The Civil Code of the Russian Federation
and International Agreements
Mikhail G. Rozenberg”
This article describes the nature, status, and op-
eration of international agreements under the aegis of
the laws of Russia in general, and under the Civil Code
of the Russian Federation in particular. Attention is
given to the means of enforcement of international
agreements, their sphere of application, and their inter-
action with domestic legislation. In terms of this inter-
action, the author considers the operation of domestic
in the absence of international
Russian legislation
agreements, the relative priority in Russia of rules in
international agreements, and the relative authority of
the rules in international agreements as well as in the
domestic legislation of the Russian Federation.
la nature,
le
Cet article d6crit
statut et
l’application des accords internationaux sous l’6gide
des lois de Russie en gcn6ral et du Code civil de la Fd-
ddration russe en particulier. L’auteur porte particuli6-
rement attention aux moyens d’execution des accords
intemationaux, a leur sph&e d’application, ainsi qu’.1
l’interaction qu’ils ont avec la 16gislation domestique.
Quant A cette
contemple
l’application de la 16gislation domestique en ]’absence
l’importance relative, en
d’accords
Russie, des rgles 6labores dans les accords intema-
tionaux, ainsi que l’autorit6 relative des rigles 6labo-
r6es dans les accords intemationaux et dans la lhgisla-
tion domestique de la F~d~ration russe.
internationaux,
interaction,
‘auteur
Professor of Law, Russian Academy of Foreign Trade (Moscow).
McGill Law Journal 1999
Revue de droit de McGill 1999
To be cited as: (1999) 44 McGill L.J. 473
Mode de rf~rence: (1999) 44 R.D. McGill 473
MCGILL LAW JOURNAL / REVUE DE DROITDE MCGILL
[Vol.44
I.
Definition of an International Agreement in Russian Law
If. Machinery for the Enforcement of International Agreements in
the Russian Federation
Ill. Sphere of Application of International Agreements
A. Purely International Relations
B.
International and Domestic Relations
IV.
International Agreements and Private International Law
V
Application of the Civil Code of the Russian Federation in Lieu of
an International Agreement and as a Subsidiary Statute
VI. Priority of Rules in International Agreements
VII. Autonomous Nature of International Agreements Within the Rus-
sian Federation’s Legal System and Enforcement Practices
VIII. Correlation of International Agreements
IX. Reflection in the Civil Legislation of the Russian Federation of
Provisions Sealed in International Agreements
Conclusion
References
1999] M.G. ROZENBERG – THE C.C.R.F & INTERNATIONAL AGREEMENTS
475
!. Definition of an International Agreement in Russian Law
The term “international agreement of the Russian Federation” is defined as an
international agreement in writing entered into by the Russian Federation with one or
more foreign countries, or with an international organization. Such an agreement is
regulated by international law, regardless of whether it is contained in one document
or in several related documents. This definition follows the Vienna Convention on the
Law of Treaties,’ and the Vienna Convention on the Law of Treaties Between States
and International Organizations or Between International Organizations!
The Russian Federation’s international agreements are concluded with foreign
countries as well as with international organizations on behalf of the Russian Federa-
tion (inter-state agreements), the Government of the Russian Federation (inter-
governmental agreements), and federal executive authorities (inter-departmental
agreements). The Russian Federation is party to a substantial number of international
agreements governing civil law relations. These include, inter alia, agreements on
contracts for the international sale and carriage of goods,’ as well as agreements on
intellectual and industrial property.” The U.S.S.R. and the Russian Federation took
part in the development of a number of other international agreements which have yet
to be ratified by the Russian Federation
’23 May 1969, 1155 U.N.T.S. 331.
2 21 March 1986, 25 I.L.M. 543. This treaty has yet to be ratified by the Russian Federation.
‘ See e.g. the United Nations Convention on Contracts for the International Sale of Goods, 11 April
1980, 1489 U.N.T.S. 3 [hereinafter 1980 Vienna Convention]; the Convention Providing a Uniform
Lawfor Bills of Exchange and Promissory Notes, 7 June 1930, 143 L.N.T.S. 257 [hereinafter 1930
Geneva Convention]; the Convention on the Contract for the International Carriage of Goods by
Road, 19 May 1956, 399 U.N.T.S. 189; and the Convention for the Unification of Certain Rules Re-
lating to International Carriage by Air, 12 October 1929,261 U.N.T.S. 423 [hereinafter 1929 Warsaw
Convention].
