From Soviet State Enterprises to Russian Unitary Enterprises

Abstract

In Russian law, the State enterprise is probably one of the most noteworthy examples of the continuity of legal development, showing just how much Soviet concepts still influence modern Russian law.

It is well known that the means of production could not belong to private persons under Soviet law (apart from some minor exceptions). Consequently, State enterprises built the foundation of the Soviet economy. However, the enterprises needed a legal foundation for their entrepreneurial activity. Not being the owners of the assets, they had an operative management over them. This legal construction, surprisingly, survived the collapse of the Soviet Union and the liberalization of the property regime. In the course of perestroika reform, the right of operative management was redesigned; additionally, a further right, one establishing a full economic jurisdiction, was created. These relicts of Soviet legal thinking later kept their position as a part of the modern Russian law of property. In the Civil Code of the Russian Federation, the right of operative management and the right of economic jurisdiction are explicitly stated as rights in rem (Art. 216 CC). Mostly importantly, they allow the State to create the so-called unitary enterprises and institutions which conduct economic activity but do not own their assets. These assets remain State property; however, the unitary enterprises can possess and use the assets on the grounds of the right of operative management or the right of economic jurisdiction.

The paper addresses the continuity in legal developments in regard of the mentioned rights and their impact on the notion of property in modern Russia.