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Vol. 39, Nº 68 (Enero - Junio) 2021, 758-766
IEPDP-Facultad de Ciencias Jurídicas y Políticas - LUZ
Recibido el 07/09/2020 Aceptado el 21/12/2020
Problems of Efciency of Legal
Regulation of the Business Relation
DOI: https://doi.org/10.46398/cuestpol.3968.48
Andrei Valerievich Mikhailov *
Dmitrii Anatolievich Petrov **
Lilia Azatovna Sungatullina ***
Robert Rinatovich Izmailov ****
Anna Igorevna Kovshova *****
Abstract
The article is devoted to the analysis of the general legal
problems of the regulation of economic relations in the Russian
Federation. Problems that lead to insufciently effective legal
regulation are identied, while identifying directions for resolving
them. The objective of this research was to review theoretical and
practical problems of the effectiveness of the legal regulation of
economic relations in the example of the Russian Federation, which makes
it possible to draw some conclusions. To obtain the results, a set of scientic
techniques and methods of study of phenomena and processes were
applied, such as synthesis methods, comparative jurisprudence, as well as
a formal legal method and an economic modelling method. The method of
economic modelling made it possible to assess the extent to which and at
what costs, the rule of law has produced the expected economic effect. It is
concluded that the effectiveness of legal regulation is one of the essential
legal categories and that the legislator is obliged to monitor existing legal
standards for its effectiveness.
Keyword: Business law; legal problems; legal regulation in business
matters; economic policy; Russian federation.
* Mikhailov Andrei Valerievich, Kazan Federal University, Ph.D., associate professor, department
the business and energy law. ORCID ID: https://orcid.org/0000-0003-2658-0122. Email: avm@
pravmail.ru
** Petrov Dmitrii Anatolievich, Saint Petersburg State University, associate professor, department of
commercial law. ORCID ID: https://orcid.org/0000-0002-4262-9259. Email: PetrovDmitrii2020@
mail.ru
*** Lilia Azatovna Sungatullina, Kazan Federal University, Ph.D., associate professor, department of
business law. ORCID ID: https://orcid.org/0000-0002-4262-9259. Email: lilia.sungatullina@mail.ru
**** Robert Rinatovich Izmailov, Kazan Federal University, assistant, department of business and energy
law. ORCID ID: https://orcid.org/0000-0002-6927-1840. Email: izmailov.robert@mail.ru
***** Kovshova Anna Igorevna, Kazan Federal University, assistant, department of business and energy
law. ORCID ID: https://orcid.org/0000-0003-1804-5605. Email: ania881@mail.ru
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CUESTIONES POLÍTICAS
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Problemas de eciencia de la regulación legal de la
relación empresarial
Resumen
El artículo está dedicado al análisis de los problemas legales generales
de la regulación de las relaciones económicas en la Federación de
Rusia. Se identican los problemas que conducen a una regulación legal
insucientemente efectiva y, al mismo tiempo se indican las direcciones
para resolverlos. El objetivo de esta investigación fue la revisión de
problemas teóricos y prácticos de la efectividad de la regulación legal de
las relaciones económicas en el ejemplo de la Federación de Rusia, lo que
permite sacar algunas conclusiones. Para obtener los resultados se aplicaron
un conjunto de técnicas cientícas y métodos de estudio de fenómenos y
procesos, tales como: métodos de síntesis, jurisprudencia comparada, así
como un método legal formal y un método de modelización económica. El
método de modelización económica permitió evaluar en qué medida y con
qué costos el estado de derecho ha producido el efecto económico esperado.
Se concluye que la efectividad de la regulación legal es una de las categorías
legales esenciales y que el legislador está obligado a monitorear las normas
legales existentes para su efectividad.
Palabras clave: Derecho empresarial; problemas legales; vigencia de
la regulación legal en materia empresarial; política
económica; federación rusa.
Introduction
Legal regulation, that is, the process of targeted impact of public
authorities on certain social relations, can be more or less effective. By
accepting the rules of law, taking specic actions to implement them, the
state expects certain benets and returns from the established rules of
conduct. Quite often, for a variety of reasons, the legislator does not achieve
the goals that were set before the adoption of the norm. Sometimes goals
cannot be achieved for objective reasons, either because goals were set
unattainable, or living conditions have changed signicantly. But often, the
norm does not achieve its goal because it was adopted without scientic,
economic, and legal justication, without taking into account other legal
norms. Sometimes, in order to achieve not the most economically important
result, public authorities spend signicant resources (labor, administrative)
on the development, adoption, and implementation of a norm, while the
same result can be achieved with much lower costs. The effectiveness
of legal regulation seems to be one of the most signicant indicators in
jurisprudence. Ineffective regulation makes no sense in principle. It is
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Andrei Valerievich Mikhailov, Dmitrii Anatolievich Petrov, Lilia Azatovna Sungatullina, Robert
Rinatovich Izmailov y Anna Igorevna Kovshova
Problems of Efciency of Legal Regulation of the Business Relation
necessary to try by all means to contribute to the development of efcient,
effective mechanisms of legal inuence.
