E-commerce

General approach

Legal and regulatory framework

There is no unified legislation on e-commerce in Russia. Applicable provisions are contained in various laws and regulations, and the main legal acts are the following:

• the Civil Code of the Russian Federation (the “Civil Code”);
• Federal Law No. 149-FZ “On Information, Information Technologies and Protection of Information” dated 27 July 2006 (the “Information Law”);
• Federal Law No. 38-FZ “On Advertising” dated 13 March 2006 (the “Advertising Law”);
• Federal Law No. 152-FZ “On Personal Data” dated 27 July 2006 (the “Data Protection Law”);
• Federal Law No. 63-FZ “On Electronic Signatures” dated 6 April 2011 (the “e-Signature Law”);
• Law of the Russian Federation No. 2300-1 “On Protection of Consumers’ Rights” dated 9 January 1996 (the “Consumer Protection Law”);
• Federal Law No. 126-FZ “On Communications” dated 7 July 2003 (the “Communications Law”);
• Federal Law No. 161-FZ “On National Payment System” dated 27 June 2011 (the “National Payment System Law”);
• Federal Law No. 259-FZ “On Digital Financial Assets, Digital Currency and on the Introduction of Amendments to Certain Legislative Acts of the Russian Federation” dated 31 July 2020 (the “Digital Financial Assets and Currency Law”);
• Russian Government Decree No. 2463 dated 31 December 2020 on rules for distance sales of goods (the “Distance Selling Rules”); and
• various regulations on Internet sales and provision of financial products and services.

Key developments

Online sales and the development of e-commerce in general are key strategic initiatives in Russia. Despite an overall drop in the economy in 2020, the COVID-19 pandemic has fuelled a surge in online shopping in the country and put even the most remote of Russian locations on the e-commerce map. This has triggered a series of amendments to Russian legislation in this field, and the process is still ongoing.

The recent legislative trends include:

• controlling the Internet;
• introducing new rules on distance selling of goods, including for pharmaceuticals;
• developing new state e-services;
• spreading the use of e-signatures both by legal entities and individuals;
• extending control over providers of online services, such as online cinemas, social media; and
• developing the regulation of digital financial assets and digital currency. 

Supervisory authority

There is not a single specific authority regulating e-commerce in Russia. Several authorities regulate this activity through their spheres of competence:

• personal data protection and Internet, communications – the Federal Service for Supervision of Communications, Information Technology and Mass Media (“Roskomnadzor”);
• advertising and competition – the Federal Anti-monopoly Service;
• development of legislation in the communications sphere – the Russian Ministry of Digital Development, Communications and Mass Media (“MinTsifry”);
• e-payments and national payment system – the Central Bank of the Russian Federation;
• consumer protection, including in terms of Internet sales – the Federal Service for the Protection of Consumers’ Rights (“Rospotrebnadzor”); and
• various regulations related to e-commerce, distance selling, etc. – the Russian Government.

Jurisdiction and applicable law for e-commerce disputes

Legal framework

The settlement of disputes arising from Internet transactions in Russia is governed by the conflict of laws rules contained in the Civil Code as well as procedural norms of the Commercial Procedure Code and the Civil Procedure Code.

Choice of forum

As a rule, the parties are free to subject their online transaction to any law and any dispute resolution forum, provided it has at least one foreign element that is connected to the respective law or jurisdiction, for example where:

• a party to the transaction is a foreign entity;
• the subject matter of the contract is located abroad or the services to be rendered under the contract are rendered abroad;
• the server used for the transaction is located on the territory of a foreign country.

If the parties do not prescribe any applicable law, the law of the country most closely connected to their contractual relation will govern their relations.

Competence of courts in e-commerce disputes

Even where foreign law is applicable to the concerned relationship (whether pursuant to the choice of the parties or conflict of laws rules), several mandatory provisions of Russian law will still apply to the respective transaction.

Russian consumer protection legislation is especially relevant in this regard (please see the Consumer rights in e-commerce section below) and, according to established court practice, will apply in any situation where an online business targets Russian consumers even if it has no legal presence in the country.

