Russian Federation: Electronic Commerce In Russia

Published 1/1/00

The number of Internet users in Russia is estimated at over one million, and their ranks are constantly increasing. The fact that Russian computer companies sell Pentium II-type systems for US$350.00 to $400.00 will only assist the spread of computer use throughout the country, and considering geographic peculiarities of the Russian Federation, electronic commerce is expected to become very popular.

In Russia, the first attempt to trade on the Internet was made in 1997 when Sovan Teleport started to receive electronic payments by credit cards. In the spring of 1998, Russian Internet stores also started to implement various Internet payment arrangements. Two years after the first efforts at implementing electronic commerce, Russian customers can now purchase books and publications, CDs, software and hardware products, make hotel and ticket reservations, buy spare parts for cars, receive financial services, and review/subscribe to legislation databases and newspapers on-line. The most effective e-businesses are those involved in advertising and sales of computer software, hardware and computer components.

Despite the general view that there is no specific legal basis for electronic commerce in Russia, the necessary framework is in the making. Articles 428, 434, 437 and 438 of the Civil Code of the Russian Federation provide some relevant provisions. According to these provisions, contracts between two parties can be made in any form including electronically, if no particular form is mentioned in the governing law.

According to the Russian Federation Law on Information, Informatization and Protection of Information, documents stored and transmitted via automated information and telecommunication systems, and authenticated by "an electronic digital signature" are enforceable. Although the law does not define the term "electronic digital signature", it gives the latter legal force where an automated information system contains the required recovery system to identify the signature in the regime established by its user. Electronic agreements are strengthened by the fact that, in case of a dispute, Russian courts will recognize electronically generated documents and electronic signatures as evidence.

Obstacles to the development of electronic commerce in Russia include logistical problems with respect to the transportation of goods, vague banking procedures and the low numbers of credit card holders. Yet, whatever the problems involved in the take-off of electronic commerce in Russia, it is not a lack of digital know-how, government enthusiasm or international support. In November 1998, the Russian Association for Electronic Commerce was created. Its creation followed the announcement by the European Union of a EU-Russian Co-operation Agreement on the development of electronic commerce in Russia. The Russian Federation Chamber of Commerce and Industry and the American Chamber of Commerce in Russia have designed an initiative to establish a US-Russian Institute for the Development of Electronic Commerce. These and other initiatives will strengthen and push forward the development of electronic commerce in Russia and promise to provide unlimited opportunities for businesses interested in this region.

Oxana Latsyk is a member of Gowlings’ Russia office and will be practicing in the IP department. She is currently completing her articles in the Toronto office.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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