1. Materials and Methods
The methodological basis of the research presented in this article is
a set of scientic techniques and methods of studying phenomena and
processes - methods of analysis synthesis, comparative jurisprudence,
as well as a formal legal method and a method of economic modeling.
The use of these methods seems to be advisable for several reasons. The
formal legal method allows us, on the basis of legislation, to form the
applied conceptual apparatus, identify the signs and characteristics of the
considered institutions of law. The comparative legal method allows us to
study the possibility of implementing foreign experience in legal regulation.
2. Research Results
Both Soviet and Russian legal science has relatively little research on the
effectiveness of branches of law, methods of legal regulation, or legal norms
(Kudriavtsev et al., 1980). In philosophy and theory of law, efciency (Latin
efcientia - action, force, inuence) is understood as the productivity of the
use of resources in achieving a goal. It is quite difcult for legal regulation
to assess productivity. It is very difcult to estimate the costs of adopting
the norm. These are the costs of organizational work to change regulations,
to conduct examinations, and a set of costs for the implementation of the
norm, the creation and functioning of special bodies (persons) associated
with the implementation of the norm. It is much easier to assess whether
or not the goal of legal regulation has been achieved. Unfortunately, both
Russian scientists and their colleagues in other countries give little attention
to the effectiveness of the rule of law in their works, although there are
works on the problems of the effectiveness of regulation in the economy
(Spulber, 1989).
When the state regulates economic and business relations, the set goals
may be very different. These are global, conceptual goals - ensuring market
development, increasing GDP, improving the quality of life, and special
goals - attracting investment, establishing a mechanism for protecting the
rights of entrepreneurs, legal support for economic development, protecting
consumer rights, ensuring tax collection, etc. The effectiveness of legal
regulation is inuenced by a variety of factors - from the political regime in
the state to the legal and technical study of the adopted norms of law and
the adequacy of the interpretation of the existing norms. The organization
of the rules of law is also important - that is, what are the regulatory acts,
branches of law, and other legal formations in the state (Dunne, 2015).
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What is important is the ratio in the legal system of the regulators of law -
laws and regulations, regulations, and customs.
In Russia and other post-Soviet states, an interesting legal feature
has developed - the structural units of law are often formed based not on
economic expediency, but on traditional ideas about the branches of law,
formed in accordance with the generality of regulated relations. Traditional
Russian jurisprudence denies many entities the status of a branch of law -
energy, sports, medicine, space, etc. Accordingly, it is believed that there is
no point in these entities to adopt codes. Some states of the former USSR
have already refused this approach - for example, Belarus has adopted
the Banking, Electoral, and Education Codes, and a sports code was being
developed.
In Russia, so far, many do not consider entrepreneurial law to be
an independent branch and deny to accept the Entrepreneurial (or
Commercial) Code as valid. This position leads to the fact that the norms
governing relations with the participation of entrepreneurs are contained in
a huge number of special laws, which often do not always unconditionally
correspond to each other. But even if the Entrepreneurial Code appears in
Russia, the rules governing entrepreneurial relations will still be contained
in the tax, administrative, land, etc. legislation. Therefore, regardless of
the way the issue of the organizational structure of the branches of law
and the presence of codes will be resolved, the primary general condition
for the effectiveness of the norms governing business relations is the
synchronization of legal regulation, taking into account the intersectoral
nature of the existing norms. It is necessary to ensure the consistency and
complementarity of legal norms.
There are conditions which, if met, boost the effectiveness of legal
regulation. Of course, there are various forms of effective legal regulation
(Cross and Prentice, 2007); different countries have different economic and
political situations. But in the most general form, such conditions include
the following. This is the right choice for the purpose of regulation; real
achievability of the goal; the correct choice of methods to achieve the set
goal; the social value of the norm, its compliance with social realities and
needs (the so-called macrosocial conditions); legal and technical quality
of the norm, its adequate structure (the organic connection between the
elements of a legal norm); availability, clarity of the norm for all subjects of
law; correct informing of legal entities about the norm and the peculiarities
of its application; ideological provision of the norm, determination of
public authorities responsible for the implementation of the norm, and the
establishment of their competencies; nancing of measures to implement
the rule of law.
