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Business Litigation in the Transition: A Portrait of Debt Collection in Russia

Published online by Cambridge University Press:  01 January 2024

Kathryn Hendley
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Abstract

Russian firms are drowning in debt. Managers are increasingly turning to the courts for help. Drawing on a database of 100 non-payments cases decided by three courts in 2000, the article explores the parameters of this litigation and the motivations for filing lawsuits. The analysis shows that the docket is dominated by small-scale disputes between trading partners with short shared histories, suggesting that those who have long-term, trust-based relationships avoid the courts. Along with fear of disrupting ongoing relationships, the disinclination to use the courts is also motivated by a reluctance to open up transactions to state scrutiny. By contrast, the petty disputes that are brought to court tend to be simple and, therefore, managers are willing to risk exposure to the state. Indeed, in a world in which firms manipulate their financial records to create the impression of no income in order to avoid taxes (often putting bogus debts on the books), some of these managers bring cases even when there is little chance of recovering the debt because the decision provides convincing evidence to the tax authorities that the debt is bona fide.

Type
Articles of General Interest
Information
Law & Society Review , Volume 38 , Issue 2 , June 2004 , pp. 305 - 348
Copyright
© 2004 Law and Society Association.

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Footnotes

Thanks are due to Stewart Macaulay, Bob Kagan, Bert Kritzer, Peter Murrell, and Joe Sanders for helpful comments on earlier drafts of this article. Research assistance was ably provided by Cem Gunusen, Timofey Milovanov, and Michael Morgalla. The field research would not have been possible without the cooperation and assistance of the Solidarity Center in Moscow, Sutyazhnik in Ekaterinburg, and the Center for Legal Reform in Saratov. Many people in these centers deserve thanks, including Irene Stevenson, Elena Gerasimova, Ekaterina Sukhacheva, Sergei Belyaev, Svetlana Mukhambetova, Marina Nemytina, and Alexei Telovalnikov. Support for the field research in the arbitrazh courts over the past decade has been provided by the National Council for Eurasian and East European Research. Support during the writing of the article was provided by the Woodrow Wilson International Center for Scholars, the University of Wisconsin Law School, and the Helen Kellogg Institute for International Studies at the University of Notre Dame.

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