Have the Honour: the Right of Public Entities to Protection of Business Reputation.

Rodikova Valentina Aleksandrovna Postgraduate student, Department of Civil Law and Process, Ural Institute of Management, Russian Presidential Academy of National Economy and Public Administration (RANEPA) 620144, Russia, Sverdlovsk region, Yekaterinburg, ul. 8 Marta, 66 rodikovajus@gmail.com

One for all: Clause 11 of Article 152 of the Civil Code of the Russian Federation is the only legal norm (in fact, a conclusion by analogy) that allows legal entities, including public entities, to reinforce very "vague" powers on civil law regulation of issues of protecting their own business reputation. Legal mechanisms that ensure the guaranteed right of legal entities to restore the most important intangible asset are rather a challenge to the Russian legislator focused on proven legal practices. Despite the difficult geopolitical situation, the emergence and development of modern threats to business reputation, including public entities, there are no corresponding effective mechanisms for its protection in Russia.

The "right to reputation" declared by the legislator of the political structures of society, including the Russian Federation, its subjects and municipalities, is not supported by an appropriate regulatory framework, fundamental doctrinal research, or uniformity of judicial practice; the available scientific papers deal exclusively with issues of protection from reputational harm of legal entities without studying the specifics of protecting the business reputation of public formations.

The reason for this, according to a number of researchers, is the discrete historical development of both private and public domestic law: neither its early examples, nor the imperial legislation of Russia, nor even Soviet jurisprudence considered it necessary to carefully regulate the issues of compensation for damage caused to the business reputation of a legal entity, due to certain specifics of Russian historical and, as consequence of the legal field [1. p. 35-38]. However, this point of view is refuted by the actual identification of reputational harm caused to individual subjects of law, harm "state", public in a number of domestic historical sources of law, including Old Russian.

Thus, the Russian Truth of the XIII-XIV centuries, as well as the Truth of Yaroslav, did not assume detailed rules of tort liability for harming the reputation of the state, its representatives, not related to criminal; there was no fundamental distinction between them ^{[2, p.12-15]}. It provided for the right to impose a monetary penalty on the culprit (the compensation payment was called a "lesson") ^{[3, p. 52]}; at the same time, a public-law penalty payment to the prince as a representative of public education, the state was separately allocated; being an analogue of today's "state duty", it was called "sale" ^[4].

The corresponding norms for causing reputational harm to officials and authorities by action were also contained in the Pskov court Charter of the XIV-XV centuries, which provides for monetary payments to the victim along with a fine in favor of the prince as a representative of the state whose reputation suffered from the actions of the culprit.

In the Judicial Code of 1550, compensation was due for dishonor as a result of insulting state people, and such was considered harm to the reputation of the sovereign himself and the state ^{[5, p. 82]}. The prototype of the institute of harm to the business reputation of public entities and authorities were the corresponding definitions of insulting the image and honor of the tsar and other state bodies, also enshrined in the Judicial Code of 1550. Such torts were subject to a double fine, emphasizing the scale of the offense and its anti-state orientation.

In the Synod Code of 1649, all crimes (i.e. criminally punishable acts) affecting the honor of the sovereign as an exponent and bearer of state power, which is an independent state institution, were considered state, the corresponding "dishonorable acts" ^{[6, p. 192]} - crimes against the reputation and image of the state, public education, being regarded as lex laesae majestatis.

V.V. Kalinkarov, analyzing the historical retrospective of the development of legislation on the civil protection of business reputation, not without reason noted that in the Russian legal tradition, encroachments on the intangible benefits of government officials, officials initially entailed only criminal liability ^{[7, p.170-171]}. Thus, in the Soviet criminal legislation, a public insult to a representative of the authorities in the exercise of his official powers was singled out as an independent composition (Articles 193.5, 193.6 of the Criminal Code of the Russian Federation) ^{[8, p. 201]}; at the same time, there was no mention of the protection of intangible benefits of legal entities, including public entities.

In fact, the norm of Article 319 of the Criminal Code of the Russian Federation "Insulting a representative of power" received from a normative act of the XVII century (according to paragraph 3 of the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 19 of 16.10.2009, persons endowed with rights and obligations to exercise the functions of legislative, executive or judicial authorities, as well as, based on the content of the note 318 of the Criminal Code of the Russian Federation, other persons of law enforcement or regulatory bodies endowed with administrative powers in accordance with the procedure established by law in relation to persons who are not dependent on them, or the right to make decisions binding on citizens, organizations, institutions, regardless of their departmental affiliation and forms of ownership)  reflects the domestic feature of protecting the business reputation of both public entities and officials who manage/represent them, outside of the civil law context.