Accordingly, Russian courts establish their jurisdiction in all disputes concerning e-contracts where a foreign entity offers goods to Russian customers over the Internet, even where such foreign entity does not have a legal presence in Russia or where its website is registered in a foreign domain zone. According to established court practice, regardless of the jurisdiction chosen by the parties, Russian courts may still assert their jurisdiction over a cross-border e-commerce dispute, for example when:

• the defendant conducts business in Russia (e.g. where it has a company, branch or representative office registered in Russia, or its management body is based in Russia, or it has property in Russia, or even where its website is registered in the Russian domain zone (.ru) and/or targets Russian consumers);
• performance under the contract takes place in Russia;
• damage to property or an event causing such damage occurred on the territory of Russia;
• seeking the protection of business reputation of a Russian entity;
• unjustified enrichment took place on the territory of Russia;
• domain names are registered in the Russian domain zone (.ru), or in foreign domain zones where the registrar is a Russian entity; or
• in other cases where the dispute is closely connected with Russia.

Arbitration clause and arbitral awards

Russian courts tend to refuse to review a case if there is an arbitration clause in a contract. 

In cases where a decision has already been adopted by a foreign arbitral tribunal, this decision will generally be enforceable through Russian courts pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, subject to a few exceptions.

Distance selling of goods

Legal framework

Distance selling of goods, including trade over the Internet, is generally governed by the relevant provisions of the Civil Code, the Consumer Protection Law and certain field-specific legislation. 

On 1 January 2021, the Distance Selling Rules entered into force, replacing Russian Government Decree No. 612 dated 27 September 2007. The updated rules preserved most of the previously existing norms and introduced some novelties intended to more effectively protect Russian consumers, such as when an online seller receives:

• a claim from a consumer, it is now obliged to reply to his/her claim in writing; or
• a message from a consumer about his/her intention to buy goods, it is now obliged to send him/her a confirmation that the sales agreement was concluded, including the order number.

General rules and exceptions

Distance selling of goods is defined as a sale and purchase agreement concluded based on the buyer’s acquaintance with the offered goods by means of catalogues, brochures, booklets, descriptions, pictures, etc. communicated via TV, post, phone, Internet or any other means excluding the buyer’s direct acquaintance with such goods when entering into the agreement.

The most popular type of transactions of this kind is trading over the Internet through online retailer stores, aggregator websites or special apps.

Online trade in Russia is regulated by the same set of rules as trade in person, subject to several exceptions.

Firstly, some goods cannot be sold remotely, such as:

• alcoholic drinks; 
• tobacco products;
• narcotic or psychotropic substances and poisons;
• occult goods; and
• weapons and other types of goods of limited civil circulation.

The Russian Government is currently discussing the legalisation of online trade of alcohol.

Secondly, certain goods can in principle be sold online, but they are subject to special regulation:

• This includes the recently legalised online retail sale of over-the-counter drugs. Since April 2020, such trade is allowed for pharmacies holding a licence for pharmaceutical activities and a special permit obtained from the Federal Service for Surveillance in Healthcare (“Roszdravnadzor”). New rules introduced in May 2020 set the conditions for obtaining a special permit, requirements for information to be provided to consumers, the rules for the drugs’ delivery and return, etc. 
• Another example is the online sale of jewellery and other products made of precious metals or stones, where special rules apply as well.

Liability

Non-compliance with the above restrictions on online trade can entail administrative or criminal liability, depending on the circumstances. However, liability will arise only in case of “proper” distance selling of goods. This should be differentiated from situations where websites are used for displaying offers and placing orders, while the purchase itself takes place directly at the point of sale. In the latter case, the trade does not contradict the law provided other rules relating to trade are complied with.

Conclusion of distance sales agreement

In the case of distance selling of goods, the seller is obliged to conclude a retail sales agreement with any person who has expressed an intention to purchase the goods under the terms of the offer posted on the seller’s website or in an app, unless the seller and an aggregator provide for another method of communicating the offer to the consumer.

The offer must contain complete and reliable information describing the offered goods as well as information about the seller, including its name, registration number and address.