4 See e.g. the Paris Convention for the Protection of Industrial Property, 20 March 1883, 74
U.K.F.S. 44 [hereinafter 1883 Paris Convention]; the Universal Copyright Convention, 6 September
1952, 216 U.N.T.S. 132; the Berne Convention for the Protection of Literary and Artistic Works, 24
July 1971, 1161 U.N.T.S. 3 (as revised in 1971) [hereinafter 1971 Berne Convention]; the Convention
for the Protection of Producers of Phonograms against Unauthorized Duplication of Their Phono-
grams, 29 October 1971, 866 U.N.T.S. 67 [hereinafter 1971 Geneva Convention] and the Madrid
Agreement Concerning the International Registration of Trademarks, 14 July 1967, 828 U.N.T.S. 389
(as revised in 1971).
– These include, for instance, the Convention on the Limitation Period in the International Sale of
Goods, 14 June 1974, 1511 U.N.T.S. 3 [hereinafter 1974 New York Convention]; the United Nations
Convention on International Bills of Exchange and International Promissory Notes, 9 December
1988, 28 I.L.M. 170 [hereinafter 1988 New York Convention]; the United Nations Convention on In-
dependent Guarantees and Stand-by Letters of Credit, UN GAOR, 50th Sess., UN Doc. A/50/640
(1987) [hereinafter 1987 Guarantees]; the UNIDROIT Convention on International Financial Leas-
ing, 28 May 1988, 27 I.L.M. 931 [hereinafter 1988 Financial Leasing]; the UNIDROIT Convention
on International Factoring, 28 May 1988, 27 I.L.M. 943 [hereinafter 1988 Factoring]; and the Con-
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II. Machinery for the Enforcement of International Agreements in
the Russian Federation
Pursuant to article 7(2) of the Civil Code of the Russian Federation,’ international
agreements concluded by the Russian Federation apply directly to civil law rela-
tions-except where the agreement requires the issuance of a domestic act in order to
apply. When such a domestic act is published, it applies concurrently with the inter-
national agreement it has been adopted to implement. One example of the direct ap-
plication of an international agreement to civil law relations is the 1980 Vienna Con-
vention.’ In contrast, arrangements relating to bills of exchange and promissory notes
in the territory of the Russian Federation are regulated by federal laws, which were
brought into force in the U.S.S.R. in accordance with the 1930 Geneva Convention’
provisions concerning uniform laws for bills of exchange and promissory notes. Some
international agreements expressly stipulate the issuance of domestic state acts on
specific matters. Articles 10 and 11 of the 1883 Paris Convention,’ for example, do
just that.
The Russian Federation can temporarily apply an international agreement-in full
or in part-before the agreement goes into force if this is envisaged by the agreement
or if it has been agreed upon by its signatories. A decision to enact such provisional
enforcement is made by the same authorities in the Russian Federation who decided
to sign the international agreement. Due to this, there appear to be no grounds for the
occasionally recurring view that judicial authorities in the Russian Federation may,
when resolving disputes, invoke ineffective international agreements as representing
international custom.
Those international agreements that have taken effect in the Russian Federation
and whose binding nature has been recognized in federal laws are subject to official
publication in the collections of Russian national legislation. As with other interna-
tional agreements-with the exception of inter-departmental accords-they are also
published in the Russian-language “Bulletin of International Agreements.” Inter-
departmental international agreements, for their part, are published in official periodi-
cals of the executive authorities in whose name they were concluded.
Article 15(3) of the Constitution of the Russian Federation decrees that no regu-
latory legal acts affecting any rights, freedoms, and duties of individuals and citizens
may apply unless officially published for general knowledge. Resolution No. 8 of the
vention on the Law Applicable to Contracts for the International Sale of Goods, 30 October 1986, 24
I.L.M. 1573 [hereinafter 1986 Geneva Convention].
6 Part 1 was enacted in 1994: Sobranie zakonodatelstva R.E (1994) No. 32, item 3301; and Part 2
was enacted in 1995: Sobranie zakonodatelstva R.E (1996) No. 5, item 410 [hereinafter C.C.R.R].