The introduction of these norms (qualifying acts that damage the reputation of the head of state/official exercising the functions of an authority as crimes against the state) into criminal legislation undoubtedly stabilizes the social situation, while being based on the genetics of Russian law that protected business reputation, along with the reputation of individuals, analogues of modern corporate and state institutions. But at the same time, it impoverishes civil law practice, not providing the possibility of legal self-defense of the business reputation of public entities and – especially - officials, "representatives of the authorities", substituting criminal liability in all cases, which is tort in nature. 

According to A.V. Belyavsky, commenting on Part 1 of Article 7 of the "Fundamentals of Civil Legislation of the USSR and the Union Republics" of 1961, "The Criminal Code protects the honor and dignity of citizens, and the Fundamentals also protect legal entities and collectives" ^{[9, p. 108]}. It seems that this point of view, which provides civil legal levers to protect business reputation, including public entities, is relevant today.

The current version of the Civil Code of the Russian Federation constitutes the competence to apply the norms of civil law to any non-property relations, including relations to protect the business reputation of public entities and government representatives (despite the fact that the current version of the Civil Code of the Russian Federation in paragraph 1 of Article 150 of the Civil Code of the Russian Federation limits the protection of the business reputation of artificial subjects of law because it designates as a subject that has a lot of protected intangible benefits, exclusively an individual).

The classic Russian approach to classifying defamatory information as a means of harming the business reputation of an authority, public education is demonstrated in a Review of the practice of courts considering cases on disputes on the protection of honor, dignity and business reputation  The Supreme Court of the Russian Federation of 16.03.2016 It is noteworthy that the Review mentions a claim satisfied by the court to claim compensation for moral damage not only in favor of the sole executive authority, ex-Mayor of Moscow Luzhkov Yu.M., but also the executive authority of the subject of the federation, i.e. de facto public education.

As the Judicial Board of the Supreme Court of the Russian Federation pointed out, when deciding on this case, it represents a conflict between the right to freedom of expression and the protection of reputation. In the reasoning part of the Definition under consideration, later replicated by both lower courts and the Supreme Court of the Russian Federation in other cases, references were made to Articles 3 and 4 of the Declaration on Freedom of Political Discussion in the Media, adopted on 12.02.2004 at the 872 meeting of the Committee of Ministers of the Council of Europe.

According to this international act, political figures seeking to gain public opinion thereby agree to become the object of public political discussion and criticism in the media, and public officials may be criticized in the media regarding how they perform their duties, as this is necessary to ensure the transparent and responsible performance of their powers. The Supreme Court of the Russian Federation also noted that, "according to paragraph 1 of Article 10 of the Convention on the Protection of Human Rights and Fundamental Freedoms, everyone has the right to freely express their opinion. This right includes freedom to hold opinions and freedom to receive and disseminate information and ideas without any interference from public authorities and regardless of State borders."

In the above Definition, the Supreme Court also noted that "the limits of permissible criticism are wider in relation to the government than an ordinary person or even a politician. Under a democratic regime, the actions and inaction of the Government should be placed under the careful control of not only the legislative and judicial authorities, but also public opinion. In addition, the dominant position that it occupies makes it necessary to demonstrate restraint when the question of criminal prosecution arises, especially when there are other means of responding to unjustified attacks and criticism from its opponents," focusing on other civil law ways provided by law to protect the violated right, in particular the right to reply, comment, a remark in the same media in order to substantiate the insolvency of common judgments, to offer them a different assessment (paragraph 3 of Article 152 of the Civil Code of the Russian Federation).

The above-mentioned position of the highest judicial instances, repeatedly duplicated in subsequent judicial acts concerning the issue of protecting the business reputation of public entities, authorities and its representatives, which has found support in the doctrine, in the near future may undergo significant changes associated with the transformation of the geo-political field and new public challenges, in particular, with the withdrawal of the Russian Federation from The Council of Europe (membership will officially end on January 01, 2023), with the simultaneous denunciation of the Charter and the Convention for the Protection of Human Rights and Fundamental Freedoms, the European Convention on Human Rights, as well as withdrawal from the jurisdiction of the ECHR (from September 16, 2022).