We can state that not all conditions of effectiveness are associated with
the actions of public authorities. Much depends on the specic subjects
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Andrei Valerievich Mikhailov, Dmitrii Anatolievich Petrov, Lilia Azatovna Sungatullina, Robert
Rinatovich Izmailov y Anna Igorevna Kovshova
Problems of Efciency of Legal Regulation of the Business Relation
of law and their legal culture. For the effectiveness of legal regulation in
the economic sphere, it is important how free the economy of a particular
country is, how high the level of development of civil society institutions
and the level of corruption are, etc. It can also be noted that the non-
market economic instruments used in totalitarian states can be considered
ineffective in any case - as shown by world history in the XX century.
The former Soviet states, unfortunately, do not have sufciently serious
traditions of life in a free economy. The Revolution of 1917 in the Russian
Empire led to a complete change in economic policy; for many years, a
state-oriented type of economy based on state ownership was developing
in the USSR. The population has developed an attitude towards the law as
a tool that arbitrarily changes depending on the will of the ruling class. At
the same time, the image of the state, responsible for absolutely everything,
gradually developed in the minds of people. The state distributes incentives
and restrictions of its own free will, and it is almost impossible for an
ordinary person to inuence this process. A peculiar attitude has also
developed towards laws - if a law in some part does not seem attractive, it
is not scary, it can be replaced. At rst glance, this position does not appear
negative. But in practice, it leads to a certain disrespect for the legislative
act, to the emergence of a position that changing the law is a common and
widely practiced phenomenon, which means that there is no particular
need to carefully think over the adopted norms (which can, in any case, be
changed).
For the economic sphere, this approach is extremely unpleasant.
Constant changes in legislation lead to the fact that law enforcement
ofcers do not have time to get used to the norms. As a result, there is a
confusion of editions that are valid at different times. Practice does not have
time to develop mechanisms of action in changing conditions; subjects do
not always understand how to protect their rights. Accordingly, there are
no important conditions for efciency - clarity of the rule of law, correct
information about the rule.
As an example of a constantly changing regulatory act, one can point to the
most important for the Russian economy bankruptcy law (Heindler, 2018),
adopted in 2002 and amended 109 times! Therefore, it is not surprising that
for many years various lawyers have been stating the ineffectiveness of the
bankruptcy law (Khodykin, 2013). Of course, constant change is far from
the only reason. Bankruptcy legislation has two objectives - fair distribution
of assets of persons declared bankrupt, and restoration of the solvency of
persons who nd themselves in a difcult economic situation. It is precise
with the latter task that Russian bankruptcy law fails. But for the normal
restoration of solvency, it is important to have not only well-thought-out
legislation, but it is also important that the state of the economy allows
for nancial rescue measures. The general level of economic development
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is extremely important for the effectiveness of legal regulation - the more
efcient the economy, the more effective the law, and vice versa.
Arguing about such a condition of efciency as the determination of the
authorities responsible for the implementation of the rule of law and the
conduct of state policy in a particular area, we should note the following.
For many years, the problem of eliminating redundant functions of the
state has been discussed in Russia. This is a problem for many countries
that are transitioning from a command-administrative economy to a
market economy. And each country solves this problem in different ways.
Unfortunately, in Russia to date, the superuous functions of the state
have not been completely removed. The list of unnecessary powers has
been compiled by various structures on behalf of the President and the
Government of Russia since 2000, but until the end, not a single project
to eliminate excess powers has been implemented. This is hindered by
the extremely large state apparatus - ofcials, apparently, cannot agree to
radical reforms for fear of losing their place in the public service. At the
beginning of 2019, the then-Chairman of the Government of Russia D.A.
Medvedev announced a “regulatory guillotine” - to dene and abolish all
obsolete and unnecessary acts affecting the freedom of the economy. The
fate of this next project is not yet clear.
It should be noted that many Russian state bodies have much more
powers than similar structures in foreign countries. An example is the
Federal Antimonopoly Service, which carries out 24 control functions -
apparently, this is a world record of control powers of one state body. Of
course, Antimonopoly regulation is extremely important for the economy
as it performs the most important functions (Whish and Bailey, 2015),
especially in a country that is moving from state monopoly to the market.
But too sweeping powers are hardly justied, the antimonopoly authorities
of Russia initiate cases of violation of competition more than all the
antimonopoly authorities in the world, and large-scale business is not the
only one to be prosecuted. The environment of constant control, in our
opinion, has a negative impact on business. Many entrepreneurs are afraid
to start their own business, fear that the regulatory authorities will be able
to prosecute for minor violations. Even the fact that economic entities have
to spend their energy, time, and funds on communicating with inspectors
does not add any advantages to the rating of the business climate.
