry out prospecting , research and other works;|
|10.||free access to the coastal line.|
The servitude can be temporal, or permanent. The servitude usage can be as less a burden as possible for the plot in the relation of which it has been established (p.4,5 Article 23 of the Land Code of the Russian Federation).
In cases when public servitude requires eminent domain and makes the usage of the plot impossible for the owner, the land user, or the land owner will have the right to demand alienation, including by the way of the purchase of the given plot from him with the compensation of the damage by the state authority, or the municipal organization who has established the public servitude, or granting the equal plot with the compensation of the damages (p.1.p.7 Article 23 Land Code of the Russian Federation)
In cases when servitude enforcement makes the usage of the plot considerably difficult, the owner of the plot will have the right to demand corresponding fees from the state authority, or the municipality organ who has established the public servitude ( Part 2 p.7 Article 23 Land Code of the Russian Federation).
Persons, whose rights and legal interests are infringed by the established public servitude, can protect their rights in court (p.8 Article 23З Constitution of the Russian Federation).
Servitudes are subject for the state registration (Article 131 Civic Code of the Russian Federation) in correspondence with the Federal Law « On State registration of rights to real estate and transactions with it » (p.9 Article 23 Land Code of the Russian Federation, p.3 Article 274 Civic Code of the Russian Federation).
The servitude is preserved in the case of the right transition for the plot under the servitude to the other person. The servitude cannot be subject to purchase, sale, or bail and cannot be transferred in any way to persons which aren't owners of the real estate for the use of which the servitude has been established (Article 275 Civic Code of the Russian Federation).
At the request of the owner of the plot under servitude, the servitude can be cancelled because of the termination of reasons of its enforcement.
In the cases when the plot belonging to a person, or a legal person cannot be used for its purpose, as a result of the servitude, the owner has the right to bring an action in court to stop servitude (Article 276 Civic Code of the Russian Federation).
The Institute of rental relations will open wide opportunities to own and use land in the Russian Federation for foreign investors. «According to the Lease Agreement
( Property Lease) the lease granter is obliged to grant on a property to the lease holder for rent or for temporal use. Crops, products and profit, received by the leaseholder as the result of the leased property, are the property of the leaseholder»(Article 606 Civic Code of the Russian Federation).
«The following can be granted on lease: plots and other natural objects, enterprises and other belongings, buildings, equipment, transport facilities and other things which don't lose the natural properties during their exploitation (non disposable things)»(Article 607 Civic Code of the Russian Federation).
The Land Code of the Russian Federation in p.1 Article 22 states: «Foreign citizens, persons without citizenship, foreign legal persons can have plots on lease on the territory of the Russian Federation with the exception of cases envisaged by the present Code.» We shall go on considering other important provisions established by Article 22 of the Land Code «Lease of land plots».
Plots, as a rule are granted on lease by the owners in correspondence with the Civic legislation and the Land Code (p.2.Article 22 Land Code of the Russian Federation). The law can establish the property types the lease of which can be restricted or limited. (P.4 Article 27 of Land Code of the Russian Federation, for example, restricts lease of plots on which national reserves and parks are located).
At the expiration of the lease term for the plot the tenant will have, as a rule, the priority right to conclude a new lease agreement for the plot (p.3.Article 22 Land Code of the Russian Federation). The tenant should inform the lease granter in writing about his intention to conclude such an agreement in the term indicated in the lease agreement, but if the term isn't mentioned within a reasonable term before the expiry of the agreement validity.
In the conclusion of the lease agreement for a new term the lease agreement conditions may be changed at the content of the parties.
If the lease granter has refused to renew the lease agreement for a new term, but within a year since the expiration date of the agreement he has concluded a lease agreement with another person, the tenant will have the right at his choice to demand in court the transition of rights and obligations on himself in relation to the concluded agreement and compensation of damages caused by the refusal to renew the agreement, or only compensation for damages. If the Tenant continues to use the property after the expiration date of the lease agreement and the lease granter doesn't have objections, then the lease agreement is considered to be renewed on the same conditions and on the undefined term (Article 621 Civic Code of the Russian Federation).
The tenant of the plot will have the right to convey his rights and obligations on the plot lease agreement to a third person, including the concession of plot lease rights on bail, invest them to the Stock Capital of the household cooperative, or as a share fee to the production cooperative, within the valid term of the plot lease agreement without the consent of the owner of the plot, but on the condition of the information of the owner if other provisions are not envisaged by the lease agreement. In the cases indicated the new plot tenant would become responsible for the plot lease agreement with the exception when the lease rights are given on deposit (p.5 Article 22 Land Code of the Russian Federation).