Despite the decision on the withdrawal of the Russian Federation from the Council of Europe and the denunciation of the listed regulations, which were the basis of the traditional approach to civil law dispute resolution on the protection of the business reputation of legal entities, adopted on March 15, 2022, some authors continue to refer to the decisions of the ECHR, considering them imperatives for the decisions made by the courts of the Russian Federation.

Thus, the opinion of the ECHR in the case "MEMO LLC (included in the list of foreign Agents) v. Russia" (the defendant is the Administration of the Volgograd Region of the Russian Federation) is given as axiomatic that "executive authorities endowed with state powers differ significantly from legal entities, including state corporations conducting economic activities activity".

April 8, 2009 The Ostankino District Court of Moscow, when considering the case on the merits, reasonably noted that "statements about lobbying the interests of a particular legal entity and about revenge on the part of the executive authority themselves damage the reputation of the administration, since they can make many Internet users believe that the administration was engaged in unclean and unethical – even if not illegal and criminally punishable – activity condemned by society", having satisfied the claims of the authority.

It is interesting that in the complaint to the ECHR, the media, in addition to the complaint about the violation of freedom of opinion, claims that "interference by the state authorities was not provided for by law ..., since in Article 152 of the Civil Code of the Russian Federation at the time of consideration of the case by the courts it was about the "honor and dignity" of citizens, that is, individuals, and about the "business reputation" of legal entities, and the regional administration as an executive authority could not engage in entrepreneurial activity and, accordingly, could not use the "business reputation". The media believed (and the ECHR agreed with this statement) that the contested interference by default "did not pursue the legitimate goal of protecting the reputation of others and did not correspond to any "urgent public need". 

In the objections, the Government of the Russian Federation noted that the publication "disseminated statements through the media that tarnished the reputation of representatives of state bodies" (thus, by making a legal transliteration of reputational harm inflicted on a representative of an authority to harm public education itself, continuing the logic laid down in Article 319 of the Criminal Code of the Russian Federation), to which the ECHR did not object in terms of protection the business reputation of legal entities in general, noting that the provisions of Article 152 of the Civil Code of the Russian Federation, as they related to business reputation, are directly applicable to legal entities as the implementation of Article 8 of the Convention "on respect for privacy" and paragraph 2 of Article 10 of the Convention. Moreover, the ECHR considered that, despite the absence of well-established national judicial practice regarding the business reputation of public authorities, the interference of public education in the person of the relevant representative was provided by law, noting that in this case the lawsuit was filed on behalf of a legal entity as such, and not on behalf of any of its participants.

If "earlier the ECHR did not dare to formulate a position that public authorities should not have the right to file lawsuits for the protection of business reputation, since they do not conduct any commercial business," then the reasoning part of the case under consideration notes that "the purpose of reputation protection is absent when criticizing executive authorities and in this regard freedom of expression cannot be restricted." A number of researchers believe that "the ECHR decision can become a vector for law enforcement practice in Russia, which will provide a wide degree of critical judgments against the authorities, as well as protect the media and citizens from unjustified lawsuits by the authorities."

In this case, one of the last considered by the ECHR in relation to Russia, he pointed out that the listed considerations of the Government of the Russian Federation "are not applicable to a body endowed with executive powers and not carrying out direct economic activity as such," since these cases "place an excessive and disproportionate burden on the media, which may have an inevitable deterrent effect when they perform their task of information dissemination and public supervision."

Thus, the European Court actually marked the difference in the interests of state executive authorities in maintaining their reputation and "commercial" legal entities or individuals; moreover, it indicated the right to file relevant claims only to individual representatives of the authorities if the publication concerns them personally and they can easily be identified by the reader. It is not explained how things stand in this case with the powers to protect the business reputation of NGOs that do not conduct commercial activities and obviously do not fall under the criteria of legal entities entitled to protect business reputation.

This decision of the ECHR directly denies the conventional right of public entities to protect their business reputation, regardless of the context and circumstances of the case, with reference to some "compelling political reasons" outside of legal justifications, which may become a reason for denying state bodies, public entities the right to bring defamation claims "in their own capacity."