For the English-language translation, see RB. Maggs & A.N. Zhiltsov, eds., The Civil Code of the
Russian Federation, trans. RB. Maggs & A.N. Zhiltsov (Armonk, N.Y.: M.E. Sharpe, 1997).
‘Supra note 3.
‘Ibid.
9 Supra note 4.
1999] M.G. ROZENBERG- THE C.C.R.F & INTERNATIONAL AGREEMENTS
477
Plenum of the Supreme Court of the Russian Federation expressly stipulates that un-
der this constitutional provision, a court may not base its judgment on any unpub-
lished regulations affecting rights, freedoms, and duties of individuals and citizens. It
seems likely that this constitutional provision also extends to international agreements
to which the Russian Federation is a party.
Ill. Sphere of Application of International Agreements
Depending on their spheres of application, international agreements fall into one
of two groups: (i) agreements regulating purely international relations, and (ii) agree-
ments regulating international and domestic relations.
A. Purely International Relations
The first type of agreement regulates international relations alone (i.e., relations
which involve partners from different countries). Examples of such agreements in-
clude the 1980 Ienna Convention, the 1974 New York Convention,” and the 1988
New York Convention.” Concluding such agreements is one way to establish uniform
arrangements to regulate international markets. However, this does not result in any
modification to the rules governing domestic relations; it simply leaves open the pos-
sibility that any country that is party to such an agreement may use provisions in the
agreement to amend its own civil legislation regulating relations inside the country.
B. International and Domestic Relations
The second type of international agreement regulates relations both in the inter-
national and domestic arena. These agreements are designed for the unification of
rules concerning specific issues. One example of such an international agreement is
the 1930 Geneva Convention. While providing for the enactment of uniform laws
within the territories of contracting nations, it allows certain departures from such law,
in particular when it comes to regulating domestic markets. Russia took advantage of
this right and adopted a national law in March 1997 that has given force to the regula-
tions relating to bills of exchange and promissory notes.
Included in this second category are international agreements that force their
member countries to make appropriate changes to domestic laws applicable to rela-
tions with and without foreign involvement. One example is the 1971 Berne Conven-
tion.”
“Supra note 5.
“IbidL
‘2 Supra note 4.
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IV. International Agreements and Private International Law
By virtue of article 15(4) of the Constitution of the Russian Federation and article
7(1) C.C.R.F., Russia’s international agreements form part and parcel of its legal sys-
tem. These statutory provisions require clarity in determining the operating sphere of
a given international agreement. The scope of operation may be defined by appropri-
ate prescriptions set forth in the agreement, or by deference to Russian legislation pur-
suant to either an understanding between the parties or a rule governing the choice of
laws (i.e., a domestic rule of private international law). In practice, Russian authori-
ties-in particular, members of the International Commercial Arbitration Court
(“I.C.A.C.”) under the Chamber of Commerce and Industry of the Russian Federa-
tion-proceed under the premise that the sphere of application of an international
agreement is determined by the agreement’s own precepts. Where an international
agreement establishes uniform norms of substantive law which are applicable to spe-
cific relations, generally no conflicts of law arise. Thus, there is no need to identify
the applicable national law in order to regulate relations made more complex by for-
eign involvement. Nevertheless, in the absence of any indications in an international
agreement that would make it possible to apply the agreement to regulate relations
arising under a civil law contract-where Russian law is applicable by virtue of an
understanding reached between the parties or a rule governing the choice of law-the
rules of the international agreement should apply as prescriptions that are part of the
Russian Federation’s legal system. The agreement’s sphere of operation, however,
must encompass the regulation of the corresponding relations.