These provisions are applied in the case when the state, or the municipality is a landowner if the lease agreement has been concluded for no less than five years ( p.9 Article 22 Land Code of the Russian Federation).
The tenant will have the right to convey the leased plot to sublease within the lease agreement term without the consent of the owner, but on the condition of his information if other provisions aren't envisaged by the lease agreement. The subtenants will have all the rights of leaseholders (p.6 Article 22 Land Code of the Russian Federation).
Looking ahead we should mention such a provision directly touching upon the tenant rights when the tenant of the sold plot in the state, or municipal property will have the priority right to buy it as envisaged by the Civic law for cases of general property share sale to an outside person (p.8 Article 22 Land Code of the Russian Federation). This rule has restrictions strictly envisaged in the considered Land Code, and in the cases, in particular, when the property owned by someone besides the tenant is located on the leased plot.
The change of the lease agreement and the restriction of the tenant rights without his consent aren’t allowed. The untimely cancelment of the plot lease agreement valid for over five years, which has been demanded by the lease granter, is only possible by the court decision if the tenant has severely violated the plot lease agreement (p.9 Article 22 Land Code of the Russian Federation).
In the case of the succession of the plots by persons under age their legal trustees can convey the plots on bail on the term when the successors reach the majority (p.10 Article 22 Land Code of the Russian Federation).
Lease agreement on the real estate including the plot lease agreements are always concluded in the written form and are subject, as a rule, to the state registration (Article 609 Land Code of the Russian Federation, The Federal Law «On the State registration of the rights for the real estate and the transactions with them » dated July 21 1997 №122-Federal Law ).
The lease agreement meaning the purchase of the leased property are subject to the special registration. In such cases the lease agreement and the following transition of the property rights are registered (p.1.Article 131 Civic Code of the Russian Federation, №122-Federal Law dated July 21, 1997).
The plot lease agreements concluded for less thas one year aren't subject to the state registration with the exceptions envisaged by the the Federal Laws (p.2 Article 26 Land Code of the Russian Federation), the statement above fully corresponds to p.2 Article 651 Civic Code of the Russian Federation, which defines that the lease agreements for buildings and premises for less than a year aren't subject to the state registration.
The lease agreement will be concluded for a term indicated in the text of the agreement. If the term isn't mentioned the agreement will be considered as concluded for an uncertain term. In this case, any party, the tenant and the lease granter, will have the right to decline from the agreement with the prior notice of the other side three months before the actual decline.(p.1,2 Article 610 Civic Code of the RF) The Land Code of RF 2001 doesn't define the limited term of the plot lease. This is a substantial difference from previous practices when the maximum lease term couldn't exceed 49 years.
The tenant should timely pay for the used property. The way, conditions and terms of the rent are determined by the lease. In the cases when they aren't defined by the agreement then the way, conditions and terms of the rent, which are used under the same circumstances, are applied.
|1.||payments, installed periodically or at once;|
|2.||share from production volume, from fruit and profits resulted from the use of the leased property (part of the harvest, for example);|
|3.||certain services provided by the tenant to the lease granter;|
|4.||enant's transfer of a thing to the leaseholder in his posession, or on lease as has been envisaged by the agreement;|
|5.||transfer of the expenses envisaged by the agreement on the leased property improvement to the tenant ( melioration works provided by tenant, for example).|
The rent forms, indicated above, aren't unique and exceptional. The parties can also envisage other forms of the rent in the lease agreement.
If other provisions aren't indicated, then the amount of the rent can change with the concent of the parties, but not oftener than once a year. Only the law can establish other minimum terms of the rent amount revision for separate lease types and also for the lease of separate types of property. It's obvious that the concept of «law» can include at least an act adopted by the legislative organization of the Federation subject as minimum - i.e. republic, region or area. In this way the Russian lawmaker will restrict the possibile voluntarism emergence from unfair bureakrats of all levels including the Administration Heads of the Federation subjects.
If the contrary isn't provided by law, then the tenant will have the right to demand a considerable reduction of the rent if under circumstances beyond his will the use conditions,envisaged by the lease agreement, or the property conditions, have been drastically deteriorated.
