1. Introduction

Political and administrative structure

The Russian Federation is a federal state with a republican
form of government.

The Constitution

The Constitution, originally adopted on 12 December 1993 is the supreme law of the Russian Federation. It has direct effect and applies throughout the entire territory of Russia.
General principles of international law and international treaties are part of the Russian legal system. If Russia is a signatory to an international treaty containing provisions contrary to the provisions of any domestic legislation, the provisions of the international treaty will prevail. The Constitution, however, takes precedence over any contradicting provision of an international treaty.

Regional and local political structure

The Russian Federation consists of 89 "constituent subjects", i.e. regions within the federation. Regions are granted a certain degree of autonomy over their internal economic and political affairs. As cities of federal significance, Moscow, Saint Petersburg and Sevastopol enjoy the status of region.
The head of the executive branch of each region is directly elected in regional elections or by the legislative body of the respective region (if such option is set out in the constitution or the law of such region).
The Constitution sets out a general list of powers that are within the exclusive federal jurisdiction. Some powers are jointly exercisable by the federal and regional authorities. The regional authorities are then allocated all residual powers. Regional powers include the authority to manage regional property, establish regional budgets, collect regional taxes and maintain regional law and order.

Separation of powers

The Constitution divides federal power among three branches: legislative, executive and judicial. The organs of each branch act independently within their constitutional powers, ensuring a system of checks and balances.

Executive branch: the President and the Government

The President is the Head of State. The term of office of the President is six years. The President may only serve two terms in total.
The President appoints the Prime Minister whose candidacy must be approved by the lower chamber of the Russian parliament (the State Duma).
The President determines the main trends of Russia’s domestic and foreign policy and represents the country in both domestic and foreign affairs. The President is Commander-in-Chief of the Russian Armed Forces.
The President has broad authority to issue executive orders and directives that in practice have the force of law. Under certain circumstances, the President has the right to dissolve the State Duma.
The Government exercises executive power at the federal level, with the Prime Minister acting as its head. The Government is required to enact the decisions made by the President and the laws adopted by the federal legislature.

Legislative branch: the State Duma and the Federation Council

The Federal Assembly or the Parliament consists of two chambers: an upper chamber called the Federation Council and a lower chamber called the State Duma. The Parliament exercises legislative power in Russia at the federal level.
There are no more than 208 seats in the upper chamber of Parliament. 178 seats are occupied by representatives of the executive and legislative branches of the Russian regions. The remainder are occupied by 30 members appointed by the President, including seven possible life-long members. After leaving office, the President may serve on the Federation Council for life.
The State Duma consists of 450 deputies who are elected by proportional representation. State Duma members are elected for five-year terms.
Federal bills are introduced in the State Duma. They may be submitted by the President, the Government, members of either chamber of Parliament, regional legislatures, the Constitutional Court or the Supreme Court on matters within their authority. Bills must pass three readings in the State Duma. After being adopted by a majority in the State Duma, bills are considered by the Federation Council. If a bill is rejected by the Federation Council, a Conciliatory Commission may be established. This consists of representatives of the State Duma and Federation Council who review and amend the bill before it is presented to the State Duma again for consideration.
Once a bill is adopted by the Federation Council, it must be signed by the President. The President has the right of final veto which, if exercised, can only be overridden by a resolution passed by two-thirds of the members of the State Duma and the Federation Council.

Judicial branch: the judicial system

The judiciary is split into three branches:
· The courts of general jurisdiction;
· The commercial (“arbitrazh”) courts; and
· The Constitutional Court.

There is a federal system of courts and a system of local courts in each Russian region.
The courts of general jurisdiction deal with criminal, civil and administrative cases involving individuals who are not engaged in business activities. Cases are heard by the district court unless they fall within the jurisdiction of the magistrate courts. The senior court of general jurisdiction is the Supreme Court. Decisions of the lower courts can be appealed through the intermediate courts, as far as the Supreme Court.
The commercial (“arbitrazh”) courts deal with economic disputes involving individuals engaged in business activities and disputes between legal entities and their participants (i.e. their shareholders). The commercial court system consists (in an increasing order of hierarchy) of the regional commercial courts, the commercial courts of appeal, the federal district commercial courts and the Supreme Court. Within this system, there is also a court specialised in the review of intellectual property claims, the Intellectual Property Court.
The Constitutional Court has jurisdiction to decide on the constitutionality of federal and regional legislation and regulations. This court also resolves jurisdictional disputes between the federal and regional authorities and is able to interpret and provide guidance on the provisions of the Constitution.
Besides, there are specialised military courts.¹

¹ Please see the Dispute resolution section.

General background

The Russian legal system is a codified law system. Like the Chinese legal system, it is based on codified statutes rather than case law and belongs to the same Romano-Germanic tradition.
The Constitution, federal laws and regional laws form the foundation of the Russian legal system. Presidential executive orders, decrees of the Russian Government and the decisions of various ministries are used to support and develop the provisions of primary legislation.
The Civil Code sets out the foundation of civil law and is the key source of law for business.

Legal environment

International organisations

The Russian Federation is a member of the Eurasian Economic Union (EAEU), the Commonwealth of Independent States (CIS), Intergovernmental organisation of major emerging national economies – Brazil, Russia, India, China, and South Africa (BRICS), and the World Trade Organisation (WTO). Through the EAEU and CIS, Russia maintains close economic ties with neighbouring states, while BRICS and the WTO serve as platforms for cooperation with other economies, including China.

Legal regulation

Foreign investors and investments in the Russian Federation enjoy treatment no less favourable than that accorded to domestic investors and investments, subject to certain broad exceptions.
Exceptions/restrictions may be introduced, amongst others, to protect the Russian constitutional system; the morality, health and rights of third parties; or to ensure government security and/or defence. Some of the sectors concerned are commented on separately below.²
Foreign investments are permitted in most sectors of the Russian economy, including investments in portfolios of government securities, stocks and bonds, direct investment in new businesses, in the acquisition of existing Russian-owned companies and in joint ventures.

Foreign investment

² Please see the Foreign Investments section.