Russia's rule of law: reforming or unravelling?

Russia’s engagement with the OECD and WTO means rule of law reform should be imminent. Yet, the worst excesses of government control and human rights abuses suggest otherwise.

When Russia finally joined the World Trade Organisation (WTO) on 22 August 2012, after an 18-year-long hard-fought slog, there were many left wondering if the wait had been worth it – and whether membership would bring any significant change. In a year that saw Vladimir Putin embark upon his third term as the country’s president, it’s unsurprising that few things have changed since last ­­August. Changes that have been implemented appear largely at odds with the new era of transparency promised by WTO membership, instead suggesting some worrying consequences for the rule of law.

One of the most striking incidents to bring Russia’s rule of law into focus in recent years has been the highly publicised case of Moscow-based lawyer Sergei Magnitsky, who died in pre-trial custody in November 2009. While it’s just one incident, Magnitsky’s plight continues to dominate the headlines worldwide and is a stark reminder of Russia’s track record for human rights violations.

Indeed, as Russia’s WTO membership was being secured last August, the US Congress was also on the verge of voting in favour of the Sergei Magnitsky Rule of Law Accountability Act 2012 (the ‘Magnitsky Act’), finally passing the law in November. This in itself was an important milestone since part of the law also required the US government to grant Russia Permanent Normal Trade Relations (PNTR).


‘Modern Russia has inherited a bad penitentiary system... it takes a lot of time to change the facilities for the prisoners, as well as the principles and the legislation’


Elena Borisenko
Deputy Minister of Justice, Russian Federation

The idea behind the PNTR bill was to once and for all revoke the Jackson Vanik amendment to the Trade Act of 1974 – an outdated Cold War era piece of legislation originally implemented by the US as a penalty against the Soviet Union for placing emigration restrictions on its citizens which prevented Russia from enjoying full trading relations with the US.

While the potential for improved trade relations between Russia and the US seemed, on the face of it, a positive step forward and in keeping with WTO rules which stipulate that member states must grant each other unconditional trading rights, a storm was already brewing.

In December last year, the Magnitsky Act was finally signed into law by President Barack Obama. The Russian government reacted strongly to the decision. It announced an outright ban on American adoption of Russian citizens and that it was proceeding with plans to try Magnitsky posthumously and, in absentia, Magnitsky’s client at the time of his death, founder of Hermitage Capital, Bill Browder. Once again the wider issues of corruption and human rights abuses in Russia, as well as the underlying flaws inherent in the country’s judicial and penitentiary systems, had reared their heads.

Many people, including Martin Šolc, name partner of Czech law firm Kocián Šolc Balaštik and Secretary-General of the IBA, have voiced strong concerns over the posthumous reopening of the criminal proceedings and what it may mean for the rule of law in Russia. ‘The whole case evidences how desperately the system, driven by clan instincts, tries to protect its people, regardless of what they may have committed,’ says Šolc. ‘If the clan is in danger, law does not seem to matter.’

Overcrowded prisons and torture

While human rights abuses in Russia are nothing new, a more unusual issue exposed by the Magnitsky case was the dire state of Russia’s overcrowded prison system. Magnitsky died in pre-trial custody from pancreatitis and there has been strong evidence to suggest that his condition was not only ignored by prison staff, but that he was also subjected to torture and appalling living conditions.

During an interview at the IBA Annual Conference in October 2012, Elena Borisenko, who is responsible for international relations at Russia’s Ministry of Justice, highlighted that prison reform has been one of the main issues on her agenda in recent years. ‘You may know that the MoJ started a great reform of the penitentiary system in Russia, which was started before the Magnitsky case, but certainly the Magnitsky case showed that changes were really needed,’ she stressed.

‘This was the most difficult reform that has ever been done [by the MoJ] as modern Russia has inherited a very bad penitentiary system from the Soviet Union and it takes a lot of time to change the facilities for the prisoners,  as well as the principles and the legislation.’

While Borisenko is right to stress that change can take a long time to take effect, Magnitsky’s plight was just one example of the thousands of cases each year where prisoners in Russia die before they even have a chance to stand trial. According to a recent article in the Moscow News, 4,121 prisoners died in prison or SIZO pre-trial detention centres in 2012. Butyrka, where Magnitsky died, is one of Russia’s most infamous SIZOs.