If the contrary isn't envisaged by the lease agreement, then in the cases when the tenant significantly violates the terms of the rent payment, then the lease granter will have the right to demand the prepayment of the rent within the term established by the lease granter. By this, the lease granter will not have the right to demand the rent prepayment for more than two months period ( Article. 614 Civic Code of the Russian Federation).
The tenant shall use the lease plot in correspondence with the lease agreement provisions, and if such provisions aren't determined, then in compliance with the purpose defined for this plot. If the tenant violates these provisions, then the lease granter will have the right to demand the cancellment of the agreement and seek for damages (Article 615 Civic Code of the Russian Federation).
The property rights transition for the leased property to another person will not be the basis to change, or cancel the lease agreement.
In the case of the death of the tenant of the leased property, all the rights and obligations as to the lease agreement will be transferred to a successor if the law doesn't envisage the contrary provisions.
The lease granter will not have the right to refuse such a successor to enter into the agreement for the rest of the term with the exception of the case when the conclusion of the agreement has been caused by the personal qualities of the tenant (Article 617 Civic Code of the Russian Federation).
The lease of the plot terminates after the expiration date of the lease agreement at the consent of the parties. The lease agreement terminates in the case of the death of the tenant if by law, or by agreement the rights cannot be passed to a successor. The untimely termination of the lease agreement is only possible by the court decision at the request of either parties , by lease granter, or by tenant.
At the request of the tenant the lease agreement can be cancelled untimely by court in the cases when:
|1.||the lease granter doesn't provide the property for use of the tenant, or makes obstacles for use of the property in conformity with the agreemnt conditions, or with the purpose of the property;|
|2.||the property given to the tenant on lease has drawbacks which haven't been mentioned by the lease granter during the agreement conclusion, haven't been known by the tenant beforehand nor shouldn't have been found by the tenant during the property inspection, or during the control of the property when the agreement has been concluded;|
|3.||the lease granter doesn't provide obligatory capital repairs of the property within the terms established by the agreement and within the reasonable terms when they aren't mentioned in the agreement;|
|4.||the property in the virtue of circumstances beyond the responsibility of the tenant will be in the state not good for use (Article 620 Civic Code of the Russian Federation).|
At the request of the lease granter the lease agreement can be cancelled untimely by court when the tenant:
|1.||will use the property with the considerable violation of the agreement provisions or the property purposes or with repeated violations;|
|2.||significantly deteriorates the property;|
|3.||doesn't pay for more than two rents in succession;|
|4.||he lease tenant doesn't provide obligatory capital repairs of the property within the terms established by the agreement when it has been the obligation.|
The lease granter will have the right to demand the untimely cancellation of the agreement only after the prior written notice to the tenant on the necessity to execute the responsibilities within the reasonable terms (Article 619 Civic Code of the Russian Federation) .
P.2 Article 46 of the Land Code of the Russian Federation will provide additional reasons for the untimely cancellation of the lease agreement at the initiative of the lease granter:
|1.||when the plot isn't use in conformity with its purpose, or when it belongs to a certain category of lands envisaged by Article 8 of the Land Code of the Russian Federation;|
|2.||when the use of the plot will bring to a considerable reduction of the fertility, or the environmental deterioration (the agreement cancellment isn't allowed on the above reasons during the agricultural works in the field, or in other cases envisaged by the Federal Laws);|
|3.||when the following land law violations made intentionally haven't been removed: contamination, pollution, damage, or liquidation of the fertile soil layer resulted from the inadequate handling of fertilizers, plant growth stimulants, pesticides and other chemical and biological materials during their storage, use, or transportation which have caused harm to the people's health, or to the environment;|
|4.||when the plot destined for agricultural production, for civil and other construction purposes haven't been used during three years if a longer term hasn't been established by the Federal Law or by the plot lease agreement with the exception of the period required for the plot assimilation and the period during which the plot couldn't have been used for its purpose because of calamities and other circumstances which exclude this use;|
|5.||in the case of the confiscation of the plot for the State, or the municipal requirements;|
|6.||in the case of the alienation of the plot (requisition) (Article 46 Land Code of the Russian Federation).|
Futher, we'll consider the detailed concept of alienation and confiscation cases, awful and terrible for each owner and the proprietor.
