Securing Russia’s Future: A Plea For Reform in Russian Secured Transactions Law

After many turbulent years of uneasy transition to a market economy, Russia is finally “open for business.” Nonetheless, the transitional period remains far from over, and Russian enterprises are still starved for capital that they desperately need for retooling to convert from military to consumer production, for acquiring new equipment to replace old and worn machinery, and for undertaking new and lucrative projects. While Russian financial institutions may provide significant funding, their reserves are limited; they could not hope to finance independently the multitude of existing and potential enterprises within the expansive Russian territory. Therefore, much of the financing for the continuing development of Russian business has and will come from Western sources. The Russian legislature recently has taken a great stride toward further enticing Western investment by adopting a new and greatly enhanced Civil Code. There, nested within a fairly detailed section on the law of obligations, lies a subsection on various methods of securing the performance of obligations, including an expanded and sophisticated section on “pledge.”