A distance sales agreement is considered concluded from the moment the seller:

• receives the consumer’s message about his/her intention to conclude a sales agreement; or
• issues a cash (sales) receipt or any other document confirming payment for the goods to the consumer.

A product is recognised as not intended for distance selling where the sale of such product via a website or an app implies a preliminary negotiation of the conditions of the sales agreement, including negotiation as to the availability, name and quantity of the goods, and in other cases where the seller has clearly defined that the respective goods are not intended for distance selling. This rule allows the seller to avoid the application of distance selling rules to its business where such application is not desirable.

Delivery of goods

The means and term of delivery of the goods are defined by the sales agreement. If such term is not prescribed, the goods are to be delivered within a reasonable time, or within seven days upon receipt of the respective request from the consumer.

Goods can be delivered by third parties provided the seller informs the consumer accordingly. 

The purchased goods are delivered to the consumer at the address specified by him/her. If the consumer is not present at the time of the delivery, his/her relatives or friends can accept the goods without any proxy, ID or other documentation.

At the time of delivery, the seller is to provide extensive information about the goods to the consumer. Failure to provide such information may entail various penalties for the seller (for more details please see the Consumer rights in e-commerce section below).

Rejection of goods

The consumer has the right to reject the goods at any time before they are received regardless of whether he/she has paid for them.

For more details, please see the Consumer rights in E-commerce section below.

E-contracts and e-signatures

E-contracts

Under Russian law, a contract may be concluded electronically if the parties to this contract use qualified electronic signatures or exchange electronic documents (e.g. scanned copies of signed documents).

When signing a contract electronically by exchanging electronic documents, the parties should consider the following issues:

• The contract must contain a provision under which it may be executed by exchange of scanned copies.
• To conclude the agreement by exchanging scanned copies by email, it is necessary to check that the documents were sent by the proper parties to the contract.
• It is advisable for the parties to a contract to use the domain name containing their respective company names.

It is not possible to e-sign a contract when:

• the contract is subject to mandatory notarisation and/or state registration (e.g. agreements on the alienation of participatory interests in the charter capital of a limited liability company); or
• the law stipulates that the contract must be concluded by signing a single document (e.g. corporate agreements, agreements on the creation of a joint-stock company).

The contract is also deemed concluded if a party starts to perform the contract in response to a written offer (e.g. paying the amount provided for in the contract).

E-signatures

Legal status

An e-signature is defined as a piece of information in electronic form that is attached or otherwise related to another piece of information in electronic form (information that is to be signed), and that is used to identify the person signing such piece of information.

There are three types of e-signatures:

• simple e-signatures (e.g. login and password, code from a message, email);
• enhanced unqualified e-signatures;
• enhanced qualified e-signatures.

The last two types of signatures differ from each other by the level of encryption protection.

Simple e-signatures

Documents signed by a simple e-signature will only be deemed legally binding if provided for by:

• law (e.g. requests filed by citizens with state or municipal authorities using simple e-signature are deemed signed by a wet ink signature); or
• an agreement on e-signature. That said, it is advisable to sign such an agreement using handwritten (wet ink) signature or qualified electronic signature.

Enhanced unqualified e-signature

An enhanced unqualified e-signature is valid subject to the following conditions:

• it is created using e-signature creation data (a private encryption key) by way of encryption of information using an e-signature code which is obtained as a result of cryptographic transformation of information using an e-signature key;
• it allows to identify the person who signed an electronic document; and
• it allows to detect whether the electronic document was amended after it was signed.

Moreover, the document signed by an enhanced unqualified e-signature should contain a verification procedure.

Documents signed by an enhanced unqualified e-signature will only be deemed legally binding if its use is provided for by law or set forth in a contract, as with a simple e-signature.

Qualified e-signatures

A qualified e-signature must meet the criteria set out for unqualified e-signatures and the following additional criteria:

• The verification e-signature key must be indicated in the qualified certificate issued by certifying centres accredited under MinTsifry. The procedure for obtaining a qualified e-signature is quite easy and fast (especially for Russian companies and individuals) – only a few documents must be filed with such a centre and within a short period of time one may receive a qualified e-signature. Foreign companies and citizens can also get this type of e-signature, subject to additional requirements being fulfilled.
• Qualified e-signatures must be created by e-signature devices that are compliant with the requirements established by the e-Signature Law.