‘I can be absolutely open in saying that we are doing a lot to change the situation,’ added Borisenko. ‘We as the MoJ are there to help improve the penitentiary system and have changed the rules for punishment and criminal procedure and now have more and more alternative measures.’

Although she insists that the MoJ has looked at ways to try and reduce the sheer number of prisoners waiting for trial – a large reason for the overcrowded, squalid conditions – the statistics are perturbing. Giving that Russia’s prisoner population in June 2012 stood at 731,000, this puts the death rate of inmates at 564 out of every 100,000 prisoners, which, even if an improvement on previous years’ figures, is still deplorable.

Putin: no fan of Glasnost

As for other changes, rather than promoting a greater level of transparency, a number of new laws enacted by the Russian government over the past 12 months have only served to highlight that WTO membership has far from swept in a new era of openness. Barely four months after being back in the presidential driving seat, in September 2012 President Vladimir Putin signed a decree ordering state-owned companies not to disclose information to foreign regulators without prior authorisation from the state.


‘Corruption, clan mentality and nepotism are features of the system rather than its bug’


Martin Šolc
IBA Secretary-General

One of the most intriguing aspects of this new law was that it came just a matter of days after the European Commission (EC) announced it was launching an investigation into Russian state-owned energy giant Gazprom for alleged anti-competitive practices. The decree suddenly made it necessary for the EC to approach the government first to make a formal request for information – an unmistakeable attempt to protect Gazprom if ever there was one.

Although the decree  seems at odds with the transparency promised by WTO membership, as Sergey Lapin, a partner at Nadmitov, Ivanov & Partners, notes, the move is, ironically, currently acceptable since Russia has yet to sign the WTO agreement on Government Procurement (GPA), which is the WTO’s sole law specifically on the issue.

‘Just recently the local press published information that the Russian Ministry of Economic Development has prepared a draft order expanding the number of industries to which preferences must be granted in the framework of government procurement, which goes against the spirit of the WTO rules, but is permissible given that Russia is not yet a party to the GPA,’ he says.

NGO crackdown

While this particular law has drawn criticism from business communities in Europe and beyond, it’s not been the only controversial piece of legislation to be brought into force in Russia in recent months. Since July last year bills relating to internet censorship, defamation and NGOs have all been signed into law. According to Jana Kobzova, a policy fellow and wider Europe programme coordinator at the European Council on Foreign Relations, these developments have been a clear warning sign to certain parts of society.

‘The main impact of these laws was not on ordinary Russians, but on NGOs, journalists and media; the aim was to encourage more self-censorship and increase the leverage the state has over these sections of civil society,’ she comments.

Although Kobzova admits that it is still early to determine their impact, the very signing of the bills into law has ensured that they are already serving their purpose. ‘There haven’t been big cases yet, but this is partly because many NGOs are trying to get rid of foreign funding in order not to be labelled as foreign agents and to avoid inspections from the tax authorities,’ she adds.

‘The main aim is not to use these laws to close down NGOs or media that are uncomfortable for the regime – the main aim is to discourage critical voices, while leaving the option open that if they don’t soften their criticism themselves, the state might do it instead.’

‘Their wording may be disputable but what is much worse is the broad way in which some authorities read them,’ says Šolc. ‘For example, an association of parents of children with cystic fibrosis is considered political just because, in its bylaws, there is a sentence on lobbying for improvement of the treatment of those children. In general, those laws have created an atmosphere of suspicion vis-à-vis all NGOs.’

At the end of March, at least 90 NGOs in Russia reported unscheduled visits by state officials, many of which were denounced as an ‘intimidation’ tactic. More than 1,000 NGOs are now thought to have been targeted, including Russian non-governmental research organisation the Levada Center, which was warned by prosecutors at the end of May that it faces closure unless it registers itself as a ‘foreign agent’. The warning followed the organisation’s release of polls showing a dip in Putin’s popularity ratings.

Clamping down on protests

The law on re-criminalising defamation has also been particularly interesting given the large number of opposition demonstrations that wracked the country last year in the run-up to the presidential elections. According to the new law, citizens found to be organising unsanctioned protests will be hit with a hefty fine of RUB1m (£21,000) and participants alone will be subject to a RUB300,000 (£6,340) fine. When you consider that Russian statistics service Rosstat listed the country’s average monthly salary in 2011 as RUB23,600 (£498), the value of the fine seems disproportionately high.

