Civil code of Russia

2019: The law "about digital rights" in operation

Became effective the law "About Making Changes in Part 1, Part 2 and Article 1124 of H 3 Civil Code of the Russian Federation". The law enshrines provisions for regulation of turnover of digital rights and provides judicial protection of the rights of citizens and legal entities arising in the relations of digital economy.

Changes became effective on October 1, 2019^[1].

The law affirms determination "the digital right" (a legal analog of the term "token"), its participation in turnover as object of the civil rights is defined.

It is offered to understand as digital rights special "liability and other laws, contents and which conditions of implementation are defined according to rules of the information system answering to the signs established by the law. Implementation, the order, including transfer, pledge, encumbrance of the digital right by other methods or restriction of the order with the digital right are possible only in an information system without the address to the third party".

"The law enters into the Civil Code of the Russian Federation several basic regulations on new digital objects of the economic relations. Actually these new objects are created and used also in Russia, and abroad, but directly still were not regulated by the Russian legislation therefore the persons purchasing such objects and also their creditors and successors could appear without legal protection", - the Chairman of the Committee on the state construction and the legislation Pavel Krasheninnikov noted.

He told that this law is fundamental for regulation of the relations within digital economy. "It is the new sphere for Russian law therefore it is important to enshrine basic provisions in the Civil code. Specific rules of turnover of digital objects are established in special laws. The law provides legal conditions for commission and execution of transactions in a digital medium, for providing protection to citizens and the organizations for such transactions", - he reported.

For simplification of transactions with digital rights the law improves rules of the civil legislation on a form of transactions, including agreements.

Is established that remote expression by the person of the will using electronic or other technical means (smartphones, computers) will be equated to the simple written form of the transaction. As a result of the transaction, made by sending by SMS or way of filling of a form to the Internet, will be considered concluded and valid. Also electronic powers of attorney will gain recognition. An exception - for wills which cannot be made using electronic means.

The law enters determinancy to the sphere of use of "the self-performed transactions" (smart contracts) and also legalizations and processings of Big Data.

Smart contracts are distributed in banking sector and electronic trading. As a result the person buying this or that virtual object will receive it automatically at approach of the circumstances specified in the agreement. At the seller the digital right will be written off, and the buyer has money.

For work with Big Data construction of the service provision agreement on providing information is entered into the Civil Code of the Russian Federation. Such agreement provides protection against obtaining information by the third parties.

2018: Bill of introduction of the concepts "digital right" and "digital money"

As it became known at the end of March, 2018, the federal law draft "About Making Changes in Parts the First, Second and Fourth Civil Code of the Russian Federation" creating a basis for regulation of legal relationship within digital economy is introduced to the State Duma.

The Chairman of the State Duma Vyacheslav Volodin and the Chairman of the State Duma Committee on the state construction and the legislation Pavel Krasheninnikov acted as authors of the bill.

According to authors of the document, in general the bill is designed to enshrine in the Civil code several basic provisions which will allow to regulate the market of new objects of the economic relations ("tokens", "cryptocurrency" and so forth), to provide legal conditions for commission and execution of transactions in a digital medium ("smart contracts", the "self-performed" transactions, etc.) and to provide protection to citizens and legal entities according to such transactions.

In particular, the bill enters the concept "digital right" as which it is offered to understand set of electronic data (the digital code, designation) which certifies the rights to such objects of the civil rights as things, other property, results of works, rendering services and the exclusive rights. Turnover of "digital rights" is performed only by means of entering of records into an information system.

Already existing term "token" will fall under determination of "the digital right" including. Initially it designates the device for identification, and now began to be used in an IT lexicon for designation of ciphers, ownership of which gives certain opportunities in network.

That the concept "digital right" earned, it is required to fix legislatively such criterion as existence of this right in the information system answering to signs of the decentralized information system ("the distributed register"). These signs also should be enshrined in the legislation — explained Pavel Krasheninnikov told. — Creation of digital rights, the sphere of their use and feature of turnover will be defined by the separate laws drafted with participation of the Bank of Russia, Ministry of Finance, Ministry of Economic Development.

At the same time, the concept "digital money" ("cryptocurrency") as "the set of electronic data (the digital code or designation) which is not certifying the right to any object of the civil rights created in the information system answering to the signs of the decentralized information system established by the law and used by users of this system for implementation of payments" is defined by the document.^[2] the rule according to which they are not a legal tender currency is fixed. It is supposed that in the long term digital money will be able to be used as means of payment, but only in cases and on conditions which will be established in the legislation.

For the description of how turnover of digital money will be performed, rules about digital rights will be applied to digital money.

It means that in an information system there have to be records about owners of digital money, and using record the moment of transition of digital money from one person to another should be fixed. However it will become possible only when there is a technical capability of forced commission of record about the new owner of the rights at the moment — Pavel Krasheninnikov specified.

Besides, the bill is directed to simplification of transactions with digital rights. In particular, it is offered to equate expression by the person of the will using electronic or other similar technical means to the simple written form of the transaction.

Fixing of the offered amendments in the Civil code equating the declaration of will of the person expressed using technical means to transaction in the simple written form as envisioned by authors, will allow to lay the foundation for the conclusion of so-called "smart contracts" and also to simplify commission of a number of one-sided transactions (issue of powers of attorney, issue of consent to transaction, failure from the agreement and other).

Regarding execution of transactions with digital rights the document introduces the rule according to which the fact of the execution of the transaction performed by the computer program is not disputed. The rule extends to all cases, except intervention in action of the program.

So, after identification of users in a system their further behavior submits to an algorithm of the computer program organizing network. As result, the person "buying" this or that virtual object (the digital right) will receive it automatically at approach of the circumstances specified in the user agreement.

In addition to everything, for the purpose of legalization of collecting and processing of considerable arrays of the depersonalized information (big data/Big Data) by the bill enters construction of the service provision agreement on providing information and the concept of the database — "data set and data" extends. At the same time such agreement, according to the interests of the parties of the transaction, the duty not to make the actions leading to disclosure of the transmitted data to the third parties can be provided.

In general, on belief of authors of the bill, its acceptance will allow to enshrine basic provisions for regulation of turnover of digital rights and digital money, for commission and execution of transactions with them and also will allow to solve a number of other problems. In particular, the existing risks for use of digital objects for the purpose of an output of assets in a non-regulated digital medium for legalization of income gained in the criminal way or for terrorism financing will be eliminated. Moreover, judicial protection of the rights of citizens and legal entities arising in the relations of digital economy will be provided.^[3]

Notes