When choosing the jurisdiction for doing business the entrepreneurs consider the legal environment as the principal factor. The State’s task is to elaborate at a legislative level a number of mechanisms, which will be sufficient to overcome the crisis stage. In this article, we will analyze in which direction this process is developing and the extent of impact of sanctions on the legal and economic environment.
Sanctions as an instrument of the international relationship. Referring to the international experience, it should be mentioned, that the introduction of economic sanctions by this or that country or group of countries has always been targeted at changing the political course of action, conducted by the governments of countries– objects of sanctions. Sanctions serve as a response of the States, which do not agree with the international policy, realized by other members of the international community.
As a rule, sanctions can be introduced in the form of a ban on import and/or export of goods, services from the countries – objects of sanctions, restriction on financial operations with these countries, with corporations, registered in these countries, a termination of economic cooperation and investment (in a whole or partially). The objective of sanctions consists in damaging mainly the strategic sectors of national economy of the countries, depending to a certain extent on international (exporting) technologies. Moreover, sanctions can be motivated to a great extent by large-scale business for the survival of big monopoly structures in a system of increasingly accelerating globalization tendencies.
One of the distinctive features of sanctions is their point orientation, that means that the restrictions are imposed not on the State as a whole, but on individual residents of the country: commercial structures and individuals.
In the context of globalization, when the national economies are dependent on each other and a free world trading system is functioning, the introduction of such economic bans in relation to one or more countries inevitably entails adverse consequences for a much larger number of third States and their citizens, respectively.
Sanctions regime as a special regime for conducting economic activity. The Russian Federation is going through a difficult period of economic and political life: the foreign policy situation is currently escalating, the economic and financial crisis within the country lasts far too long, the scale and severity of problems, which the Russian society is experiencing, are growing. Evidently, the sanctions most significantly affected the Russian and foreign businessmen and only exacerbated the issue, making an accent on the long-term problem of relationship between the State and business community.
It’s important to stress, that the western sanctions affected not only large-scale industrial and agricultural business and financial system, but also put small business at a significant risk – the most massive and mobile part of business, playing a major, indispensable role in the Russian economy in case of emergence and resolution of the most pressing economic and social problems.
At the same time, sanctions should be considered from a different angle, as a powerful impulse for the country’s transition to the path of sovereign socio-economic development, of developing economically modernized and politically independent country, expanding its own production.
Considering the new economic conditions, the necessity to foreground the state policy in the field of economic development, to develop business relationship with the already established partners, to provide new investments possibilities both for domestic and foreign entrepreneurs is objectively increasing. There is a vivid need to elaborate a whole range of activities of legal, economic, political, informational, organizational character, which should be aimed at the obtaining of high economic indicators and a gradual recession from crisis.
Within the actual sanctions regime conditions, the legal environment is forced to adapt to the existing changes and to develop the necessary mechanisms, that should meet two objectives: overcoming the crisis and strong protection of rights and freedoms, including economic ones.
The development of legal environment – a guarantee of the effective business partnership and addressing the crisis. Speaking about the maintenance of economic development and improvement of cooperation in a business community, it should be noted, that this includes not only the allocation of funds, but, primarily, the elaboration of a favorable legal environment in the country, contributing to the development and effective functioning of business.
A favorable legal environment includes, but not limited to, the development of legislative initiatives, the implementation of new legal mechanisms for business support, stimulation measures, decline of tax barriers, the effective functioning of state courts, development of arbitration and other conciliation procedures for settling commercial disputes. The businessmen should be clearly confident, that the concluded contracts will be executed, and in case of necessity their rights will be ensured.
It is worth noting the main levers for overcoming the crisis, which should be elaborated by the legal environment: 1). negotiations and the use of soft power, demonstrating the disadvantages of sanctions and the need for their removal; 2). strengthening of economic security of the country – focus on import substitution; 3). search for access to new markets, expansion of multi-vector relations.
Sanctions significantly affected the volume of cross-border transactions with a foreign element. At the same time, under the current circumstances, the confidence of business in the Russian law is increasing. Many domestic and foreign companies choose the Russian, and not foreign, law as the applicable one for corporate and financial transactions significant for their business.
This is largely ensured by the emergence in the Russian civil law of contemporary instruments for deals structuring and investments protection, adopted in the Anglo-Saxon system of law and demanded by the modern business. Businesses no longer need to include a foreign element in the deal’s structure in order to draft a contract, as they need. Reducing the number of imperatives that prescribe business, how to negotiate among themselves, should contribute to the continued growth of the popularity of the Russian jurisdiction.
It will be important to note, that Russia takes one of the first places in the ranking of the World bank Doing business on such indicators as the timing and cost of settling the commercial disputes and even the «quality of justice». It ranks twelfth in the world in terms of the effectiveness of contracts execution through the courts. Among the BRICS countries, only China is superior to Russia for the same criteria, the rest countries are far behind.
Today, in Russia, there is a large number of domestic and foreign business associations and chambers of commerce and industry: the Association of European Business, the Russian-German chamber of Commerce, the American Chamber of Commerce and others. The expert committees of these organizations elaborate practical recommendations for improving the current legislation and serve as a positive example of a dialogue between business and the government.
Summing up the aforesaid, it can be concluded with certainty, that in the context of the fierce sanctions policy, conducted by the States, the dynamically functioning legal environment, which guarantees the respect of rights and freedoms, in particular – economic, constitutes a solid basis for overcoming the crisis stage and providing the country’s exit on the path of sustainable socio-economic and political development.