The protest that has attracted most publicity internationally involved members of feminist punk rock band Pussy Riot who stormed a cathedral in Moscow last February, calling for the Virgin Mary to ‘throw Putin out’. Although three band members were sentenced to two years in prison – a sentencing that outraged human rights groups worldwide – a proportion of Russian society, notes Kobzova, felt the punishment was justified.

‘There are two aspects of the Pussy Riot – let’s not forget that many Russians found the Pussy Riot performance in the cathedral unacceptable based on social, religious, moral grounds – and the condemnation of the punishment the band members got was much smaller inside Russia than in the West, she notes.

‘Many sections of Russian society are more traditional than the West would like to think and many people welcomed the sentence the band received. Unfortunately, the case no longer commands much public attention.’

Tit-for-tat legislation

Another irony remains that, since joining the WTO, rather than bringing Russia closer to other WTO members, the country has continued to move further apart.
The most striking example has been Russia’s increasingly troubled relationship with the US. As aforementioned, following the US’s decision to sign the Magnitsky Act into law in December the Russian government reciprocated by imposing an outright ban on Americans from adopting Russian citizens, a practice which has been increasingly common over the past decades.

The law was named the Dima Yakovlev Bill, after the infamous case of a Russian toddler who died in Washington DC in 2008 having been accidentally left in a car for hours by his adoptive father. An estimated 19 adopted Russian children have died in the US over the past 20 years,

Although much of the world has reacted to the ban in consternation, the response has been no more keenly felt than back at home in Russia where thousands lined the streets in January to protest against the new law. ‘In fact, many people in Russia have been more upset about the reaction of Moscow than the US,’ stresses Kobzova.

‘The Magnitsky Act has touched the nerve of the Russian elite and what they did was they used vulnerable and defenceless children to retaliate,’ she adds. ‘The disproportionality of the Moscow response hasn’t escaped many Russians. On the other hand, Moscow’s response was so harsh also because they had to send a signal to the Europeans – some of the EU member states are debating the possible adoption of a similar law.’

‘Indeed, there have been calls for a new ‘re-set’ in the US–Russia relations but it is not clear where it would come from or what issues it could help advance: besides Afghanistan and Iran, there are very few issues where compromise between the US and Russia could be found at the moment.’

The revelation in May that Russia had detained, and subsequently expelled, US diplomat Ryan Fogle over allegations that he was recruiting for the Central Intelligence Agency (CIA) only served to exacerbate the already fraught relations between the two countries. Fogle was reportedly attempting to recruit a Federal Security Services of the Russian Federation (FSB) agent focused on anti-terrorism efforts in the North Caucasus in the wake of the Boston Marathon bombing.

However, Bill Browder also sees the adoption ban as a clear message to Europe. ‘President Putin ordered the adoption ban mostly to send a message to Europe to stop the Magnitsky act spreading here,’ he comments.

While the UK has yet to even come close to signing the Magnitsky Law, foreign secretary William Hague took the opportunity during a recent meeting with Russian foreign minister Sergei Lavrov to criticise Russia’s handling of the Magnitsky case.

Although overall the meeting was lauded as a sign of thawing Anglo-Russia relations, there have been several incidents that have exacerbated Anglo-Russian relations in recent months, most notably the mysterious circumstances surrounding the death of Russian businessman Alexander Perepilichnyy in Surrey in November 2012. Like Magnitsky before him, Perepilichnyy decided to expose corruption and supplied documents to Swiss prosecutors, implicating a number of corrupt Russian state officials and linking them to the very same tax fraud uncovered by Magnitksy.

As the cause of Perepilichnyy death is still to be determined, in mid-May the long-awaited inquest into the death of poisoned KGB agent Alexander Litvinenko, which has been a key bone of contention between UK and Russian governments and legal authorities in recent years, looked to be on the brink of collapse when the coroner controversially upheld an application by UK Foreign Secretary William Hague to keep crucial evidence secret and called instead for a public inquiry to ensure a fair verdict.
While Hans Corell, Vice-Chair of IBAHRI, former Judge of Appeal and former Legal Counsel of the UN, admits that the rule of law is still severely lacking in Russia today, he questions whether the West has engaged enough with Russia to help the country’s evolution into a democratic and law-abiding country. ‘The question is whether there is at present sufficient engagement in a necessary effort to establish democracy and the rule of law in Russia,’ he says. 