The practical significance of following one or the other approach is forcefully
manifested in the following example. Russia has been a party to the 1980 Vienna
Convention since September 1, 1991″ and, as of February 1, 1998, it is in effect in
forty-eight countries. According to article 1 of the 1980 Vienna Convention, this treaty
applies to international contracts of sale of goods between parties whose commercial
enterprises (i.e., principal places of business) are in different countries when (i) the
countries are Contracting States (i.e., parties to the 1980 Vienna Convention), or when
(ii) the rules of private international law lead to the application of the law of a Con-
tracting State. However, article 566 of the 1964 Civil Code of the Russian Soviet Fed-
erated Socialist Republic” governing choice of laws which was effective until August
3, 1992 stipulated that the rights and obligations of parties under a foreign trade trans-
action were defined by the law of the place where the transaction was executed, unless
otherwise agreed upon by the parties. A similar precept is set out in the agreement of
countries grouped in the Commonwealth of Independent States (“C.I.S.”), On the
Procedure for the Resolution of Disputes Pertaining to Economic Activities, con-
” The respective act of accession was approved by the U.S.S.R. Supreme Soviet on May 23, 1990.
The Russian Federation has continued to participate in the 1980 Vienna Convention as successor to
the U.S.S.R. from December 24, 1991.
” Vedomnosti S”ezda Narodnykh Deputatov R.E i Verkhovnogo Soveta R.E (1964) No. 24, item 406
[hereinafter 1964 Civil Code].
1999] M.G. ROZENBERG- THE C.C.R.F & INTERNATIONAL AGREEMENTS
479
cluded on March 20, 1992,” and in the Convention on Legal Assistance and Legal
Relations in Civil, Family, and Criminal Cases, concluded among C.I.S. countries on
January 22, 1993.”
If the rules governing the choice of laws as established by the 1964 Civil Code,
the 1992 Procedure, and the 1993 Legal Assistance were invoked without taking into
account the relevant provisions of the 1980 Vienna Convention, then the domestic
legislation of the corresponding foreign jurisdiction, not the 1980 Vienna Convention,
would be the governing law in certain cases contrary to the clearly expressed wishes
of the Russian Federation. For example, relations arising under an agreement con-
cluded on July 1, 1992 during an international exhibition in Britain between a Russian
and Canadian organization for the supply of goods from Russia would have been
subject to English law rather than to the 1980 Vienna Convention-to which both
Russia and Canada’7 are parties-simply because Britain is not a signatory to the 1980
Vienna Convention.
Similar problems would also arise should provisions on conflict of laws call for
the application to an agreement of a national law which is the most closely related to
the agreement. A court would thus be in a position to apply the national law of a
country not participating in the 1980 Vienna Convention, although the contracting
parties are signatories to the convention. The provisions contained in the 1986 Geneva
Convention” are particularly relevant here even though this Convention itself has not
yet come into force. First, article 23 of the 1986 Geneva Convention expressly stipu-
lates that it does not interfere with the application of the 1980 Vienna Convention, or
the 1974 New York Convention. Second, according to article 8(5), the 1986 Geneva
Convention prefers the domestic law of the State where a contract is concluded over
the law of 1980 Vienna Convention member states where the contracting parties are
based.
It should be noted that the draft section on “Private International Law” in Part 3 of
the C.C.R.F.” directly points to an international agreement as a source for determining
the governing law applicable to relations with foreign involvement.
V. Application of the Civil Code of the Russian Federation
in Lieu of an International Agreement and as a Subsidiary
Statute
The general rule is that provisions in an international agreement itself determine
the possibility of applying C.C.R.F. provisions instead of those formulated in the in-
ternational agreement, or of applying the C.C.R.F. as a subsidiary statute where the
“Hereinafter 1992 Procedure.
16 Hereinafter 1993 Legal Assistance.
“Canada has been a party to the 1980 Vienna Convention since May 1, 1992.
“Supra note 5.
9 Part 3 of the C.C.R.F. is not yet in force.
MCGILL LAW JOURNAL / REVUE DE DROIT DE MCGILL
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international agreement features gaps and where Russian legislation is the governing
law. In relation to the 1980 Vienna Convention, if an international contract of sale falls
under its sphere of operation, the application of national civil legislation is permitted
in the following cases: first, where the parties excluded the application of the 1980 Vi-
enna Convention in full or in part or derogated from any of its provisions, then ac-
cording to article 6 of the 1980 Vienna Convention national civil legislation will be
permitted. Second, where matters governed by the 1980 Vienna Convention are not
expressly settled and cannot be settled in conformity with the general principles on
which the 1980 Vienna Convention is based, then these matters are subject to applica-
ble Russian civil legislation under article 7(2) of the 1980 Vienna Convention. One
should keep in mind the fundamental differences manifested in approaches to identi-
fying the sphere of application of the 1980 Vienna Convention and those rules set
forth in the C.C.R.F. which govern the sale of goods.