Meanwhile, it is a favorable business investment climate that is one of
the important conditions for the normal development of the economy and
effective legal regulation.
Russia is denitely making attempts to improve its own investment
legislation, but it is too early to talk about its integrity and consistency.
Existing reform efforts are fragmented and not based on any well-thought-
out concept. Moreover, a similar characteristic can be given to the entire
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Rinatovich Izmailov y Anna Igorevna Kovshova
Problems of Efciency of Legal Regulation of the Business Relation
complex of normative legal acts, on the basis of which the interaction of
economic entities and public authorities is carried out. The legislation
on special economic zones and other territories with a special regime for
carrying out the entrepreneurial activity, on public-private partnership has
not been sufciently developed. Improvement of legal regulation in these
areas is quite possible. It is necessary to abandon the “point” changes in
legislation and go to the principles of improving legislation on the basis of a
previously developed concept of development.
The investment legislation of Russia is currently represented by several
acts. This is the law of Federal Law of July 9, 1999, No. 160-FZ “On foreign
investments in the Russian Federation,” Federal Law dated 02.08.2019
No. 259-FZ, “On attracting investments using investment platforms and on
amending certain legislative acts of the Russian Federation”; Federal Law of
April 1, 2020, No. 69-FZ “On the Protection and Promotion of Investment
in the Russian Federation.” This list shows that there is still no uniformity
in regulation. In terms of the problems of the effectiveness of regulation,
it is more promising to adopt general laws that apply to all subjects of the
economy.
As a rule, developing countries create special investment laws or codes
in seek to attract the maximum amount of foreign investment, create a most
favored nation treatment for the investor. In most economically developed
countries, there is no special investment legislation - it is believed that any
investor should be protected by the rules of the law that are common to all.
Ideally, Russia should also create conditions where a business is protected
by general rules of law, general rules for investment, access to loans,
protection of property rights, and without special investment legislation.
For this, it is necessary, rst of all, to clearly dene one’s own strategy for
the development of investment legislation.
It’s interesting to know that almost all investment legislation in Russia
provides for the provision of benets only to large investors. The latest
adopted law - dated April 1, 2020 (Federal Law of April 1, 2020 No. 69-
FZ) - was created for industrial projects and does not take into account
the specics of infrastructure projects, which more often involve indirect
effects for the economy. To get benets from this law, a new investment
project should be implemented, with 250 million to 5 billion rubles
invested, depending on the eld of activity. Thus, the majority of Russian
entrepreneurs (according to the Chairman of the Accounts Chamber of the
Russian Federation A.L. Kudrin, this is 95% of all entrepreneurs) will never
be able to use the provisions of this law. Investment legislation is often
criticized in Russia, a decrease in the inow of foreign investment is noted,
but ineffective legislation itself contributes to the lack of investment.
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Conclusion
Our review of theoretical and practical problems of the effectiveness
of legal regulation of economic relations on the example of the Russian
Federation allows us to draw some conclusions. Efciency is the most
important legal category, legal acts and norms of law should be assessed
in terms of their effectiveness. Different states have different legal regimes
and different economic situations, but in the most general form, the set
of factors that make legal regulation effective or ineffective is clear. For
the economic sphere, the most important condition for efciency is the
synchronization of legal impact, i.e. complex legal regulation of economic
relations, taking into account the mutual inuence of the norms of various
branches of law and a different legal nature. This is easier to achieve. By
developing sufciently large blocks of legislation, ideally codied acts, with
a single terminology and with a comparable mechanism of legal impact. In
addition, other conditions of effectiveness specied in this article must also
be met. In addition, the law should not be changed often - constant changes
in the rule of law have a negative impact on efciency.
The conducted research allows us to systematize knowledge about
the conditions for effective or ineffective legal regulation of economic
relations. Meeting the indicated conditions will improve the quality of
legal regulation. And we must remember that there is a close relationship
between the level of economic development, the efciency of the economy
and the effectiveness of the law.
Acknowledgments
The work is performed according to the Russian Government Program
of Competitive Growth of Kazan Federal University.
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Rinatovich Izmailov y Anna Igorevna Kovshova
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www.luz.edu.ve
www.serbi.luz.edu.ve
www.produccioncienticaluz.org
Esta revista fue editada en formato digital y publicada
en enero de 2021, por el Fondo Editorial Serbiluz,
Universidad del Zulia. Maracaibo-Venezuela
Vol.39 Nº 68