In spite of the obvious criticisms against Russia, Corell stresses the importance for the West to be open-minded and constructive in their relations with Russia. ‘Not long ago, we heard a presidential candidate in the US refer to Russia as “Our Number One Geopolitical Foe” - I did not believe my ears,’ he says incredulously. ‘The best way we could assist Russia in establishing democracy and the rule of law is to interact in a positive spirit. And, above all, we have to lead by example.’

Sticking points

Despite 65 per cent of Russians surveyed by the Levada Center in February this year saying that Putin had done more good than bad for the country since his re-election, many are still finding fault with Russia’s government.

During a session on Russia at the World Economic Forum in Davos earlier this year, a report entitled Scenarios for the Russian Federation cited the global energy landscape, the institutional environment and social cohesion as the three main areas of uncertainty for Russia going forward.

However, more worrying than the problems themselves is the question of whether the Russian government has what it takes and is prepared to overcome them, admits Kobzova. ‘The greatest uncertainty is whether the current government realises the scope of challenges that the report mentions. The challenges are huge of course but they are not insurmountable if you have a government keen and eager to tackle them.’

‘My worry is that although some elements in the government recognise these challenges, the will to tackle them is painfully missing.’

‘A part of the Russian establishment – including on the top floors of politics – understands there is a problem, but does not know how to solve it,’ says IBA Secretary-General Martin Šolc. ‘Corruption, clan mentality and nepotism are features of the system rather than its bug. How to remove them without the whole system collapsing is going to be the challenge for the Kremlin in the years to come.’

WTO impact

In terms of progress, while the outlook may look bleak, there have been some positive changes already introduced as a direct result of WTO membership. ‘As for other commitments, for example Russia undertook to introduce universal electronic customs declarations, instead of paperwork, by 1 January 2014,’ says Lapin. ‘According to a recent interview by the Deputy Head of the Russian Federal Customs Service, electronic declarations made 96 per cent of their total number and were used by around 85 per cent of the external trade participants. This is a serious achievement, which may contribute to the reduction of corruption and increase of good governance.’

Edward Borovikov is a partner at Dentons and one of the main lawyers that advised the Russian government on joining the WTO since the early 1990s. He thinks WTO accession will have an impact on rule of law in the country and believes it is up to other WTO members to show Russia how it is done. ‘I believe it will do so, yes. I also believe that certain leading WTO members should lead by example. For example, the EU continues to apply WTO questionable energy adjustments in anti-dumping investigation against Russian energy intensive products.’


‘The best way we could assist Russia in establishing democracy and the rule of law is to interact in a positive spirit’


Hans Corell
Vice-Chair of IBAHRI, former Judge of Appeal and former Legal Counsel of the UN

‘I am aware that many draft laws, including on domestic support, are scrutinised in terms of compatibility with the WTO – albeit sometimes lobbyists are stronger than WTO lawyers – [but] some WTO questionable measures are being removed or at least softened and the quality of Russian/Customs Union trade defence investigations increased dramatically.’

Lapin cites other signs of progress, such as the WTO Technical Barriers to Trade Committee’s recent meeting to discuss concerns relating to certain proposed measures by Russia, including the country’s draft regulation on the safety of alcoholic beverages.

Although the WTO is evidently concerned by some of these proposals, Lapin highlights that Russia’s efforts to disclose such information is progress in itself. ‘This means that Russia has started to notify these proposals to the WTO and that they are being discussed at the relevant committee, thus progress in the transparency field is already being felt.’

And as Borovikov notes, thanks to the WTO, Russia is also starting to move in the right direction to achieve one of its primary accession goals: creating a business climate attractive to domestic and foreign investors. ‘I understand the criticism, but I still think that Russia is at least one step closer to that goal. There are clear positive developments.’

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Ruth Green is a freelance journalist. She can be contacted at ruthsineadgreen@gmail.com