As noted above, the parties to the contract must have their commercial enterprises
located in different countries for the 1980 Vienna Convention to apply. It follows from
this that a contract concluded by subjects of different countries whose commercial
enterprises are located in the same country is not recognized-within the meaning of
the 1980 Vienna Convention-as an international contract of sale. Therefore, the con-
tract would not be subject to the provisions of the 1980 Vienna Convention. Such a
contract, if falling under Russian law, is governed by provisions set forth in the
C.C.R.F.
The 1980 Vienna Convention’s application is expressly ruled out in article 2 with
respect to specific goods, namely, ships, vessels, hovercraft or aircraft, electricity, and
securities. At the same time, transactions involving such goods are either clearly sub-
ject to the C.C.R.. or, as stipulated by the provisions on securities in article 454(2)
C.C.R.F., are to be governed by general regulations on the sale of goods. This would
be the case unless special rules are in effect for their sale.
The 1980 Vienna Convention also does not apply to goods bought for personal,
family, or household use unless the seller-at no time before or at the conclusion of
the contract–either knew or ought to have known that the goods were bought for any
such use. Nor does it apply to sales by auction (on execution) or otherwise by the
authority of law according to article 2.
The 1980 Vienna Convention only governs the formation of a contract of sale and
the rights and obligations of the seller and the buyer arising from such a contract. In
particular, it is not concerned with the validity of such a contract, its provisions or us-
age, or with the effect the contract may have on the goods sold.” Moreover, under the
1980 Vienna Convention, the seller is not liable for death or personal injury caused by
the goods to any person.’
‘0 1980 Vienna Convention, art. 4.
21 Ibid., art. 5.
1999] M.G. ROZENBERG- THE C.C.R.F & INTERNATIONAL AGREEMENTS
481
Regarding mixed contracts (Le., providing for the provision of services), the 1980
Vienna Convention stipulates that it is not applicable to contracts in which the prepon-
derant part of the obligations of the party who furnishes the goods consists in the sup-
ply of labour or other services.22 Meanwhile, the C.C.R.F. stipulates that the rules on
contracts whose elements are contained in a mixed contract apply to the appropriate
arrangement between the parties under the mixed contract, unless something other-
wise follows from the parties’ agreement or from the substance of the mixed con-
tract.’ This means that where a mixed contract featuring elements of an international
contract of sale does not fall under the 1980 Vienna Convention, it becomes subject to
the C.C.R.F.
The I.C.A.C. has made extensive practical use of Russian civil legislation (in-
cluding the C.C.R.F.) as a subsidiary statute in settling disputes that are regulated by
the 1980 Vienna Convention. This is because the 1980 Vienna Convention generally
fails to provide-or provides only partial regulation for–certain issues which cannot
be settled even by applying its general principles. One example is the enforcement of
a contractual term through the imposition of fines. The 1980 Vienna Convention gen-
erally makes no mention of fines and their correlation to losses. Another example is
the determination of the amount of default interest and a procedure for its calculation
where the performance of pecuniary obligations is delayed beyond established dead-
lines. While granting the right to draw such interest under article 78, the 1980 Vienna
Convention does not specify either the rate or computation procedure. Further issues,
such as the validity of a contract or its individual terms, as well as the related issues
regarding the observance of Russian legislative requirements for the form of foreign
economic contracts, the legal capacity of Russian and foreign legal entities, represen-
tation, powers of attorney, and the invocation of a limitation period, are all subjects on
which the 1980 Vienna Convention is silent.
The C.C.R.F. was applied as the principal statute during the resolution of some
disputes on the grounds that the parties’ agreement, with respect to the application of
Russian legislation, was interpreted as excluding the application of the 1980 Vienna
Convention. At the same time, in other arbitration awards the I.C.A.C. reasoned that
the contracting parties’ decision to apply the law of a country participating in the 1980
Vienna Convention does not, as a general rule, exclude the application of the 1980 Vi-
enna Convention’s provisions.