The alienation including by the way of plot purchase for state and municipal requirements will be made in exceptional cases in comformity with Article 49 Land Code of the RF and in connection with:
|1.||executed international obligations of the Russian Federation;|
|2.||project installation of the state and municipal significance when other variants of the location of these istallations are not possible;|
|3.||other circumstances established by the Federal Laws in the cases applicable to the alienation including the purchase of the plots from the lands in the posession of the subjects of the Russian Federation or the municipalities for the cases envisaged by the laws of the subjects of the Russian Federation.|
The alienation limits are established with the quality of the land considered (in the case of the lands for agriculteral use purposes Article 79 Land Code of the Russian Federation), with the consideration of their use in conformity with the Master Development plans of cities and other settlements (for construction purposes Article 83 Land Code of the Russian Federation). No alienation, nor right cancellation for the strictly protected natural territories is allowed (for requirements which are in contradiction with their purposes Article 95 Land Code of the Russian Federation). The alienation of plots occupied by the forests of the first and the second (Article 101 Land Code of the RF) groups is only allowed on the reasons mentioned above 1)and 2).
The provisions and the order of the plot alienation for state and municipal purposes are established by Article 55 Land Code of the RF.
The forced alienation (confiscation) of the plot for the state and municipal requirements can be made under the conditions of the prior and equal compensation of the plot cost by the court decision . The plot purchase procedure from the owner; the plot price definition ; the ownership rights and the plot use termination under confiscation, the plot rights of the owner are envisaged by the civic legislation of the RF ( p.2,3 Article 55 Land Code of the RF).
Rules, rights termination for plots in the case of their confiscation for state, or municipal requirements established by Articles 279-282 Civic Code of the RF will spread for all plots which are both in private property and in possession and use, i.e. on lease what is indicated in Article 283 Land Code of the RF. For example Article 279 Land Code of the RF indicates, that a plot can be alienated from the owner by the way of purchase. Depending on the subject for whose purposes the plot is alienated, the purchase is made by the Russian Federation, by the corresponding subject of the RF or by the municipality (Articles 9,10,11 Land Code of the RF). The decision on the alienation of the plot for state or municipal requirements can be taken by the Federal executive power and the executive power of the subjects of the Russian Federation.
The plot owner should obtain an alienation notice in writing one year before the plot alienation. The purchase of the plot within a year period after the receipt of the notice by the owner is allowed only with the consent of the owner.
The decision of the state organization on the plot alienation is subject to the state registration. The plot owner can be informed about this registration with the registration data indicated in the notice. The purchase of a part of the plot for state and municipal requirements is allowed only with the consent of the owner.
Article 280 Land Code of the RF defines the rights of the owner of the plot subject to alienation, it says, in particular: the owner of the plot subject to alenation for state and municipal requirements can possess, use or handle the plot at his wish, or make necessary expenses providing the use of the plot in conformity with its purpose since the moment of the state registration of the plot alienation till the decision taken by the court on the plot purchase. However the owner will bear the risk that expenses and damages related to new construction, building expansion and reconstruction on the plot within the indicated period will be attributed to him. (Article 280 Civic Code of the RF).
The price for the plot taken for the state and municipal requirements (the purchase price), terms and other purchase provisions are determined by the agreement with the plot owner. The agreement should include the obligation by the Russian Federation, by the subject of the Russian Federation or by the municipality to pay the purchase price for the plot subject to alienation.
In determining the purchase price it should include the market price of the plot and related real estate property as well as all damages caused to the owner by the plot alienation, including the damages, which carries with the untimely termination of his obligations in relation to the third persons and the lost profits. At the consent of the owner another plot can be given with the consideration of its cost in the purchase price instead of the plot alienated for the state and municipal requirements. (Article 281 Civic Code of the RF).
If the owner doesn't agree with the decision of the plot alienation from him, or the purchase price decision, or other purchase provisions haven't been reached, then the state organization who has taken the decision should take an action in court on the plot purchase. The legal action on the plot purchase for the state and municipal requirements should be taken within two years since the date of the corresponding notice indicated in Article 279 Land Code of the RF (Article 282 Land Code of the RF) to the plot owner.