Only enhanced qualified e-signatures are unconditionally equivalent to handwritten (wet ink) signatures.

This type of signature is the preferable type for tendering. Even though the Russian laws on tendering do not specify what type of e-signature should be used, an enhanced qualified e-signature is usually required to participate in the tendering process.

Russian case law on e-signatures lacks uniformity and, if a dispute arises on whether a document signed by some type of an e-signature is valid or not, it will be decided on a case-by-case basis.

E-payments and money transfers

Regulation of e-payments

In accordance with the National Payment System Law, electronic means of payment allow a client to transfer funds within the framework of cashless payment forms using information technologies (including payment cards) or other technical devices.

Digital currency

Regulation

In January 2021, provisions of the Law on Digital Financial Assets and Currency come into force.

This law introduces a legal framework for the circulation of digital financial assets ( “DFAs”) and digital currency in Russia. The adoption of this Law is a continuation of the policy of gradual regulation of the digitalisation of the Russian economy. In the context of this policy, the concept of “digital rights” had been introduced into Russian legislation in October 2019 as a starting point for the further development of regulation in this area.

For the most part, the Law on Digital Financial Assets and Currency is devoted to regulating the circulation of DFAs, while in fact only one article addresses digital currency.

Definition

The Law defines digital currency as a set of electronic data (i.e. a digital code or designation) contained in an information system:

• which is offered and/or may be accepted as a means of payment;
• which is not a monetary unit of the Russian Federation, a monetary unit of a foreign state and/or an international monetary or account unit; and
• where no one is liable to the owners of the electronic data, except for the operator and/or information system nodes that are only obliged to maintain the procedure for the issue of these electronic data and to make entries in or changes to the information system.

Restrictions on the circulation of digital currency

Russian residents are not able to use digital currency when making settlements (i.e. to accept or offer digital currency as consideration for goods, works or services). In addition, in Russia, it is prohibited to disseminate information about the offer and/or the acceptance of a digital currency as consideration for goods, works or services.

Thus, even though digital currency is defined as a “means of payment”, Russian residents are not able to use it as such. In practice, the circulation of digital currency in Russia amounts to operations for the transfer of digital currency from one owner to another using the Russian information infrastructure (i.e. using Russian domain names and network addresses, or using technical means or software and hardware complexes located in Russia).

Russian residents must declare their ownership of digital currency and their transactions with digital currency in accordance with Russian tax legislation. Otherwise, their claims related to digital currency will not be enforced in courts.

As the Law on Digital Financial Assets and Currency only regulates some aspects of the circulation of digital currency, the development and adoption of a separate legislative act with more detailed regulation of issues related to digital currency is expected. The Russian Code on Administrative Offences could also be amended to establish liability for violating the rules for the circulation of DFAs and digital currency.

Consumer rights in e-commerce

The Consumer Protection Law contains the following special rules applicable to online transactions:

• Prior to the transaction, the seller must provide to the consumer information about the basic consumer properties of the goods, the seller’s address and full name, and some additional other details.
• When the goods are delivered, the seller must provide to the consumer extensive information about them (including their full description, information about their conformity with the applicable technical regulations).
• The consumer has the right to reject the goods at any time before delivery and within seven days of delivery.
• The consumer may also reject the purchase within three months of delivery if, at the time of delivery, he/she was not provided information about the procedure and terms of their return.
• The consumer does not have the right to return goods that have individually defined properties if they can only be used by that consumer.
• If the consumer rejects the purchase, the seller must refund the consumer within ten days of his/her claim all sums paid under the contract with the deduction of the cost of return shipping.

The rights of consumers in case of defects in the goods purchased online are similar to those of consumers when purchasing goods in person. 

Failure to provide any information prescribed by law to the consumer may lead to seller’s enhanced liability for any damage caused to the consumer or his/her property. A consumer may also request the court to amend or terminate the contract if it contains terms that are unfair or unfavourable to him/her (including where the consumer was not given sufficient opportunity to renegotiate such terms).

