During the St. Petersburg International Economic Forum in June 2013, President Vladimir Putin proposed a reorganization of the Supreme Arbitration Court of the Russian Federation, and in October 2013 the bill outlining constitutional amendments was submitted to the State Duma. The proposed changes strive to ensure the uniformity of the Russian court system and practice.

The Supreme Court of the Russian Federation shall assume competence over the Supreme Arbitration Court and will handle civil, criminal, administrative and other trials involving physical persons and legal entities.

In addition, a special Judicial Panel of the Supreme Court for economic disputes will be formed and established in St. Petersburg. A Representation of the Supreme Court will function in Moscow to assist the Supreme Court in performing its functions. Through this arrangement, St. Petersburg will move towards becoming the judicial capital of the Russian Federation.

Through the reorganization of its judicial system, Russia hopes to provide a unified approach to dispute resolutions involving both individuals and legal entities, eliminate possible jurisdiction conflicts, establish general rules of judicial proceedings, and introduce consistency to Russian court practices.

The Constitution Amendment Act “On the Supreme Court of the Russian Federation and the Public Prosecution Office of the Russian Federation” (the “Constitution Amendment Act”) was passed by the State Duma on  November 22, 2013, and by the Federation Council on November 27, 2013. This law will enter into force on the date of its official publication, immediately after it has been approved by the legislative bodies of at least 2/3 of the constituencies of the Russian Federation.

Once the Constitution Amendment Act enters into force, the Supreme Arbitration Court of the Russian Federation will be abolished and a six month transition period begins for supplemental laws to be adopted.

Judges of the Supreme Court and the Supreme Arbitration Court of the Russian Federation who were appointed before the implementation of the Constitution Amendment Act shall continue to exercise their powers until the Supreme Court of the Russian Federation begins its work. The Supreme Court will comprise 170 judges. A special qualification commission will be established and include inter alia representatives of the President of the Russian Federation, Civic Chamber of the Russian Federation, all-Russia non-governmental associations of lawyers, as well as judges from judicial councils of federal subjects of the Russian Federation.

Although the Supreme Court of the Russian Federation will have exclusive authority to interpret issues related to judicial practice, many issues related to these interpretations still remain unresolved. Yet to be established is how the arbitration courts are to use such interpretations. In addition, the fate of interpretations issued by the Supreme Arbitration Court over the last twenty years remains unknown. Another grey area involves the process of judicial supervision of the review of judgments and resolution of possible conflicts that could arise when the Supreme Court of the Russian Federation and the Supreme Arbitration Court of the Russian Federation contradict one another in legal positions involving similar issues.

Presumably, in time, once reorganization is complete and comprehensive amendments implemented, a unified approach to interpretations will emerge. However, for the time being, the legal views of the Supreme Arbitration Court of the Russian Federation and the Supreme Court diverge in many issues. One example of these differences involves credits. According to the Supreme Arbitration Court, an assignment of credit is an acceptable court practice. For the Supreme Court, however, such actions are not permitted.

The Arbitration Procedural Code of the Russian Federation will continue to function to the extent it does not contradict the Constitution of the Russian Federation and new constitutional laws and other laws adopted pursuant to the Constitution Amendment Act. Currently no changes to the Arbitration Procedural Code of the Russian Federation are foreseen and proceedings in arbitration courts of federal subjects, arbitration appellate courts and federal courts of arbitration, as well as all other issues not directly related to the activities of the Supreme Arbitration Court of the Russian Federation shall not be affected by the reform.

In summary, the reorganization of the judicial system aimed at unifying the Supreme Court will start with the Constitution Amendment Act and continue with the adoption of supplemental laws. The abolishment of the Supreme Arbitration Court is not merely a matter of technical restructuring; it represents the first step in a process that will require comprehensive amendments to resolve legal and enforcement issues, both predictable and unpredictable, bound to arise from the changes in the coming months and years.