The requisition of the plot as per Article 51 Land Code of the RF is a temporal alienation of the plot belonging to the owner in cases of calamities, disasters, epidemic, epizootic and under other extraordinary circumstances, with the damage compensation to the plot owner and the issuance of the document on the requisition with the purpose to protect the vital interests of the citizens, the society and the state from the treats caused by these extraordinary circumstances. In cases when the return of the requisited plot isn't possible the owner may receive the market cost for this plot, or another equal plot at his wish. The owner of the requisitioned plot will have the right to demand the return of the plot by court in the case of the termination of the circumstances due to which the requisition has been enforced. In cases when force majeure circumstances don't require the requisition the plot can be temporarily occupied to enforce the protection from the extraordinary powers for the period of the duration with the damage compensation to the plot owner who has suffered a temporal limitation of his rights. Evaluation due to which the cost of the requisitioned plot and the damages caused by the requisition, or the temporal limitation of the owner rights will be compensated to the owner can be disputed by the plot owner in a legal way.
P.2. Article 5 of Land Code of the Russian Federation stipulates that the rights of foreiners, persons without citizenship and foreign legal persons to acquire plots in their possession will be determined by this Code and by the other Federal Laws. No doubt, that the in this legal institution the Land Code of the RF defines the legal capacity of the foreiners, persons without citizenship and foreign legal persons with some limitations as compared to the Russian participants of the land relations.
For example Article 15 Land Code of the RF indicates that «The property of legal persons are plots acquired on reasons… envisaged by the legislation of the Russian Federation». »Citizens and legal persons will have the right to the equal access to acquire plots in their possession». However there is a pretext that " foreiners, persons without citizenship and foreign legal persons cannot acquire in their possession plots, which are in the frontier territories which are established by the President of the Russian Federation in conformity with the Federal Law on the State Frontier of the Russian Federation" and in other territories of the Russian Federation which have been established on the basis of the Federal Laws. Article 28 Land Code of the RF « Acquisition of rights for plots in the state and municipal property » in p.5 will stipulate: «Plots for foreiners, persons without citizenship and foreign legal persons are given in possession only for payment...» But the other thing can be difficult to imagine for the state in such a difficult economical situation.
With the above provisions the plots for foreiners, persons without citizenship and foreign legal persons can be given also for the construction purposes (p.12 Article 30 Land Code of the RF).
In the plot right transition during the property right transition for buildings located on the plot, p. 5 Article 35 Land Cod of the RF indicates, that « Foreiners, persons without citizenship and foreign legal persons – are owners of the buildings and facilities located on the other owner's plot and will have the priority right to buy or lease (this - author's remark) plot … ». However the President of the Russian Federation can establish a list of buildings and installations on which this rule cannot be applied.
In accordance with Article 36 Land Code of the RF foreiners, persons without citizenship and foreign legal persons are the owners of building and facilities located on the plots in the state and the municipal property and will have the right to acquire the mentioned plots in their possession in conformity with the requirements of the Articles 15 and 28 Land Code of the RF.
The fight of two tendencies in relation to possible right acquisition for land in the Russian Federation by foreign investors has been stressed in relation to the agricultural land rotation. There are two historically emerged tendencies in Russia in relation to the land problem:
the first one - admits the possible acquisition of Russian lands to foreign investors in their possession and wishes that;
the second one – categorically denies this possibility and puts all obstacles to this.
The adoption of the Land Code of the Russian Federation has been the victory of the supporters of the second tendency.
For example, Article 8 of the Federal Law « On enforcement of the Land Code in the Russian Federation» says:» Foreiners, persons without citizenship and foreign legal persons can possess and use plots of agricultural purpose only on the lease basis ». This situation continues also after the enforcement of the Federal Law «On the land of agricultural lands rotation» №101 –Federal Law dated 24 07.2002.
Thus, indicating the possibility for foreign investors (foreiners, persons without citizenship and foreign legal persons) to possess and use agricultural lands on lease basis, the legislature will limit their possibilities to dispose of the indicated plots.
In connection with the above the readers can ask about such reasons to acquire material rights for agricultural land as donation, testament and deposit. These are very important items and I believe they will be also considered in the future.
The Russian government will direct its legislation first of all to attract the investor to the projects in excavating, processing and hi-tech branches of the economy. However, it's well known that investments to mediatory and commercial activities can also be very efficient. On my opinion there are many people among legitimate businessmen who have made capitals on trade and mediatory transactions with real estate (what can be more reliable and financially guarranteed as real estate?) . I believe this phenomenon is actual not only for Russia.
To my opinion the most interesting in financial opportunities for business iniciatives will always be these trends, which are on the junctions between the legal branches- - the Civic, Inheritance, Fiscal, Land and others.
“Blessed are they which do hunger and thirst after righteousness: for they shall be filled”