Arbitration Among the Russians – Vol. 3 No. 1-4

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AuthorJohn N. Hazard*

Published: December 1992

Categories of Disputes
Commercial Disputes
Dispute Resolution and Litigation

Description: Russian bureaucrats were wary of litigation during the communist period. No bureaucrat wanted to risk his career, and perhaps his neck, appearing in court demonstrating his ineptitude as a negotiator. Ministers had reputations for severity when subordinates demonstrated their incompetence. To avoid personal catastrophe, bureaucrats tended to attempt to “cover up” poor commercial deals by adjusting compensation for damages. In this manner, they hoped to conceal losses by offering make-up payments in the next deal. With luck, the Minister would not become aware of the true facts, and the bureaucrats would escape attention.

The effort to avoid litigation emerged even before the communists established what some have called “draconian” penalties for mistakes. Historians recall that the traditional peasant village, the mir, settled disputes centuries ago with the help of the village elder, just as was done in many traditional societies. Russians of the present generation also seem inclined to “work things out” without confrontation in court.

This ancient cultural trait also appealed to communist administrators as they debated establishment of formal dispute resolution in the new “socialist” Russia. They showed themselves prepared to settle disputes among “comrades” without fanfare. To be sure, they abhorred accommodation with so-called “class enemies” for whom there was to be no quarter, but for “comrades” there had to be another way. For them, dispute resolution was to incorporate principles of “comradeship,” hard as it might be to define the concept.

In 1922, Lenin had granted a respite for an entrepreneurially oriented economy by introducing what was called a “New Economic Policy” (“N.E.P.”). Attitudes towards “comradeship” changed when Stalin in 1929 introduced state monopoly of the ownership of means of production. With state ownership, Stalin began state economic planning. This was to affect social structures greatly, but one feature was to be hallowed even with change to compulsory production relationships. Reverence was to be shown to the spirit of conciliation which had been exemplified in the ancient mir. Although state economic planning required strict compliance with the plan, managers were exhorted to avoid the confrontations with angry merchants that had prevailed during the N.E.P. Comradely relationships were to be favored, and a new structure of dispute resolution was to replace the court litigation that had been the centerpiece of dispute resolution.

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*Nash Professor Emeritus of Law, Columbia University.