Law “on digital rights” entered into force in Russia.

LEGAL NEWS

Digital rights in Russia.

On October 1, 2019, Federal Law No. 34-FZ “On amendments to parts 1, 2 and Article 1124 of part 3 of Civil Code of the Russian Federation” (hereinafter, the “Federal law”) came into force. These amendments establish the regulation of digital rights and relations in Russia and define their place in the Russian economy.
 
Amendments at a glance:
 
1. What are the “digital rights”
 
The Federal law defines digital rights as obligatory rights and other rights, the nature, contents and conditions of implementation of which are determined in accordance with the rules of the information system that meets the criteria established by Federal law No. 149-FZ “On information, information technology and protection of information” dated July 27, 2006. Implementation, disposal, including transfer, pledge, encumbrance of digital rights in other ways or imposing any restrictions on their use can be done only in the information system without contacting the 3rd party. By this, the legislation directly recognizes Internet transactions as legally valid and binding.
 
It is also important that in accordance with Article 128 of Civil Code, digital rights shall be considered to be property rights and regulated as property rights (similar to the regulation of non-cash money or non-documentary securities). For this reason, unless otherwise required by the scope of digital rights, their sale and purchase shall be governed by Article 454 of Civil Code regulating sale and purchase of a property.
 
2. Electronic receipt
 
According to Federal law, an electronic receipt is an electronic copy of a regular receipt confirming purchase payment. The retail agreement shall be deemed duly concluded by the parties when the seller provides the buyer with an electronic receipt.
 
This amendment correlates with recent changes in the law regulating the use of cash registers in Russia and determining cases when the seller shall provide electronic receipts to the buyer.
 
3. Displaying product for sale online may be deemed an offer
 
Before, the law defined displaying the product and the terms of its purchase at the sales location as a public offer to buy such a product.
 
According to Federal law, displaying a product for sale online shall be also deemed a public offer to buy it. These amendments were introduced to the uniform regulation of e-commerce in Russia.
 
4. Electronic transactions
 
As of October 1, 2019, a contract concluded electronically shall be deemed valid written agreement if such a contract makes it possible:

  • to put the scope of the transaction as it was on paper or any other tangible media; and
  • to verify true parties to the transaction.

However, the law does not clarify what shall be included in the terms of an electronic transaction to meet the above conditions. So, it is still for the courts to define that.
 
The Federal law directly allows entering into insurance agreements and nominal account contracts in electronic form. However, it prohibits electronic form for wills as that would contradict to the legal nature of wills and inheritance.
 
5. Regulation of “smart contracts”
 
The Federal law establishes a concept of “smart contract” for the first time. “Smart contract” means the execution of a contract by the parties automatically using software and without expression of their will by any other means. For example, auto-payment in online banking set by the customer.
 
6. Information services agreement
 
The Federal law also introduces amendments into Article 783.1 of Civil Code and establishes a new type of the agreement – information services agreement. Under the terms of such an agreement, a customer may require a contractor not only to provide certain information but also to refrain from any activity that may result in unauthorized disclosure of the information to the third parties (e.g. competitors).
 
We recommend to companies and business owners to keep track of further commentary to the Federal law and related court practice. In our view, these amendments may significantly help corporations in their future operational activity.
 
If you need advice or other legal support in connection with these changes, LEGAL PRO team will be happy to provide you with necessary assistance.

 
Contact details:

Anastasia Fomicheva
Partner
[email protected]