VI. Priority of Rules in International Agreements
The Constitution of the Russian Federation and the C.C.R.F. establish the relative
priority of rules in international agreements. The legislation expressly states that if an
international agreement in which the Russian Federation is a party establishes rules
that differ from those prescribed by Russian law, the rules of the international agree-
2 Ibid., art. 3.
Art. 421(3) C.C.R.F.
MCGILL LAW JOURNAL / REVUE DE DROITDE MCGILL
[Vol. 44
ment shall prevail.2- The same approach was taken by earlier legislation.’ The
I.C.A.C. has invariably proceeded from the same principle. For example, when the
Council for Mutual Economic Assistance’s General Terms of Supply were used as an
international regulatory agreement, the limitation period and the procedure for its cal-
culation were determined based on this document rather than on any national law.”
Such court decisions provide a vivid illustration of the acknowledged supremacy of
international rules.
Where the seller undertakes to refund the price of goods to the buyer, the I.C.A.C.
binds the seller to pay the interest accruing on the price, and in so doing is guided by
article 84 of the 1980 Vienna Convention rather than by article 487(4) C.C.R.F. Under
the 1980 Vienna Convention, the interest is payable from the date on which the price
was originally paid by the buyer. Under the C.C.R.F, it is payable from the day when
the goods should have been delivered to the buyer-or when the amount earlier paid
by the buyer is refunded to him-unless the contract binds the seller to pay interest on
the prepaid amount from the day on which he receives such prepayment from the
buyer.
In keeping with the Constitution of the Russian Federation and with article 7(1)
C.C.R.E, generally recognized principles and standards of international law form part
of the Russian Federation’s legal system. At the same time, both the Constitution and
article 7(2) C.C.R.F formulate the rule on supremacy only with respect to intema-
tional agreements.” The arrangement for applying generally recognized principles and
standards of international law to civil law relations is not defined by law. The issue
remains largely unelaborated.
Resolution No. 8 of the Plenum of the Supreme Court of the Russian Federation
lists the Universal Declaration of Human Rights,’ the International Covenant on
Civil and Political Rights,” and the International Covenant on Economic, Social and
Cultural Rights’ as examples of international agreements which have institutionalized
generally recognized principles and standards of international law.
24 See Constitution of the Russian Federation, art. 15(4); and art. 7(2)(ii) C.C.R.F
‘Fundamentals of Civil Legislation of the U.S.S.R. and Union Republics, Vedomosti S”ezda
Narodnykh Deputatov S.S.S.R. i Verkhovnogo Soveta S.S.S.R. (1991) No. 26, item 733, art. 170
[hereinafter Fundamentals].
26Art. 80 of the 1964 Civil Code; and art. 198 C.C.R.F.
27Supra note 24.
23GA Res. 217(111), UN GAOR, 3d Sess., Supp. No. 13, UN Doc. A/810 (1948) 71.
19 December 1966,999 U.N.T.S. 171.
19 December 1966,993 U.N.T.S. 3.
1999] M.G. ROZENBERG – THE C.C.R.F & INTERNATIONAL AGREEMENTS
483
VII. Autonomous Nature of International Agreements Within the
Russian Federation’s Legal System and Enforcement Practices
The prevalence of rules in an international agreement concerning domestic statu-
tory precepts should be kept in mind both during the application of provisions of the
international agreement and during the subsidiary enforcement of domestic legal re-
quirements. Article 7 of the 1980 Vienna Convention states that, in its interpretation,
regard is to be made to its international character and to the need to promote uniform-
ity in its application. Similar principles are laid down in a number of other interna-
tional agreements.’ It seems justified to view this rule as being of a general nature,
i.e., to also be invoked in relation to those international agreements that do not them-
selves contain it. This approach supports the underlying purpose of international
agreements that set out uniform rules to regulate international markets, which is to
harmonize legal environments in different countries, and therefore to help remove le-
gal barriers to international economic relations.
The fact that the Russian Federation’s international agreements are, in accordance
with its Constitution, part of the nation’s legal system does not alter the understanding
(prevalent in private law theory) of the autonomous nature of an international agree-
ment within the framework of the national legal system of which it is part. It follows
from this autonomous nature that it is inadmissible to make subsidiary use of those
domestic statutory provisions which run counter to any underlying principles of the
international agreement. This yardstick should also be applied to explanations issued
by the Supreme Court of the Russian Federation and the Russian Higher Court of Ar-
bitration 2 on the procedure for courts in applying C.C.R.R provisions when the latter
are used subsidiarily with respect to relations regulated by international agreements.
