The Odessa File: Post Socialist Property Rights in English Courts

Abstract

Since the disintegration of the Soviet Union in 1991 property relations in former Soviet states have been in a state of flux. This period of transition has raised significant practical and theoretical questions concerning the nature of ownership, because even before full privatisation many former state enterprises have been reaping the benefits of greater economic independence. In The 'Nazym Khikmet'P the Court of Appeal was called upon to analyse some of the effects of these developments and was faced with socialist legal concepts that are without parallel in English jurisprudence. For the majority of the twentieth century state ownership of the means of production and central planning of the economy were the ideological and economic twin pillars of socialist states.2 From 1923 in the territory of the former Soviet Union state property was managed by various enterprises under the theory of 'operative management'. According to Bregman and Lawrence, '[u]nder operative management principles, the Soviet state assigns limited ownership rights to various state organisations that produce goods and perform services. These assigned rights include the possession, use and disposition of the property.'3 These enterprises were vested with legal personality and were charged with ensuring that state property was used efficiently. State enterprises (not the treasury) were responsible for the debts that their activities generated.4 However, they remained subject to the national economic plan and therefore they did not enjoy independence during the socialist hegemony. State ownership raised problems for western businessmen who were concerned about its effects on their security since, according to article 20 of the Merchant Shipping Code of the Soviet Union, state owned ships could only be arrested with the consent of the Council of Ministers. In practice, however, business may often have been conducted in a way to allay such fears. It seems, for example, that Soviet shipping companies often provided other security to avoid disputes over in rem proceedings.5