In addition to civil liability, the Russian Code of Administrative Offences features several provisions prescribing administrative liability for violations of consumer rights. Furthermore, if the goods sold do not meet the prescribed product safety requirements or endanger life or health of consumers, its producers or sellers may face criminal liability under the Russian Criminal Code.

Сonsumers’ personal data is protected under mandatory provisions of Russian data protection law, and as a rule cannot be transferred to other countries without their informed written consent (for more details please see the Personal Data Protection chapter).

Domain names

Legal status

In Russia, domain names are not qualified as intellectual property objects. Therefore, unlike these objects, domain names cannot be licensed or alienated, instead they can be transferred via a registrar. 

Domain names are registered and delegated to an organisation or an individual under an agreement with the relevant registrar. This process is not subject to specific legal regulation in Russia.

Key players

There are several accredited registrars of domain names in Russia having exclusive competence for local TLD .ru and those in Cyrillic (e.g. .рф, .москва). 

There is also a Coordination Centre for TLD RU/РФ, which works as regulator and accreditation centre for registrars and technical support for DNS for national domains.

Domain names and trademarks

Domain names, as well as trademarks, are registered on a first-to-file basis. The existence of a domain name in LTD .ru/.рф or any other LTDs is not listed as a ground precluding registration of an identical or similar trademark. Vice versa, a domain name identical or similar to a trademark may be registered. 

If a trademark similar to a domain name or vice versa is registered in bad faith and this registration is aimed at damaging a competitor, these actions may be considered as unfair competition. 

The mere fact of trademark registration prior to registration of a domain name is not sufficient to prohibit the use of a domain name. Nevertheless, courts in Russia tend to take a favourable approach towards trademark owners. Therefore, when a trademark is registered, the burden of proof on the claimant is alleviated.

Domain name disputes

Even though domain names are not intellectual property objects, disputes regarding trademarks and domain names form a substantial part of intellectual property disputes in Russia. 

Russia is not part of UDRP (the Uniform Domain Name Dispute Resolution Policy), and there is no similar alternative dispute resolution procedure in place. Therefore, domain name disputes are resolved by state courts.

Procedural legislation does not establish jurisdiction rules for domain name disputes. In the past, the courts took a conservative approach: disputes involving persons who are not individual entrepreneurs (e.g. if a domain name is registered by an individual) were traditionally resolved by courts of general jurisdiction.

In 2019, the Russian Supreme Court declared that all disputes related to breaches of means of individualisation (including domain name disputes arising from rights to trademarks or trade names) must be resolved in state commercial courts. This decision was considered as a positive shift on the Russian market.

Taxation

Under the Russian Tax Code (Article 174.2), foreign companies that supply electronic services (“e-services”) to customers located in Russia must pay VAT.

E-services are services delivered over the Internet or another similar electronic network in an automated fashion with the use of information technology. E-services include the provision of rights to use online products such as (i) software (including video games, e-books, music and audio-visual content); (ii) advertising services; (iii) domain name registration and hosting services; and (iv) data storage, providing access to online search engines, etc.

The following services are not recognised as e-services at law: 

• the sale of goods and/or services ordered through the Internet where supply takes place without using the Internet;
• the sale of or provision of rights to use software (including video games) on tangible media;
• the provision of consulting services via email; and
• services for providing remote access to the Internet.

A customer is deemed to be located in Russia if any of the following criteria are met:

• for B2B provision of services: when an organisation is registered with the Russian tax authorities;
• for B2C provision of services, when the consumer:
  • resides in Russia;
  • pays through a bank or an electronic payment operator located in Russia;
  • uses a Russian IP address when obtaining an e-service; or
  • uses a telephone number with Russian country code when obtaining an e-service.

For more information related to tax issues please see the Tax system chapter. 

Neighbouring regulation

E-commerce is tightly connected with such fields as intellectual property, data protection and advertising. 

For more details please see:

• the Intellectual Property chapter;
• the Personal Data Protection chapter;
• the Advertising Issues chapter.