The purpose of such explanations is not, and cannot be, to alter Russia’s obligations
under an international agreement. This is vividly seen in article 395 C.C.R.F. which
defines the consequences of using another party’s money with respect to relations
regulated by the 1980 Vienna Convention.
Under article 78 of the 1980 Vienna Convention, if one party fails to pay the price
or any other sum that is in arrears, the other party is entitled to interest on it without
prejudice to any claim for damages recoverable under article 74 of the 1980 Vienna
Convention. Article 74 establishes the right to recover damages for breach of contract
to the extent of both actual damages and lost profit. Since article 78 does not provide
” See e.g. the 1974 New York Convention, supra note 5, art. 7; the 1988 New York Convention, ibid.,
art. 4; the 1987 Guarantees, ibid, art. 5; the 1988 Financial Leasing, ibid, art. 6(1); and the 1988
Factoring, ibid, art. 4(1).
” In accordance with the Constitution of the Russian Federation, the country’s Supreme Court (arti-
cle 126), and the Higher Arbitration Court (article 127) are empowered to issue explanations regard-
ing issues of legal practice. Under the Federal law On the Arbitration Courts, Sobranie zakonodatel-
stva R.E (1995) No. 18, item 1589, art. 13(1), the right to provide some explanations is granted to the
Plenum of the Higher Arbitration Court, and resolutions issued by the Plenum on matters within its
jurisdiction are binding on courts of arbitration in the Russian Federation.
484
MCGILL LAW JOURNAL / REVUE DE DROITDE MCGILL
[Vol. 44
any indication as to the procedure for determining the amount of interest, this gap is-
by virtue of article 7(2) of the 1980 Vienna Convention-filled by courts invoking the
applicable domestic law (i.e., article 395 C.C.R.F). This kind of subsidiary enforce-
ment may not, and should not, result in a breach of the 1980 Vienna Convention. It is
the Convention and not the C.C.R.F. that determines principles for applying rules on
annualized interest. Further, it is necessary, pursuant to article 7(1) of the 1980 Vienna
Convention, to give due regard for the need to achieve uniformity in the application of
the Convention in different countries.”
In this vein, one should note that in international commercial exchange (which is
also acknowledged in theory and foreign judicial and administrative practices), annu-
alized interest is recovered regardless of whether there were any circumstances ex-
cusing the defaulting party of liability for the payment delay. The lender should not,
as a general rule, be required to prove the amount of damages incurred but only the
validity of the rate applied to calculate the amount of interest. In the meantime, based
on the location of article 395 C.C.R.E in Chapter 25: “Liability for Violation of Obli-
gations,” and under the subheading “Liability for Non-performance of a Monetary
Obligation’
the Russian Federation’s Supreme Court of Arbitration treats the annu-
alized interest stipulated by article 395 as a penalty, and orders the recovery to be ef-
fected according to those rules which apply to property liability.
VIII. Correlation of International Agreements
Where several international agreements have been concluded between the Rus-
sian Federation and another country, a particular question then arises. In essence,
which should enjoy priority when identifying rules to be applied in lieu of C.C.R.F
provisions? It is obviously difficult to give an unequivocal answer to this question. It
is imperative, first of all, to turn to the directions given by the international agree-
ments themselves.
Relative to international sales, the 1980 Vienna Convention expressly stipulates
that it does not prevail over any international agreement which has already been, or
may be, entered into and which contains provisions concerning matters governed by
the Convention, provided that the parties have their commercial enterprises in coun-
tries that are parties to such an agreement. It follows that this is meant to refer to other
international agreements that provide regulation on issues of substantive law. It should
be noted that the 1980 Vienna Convention does not set any rules to govem the choice
” A court does not have the right, when trying cases, to apply those statutory provisions that govern
any legal relationships if an international agreement which has taken effect for the Russian Federation
and consent to the binding nature of which was given in the form of a Federal law establishes differ-
ent rules than those set out in the law. In the author’s opinion, this explanation should be understood
more broadly than expressly stipulated. The constitutional precept regarding the prevalence of rules
contained in the Russian Federation’s international agreement extends to all types of such agreements.
It is of decisive significance that such consent should be expressed by an authority provided for by
law and in a form consistent with statutory requirements.
1999] M.G. ROZENBERG – THE C.C.R.F & INTERNATIONAL AGREEMENTS
485
of laws. Another example of such an international agreement is the Council for Mu-
tual Economic Assistance’s General Terms of Supply which, at the time the 1980 Vi-
enna Convention was adopted and entered into force, had the status of an international
agreement for signatory states.
The applicable provisions of the 1986 Geneva Convention were set out earlier in
this article?’ A direct refusal to recognize the prevalence of the corresponding inter-
national agreement over other international agreements that have already been signed
or may be signed is contained in particular in article 17 of the 1988 Financial Leas-
ing,” and article 15 of the 1988 Factoring?”
IX. Reflection in the Civil Legislation of the Russian Federation of
Provisions Sealed in International Agreements
The law-making process of the U.S.S.R. and of the Russian Federation has tradi-
tionally taken account of international practices in the regulation of civil law relations.
This was reflected, in particular, in the Fundamentals,”7 effective in the Russian Fed-
eration from August 3, 1992.
The same method was used, to a much greater extent, during drafting work on
Parts 1 and 2 of the C.C.R.F. As a result, a number of provisions which the C.C.R.F.
institutionalizes are identical, or close in meaning, to the relevant provisions of certain
international agreements. This has provided assurance that the C.C.R.F. is consistent
with the present-day international practices of regulating property relations in a mar-
ket economy.
When the C.C.R.F. was drafted, due regard was given, most notably, to those in-
ternational agreements to which Russia was party. Particular note was also taken of
those international agreements drafted with Russia’s participation, but which had yet
to take effect. Other international documents of a universal nature were likewise given
some consideration.
The 1980 Vienna Convention should be singled out among such documents. Its
provisions were used in varying degrees when formulating individual provisions in
the C.C.R.F’s section dealing with the law of obligations, as well as a large number of
other provisions governing sales. Since the sole provisions set forth in the C.C.R.F.
are also applied to contracts other than those of sale-i.e., contracts of exchange,
contracts of hiring work, and trade credit contracts-the 1980 Vienna Convention has
thus been influential in regulating these types of contracts too.
‘
4 See Part IV, above.
35 Supra note 5.
6 Ibi
37Supra note 25.
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Account has been taken of approaches established by the 1974 New York Con-
vention.” In particular, provisions renunciating special shortened limitation periods in
the area of product quality claims, as well as provisions invoking the statute of limita-
tions at the debtor’s request.
The drafting of the C.C.R.F’s provisions on contracts for financing against the
cession of a pecuniary claim has taken account of principles set out in the 1988 Fac-
toring,” while the drafting of the C.C.R.F.’s provisions on financing leasing contracts
proceeded with due regard to the 1988 Financial Leasing.’
The Federal law On Copyright and Neighbouring Rights’
The Air Code of the Russian Federation’ which has been adopted in line with ar-
ticle 784(2) C.C.R.F., considers prescriptions given by the 1929 Warsaw Convention.”‘
includes the relevant
provisions of the 1971 Berne Convention” and the 1971 Geneva Convention.” The
various Russian legislation on patents and trademarks reflect the relevant provisions
of the 1883 Paris Convention.”
Conclusion
Few today can deny the importance of uniformity of rules in today’s global com-
munity, especially in the realm of international commerce. As the Russian Federation
tries to find its place in a market economy, the importance that is placed on interna-
tional agreements can only help to ease the transition. Yet the Russian Federation
cannot lose sight of the importance of its domestic laws in this field. The challenge
now is to achieve a sound balance between international and domestic rules and pro-
cedure that will further enhance business relations within the Federation and on the
global scene.
,Supra note 5.
9 Ibid.
,0Ibid.
4’ Sobranie zakonodatelstva RE (1997) No. 12, item 1383.
42 Supra note 3.
43 Federal law No. 5351-1 of 9 July 1993.
” Supra note 4.
4 Ibid.
46 ibid.
1999] M.G. ROZENBERG – THE C.C.R.F & INTERNATIONAL AGREEMENTS
487
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