Moreover, the concurring opinion of the three ECHR judges contained in the decision on the case under consideration directly indicates a radical deviation from numerous previous ECHR Rulings that recognized the right of public entities and authorities to protect business reputation in both criminal and civil contexts, regardless of the possibility of identifying members of a state body and the scope of its activities, as well as the lack of evidence on the deterrent effect on the media criticizing the activities of public education, at the same time noting the lack of "reasonable proportionality between the interference in question (in the actions of the media – approx.) and the legitimate goal pursued (to protect business reputation – approx.) from the authorities of the Russian Federation and national courts".

Obviously, the protection of the business reputation of public entities, as well as other legal entities performing public, social functions, is a problematic, moreover, a debatable part of the relevant layer of court cases. In many ways, the reason for this is the thesis contained in paragraph 8 of the Review of Judicial Practice of the Supreme Court of the Russian Federation on the Protection of Intangible Assets No. 1 of 2017 and is still widely used: "criticism of the activities of persons performing public functions is permissible within wider limits than in relation to private persons; consideration of such cases is of particular concern complexity".

As an additional illustration of the widespread use of such an approach, we can cite the Ruling of the Judicial Board for Civil Cases of the Supreme Court of the Russian Federation dated December 10, 2013 No. 10-KG13-2 on the claim of the then governor of the Kirov Region, respectively, who is an official of the executive authority of Belykh N.Yu. to the deputy of the State Duma of the Federal Assembly To Mamaev S.P. on the protection of business reputation by recognizing the information disseminated by the defendant at the 62nd meeting of the State Duma of the Federal Assembly of the Russian Federation, discrediting, in the plaintiff's opinion, the business reputation of Belykh N.Yu. as a citizen and official, as well as recognizing a number of public statements as untrue.

An example of the perception of the above approach to the consideration of cases against authorities, public entities, including appellate instances, is also the case No. A10-5338/2018, considered by the Arbitration Court of the Republic of Buryatia in relation to LLC "Number One" (mass media) on the claim of the Office of the Federal Service for State Registration, Cadastre and Cartography in the Republic of Buryatia, and Also, case No. A46-20094/2017 and the procedure for their consideration in the "Certificate on the results of the generalization of judicial practice on the resolution of disputes related to the application of norms regulating relations on compensation for moral damage and protection of business Reputation of the Fourth Arbitration Court of Appeal" dated 06/25/2021 No. 19. In this document, referring to the established provisions of judicial doctrine in the Reviews of the Supreme Court of the Russian Federation from 2016 and 2017, the appellate instance emphasized that "criticism of the activities of public authorities in itself does not indicate the defamatory nature of such information."

All of the above indicates a special approach when considering cases concerning public entities or legal entities whose activities are directly related to the performance of public, socio-public functions, within the framework of civil legislation.

Reduced in the vast majority of cases to the criminal context or to the "publication of refutations", law enforcement practice does not regulate the most interesting from a legal point of view precedents of causing reputational harm to public entities in the Russian Federation.

Thus, the municipal entity of Yekaterinburg, Sverdlovsk region, did not file a lawsuit for the protection of business reputation to the TV presenter V.R. Solovyov, who called the municipality a "city of demons", "a city of vile liberality, which gave rise to many scum now hiding abroad," despite the fact that these quotes have become widespread at the federal and even international and, of course, had a negative impact on the business reputation of Yekaterinburg. According to the results of the pre-investigation check, according to these precedents, V.R. Solovyov was refused to bring the TV presenter to administrative responsibility under Article 20.1 of the Administrative Code of the Russian Federation, a civil lawsuit was not filed by the Administration of Yekaterinburg in the public interest.

The obvious reputational risks of public entities associated with bringing officials employed in them to criminal responsibility in accordance with Chapter 30 of the Criminal Code of the Russian Federation "Crimes against state power, interests of public service and service in local self-government bodies", also not reflected in judicial practice, are a consequence of the simultaneous underestimation, including by state bodies, of such an intangible asset, such as a business reputation, and the established "one-sided" approach in the consideration of "reputational cases" by the courts, where the plaintiff is a public entity.

A striking example of this kind of damage caused to the business reputation of public education, as well as to the executive authorities of the subject of the federation, is the criminal case initiated against the ex-Deputy Minister of Ecology of the Chelyabinsk Region Bezrukov V.I., who is charged with abuse of official authority with causing serious consequences (illegal actions to notify industrial enterprises of an inspection during the validity period adverse weather conditions).

At the same time, the reputational damage caused to public education, to the authority in which the accused was employed, by dozens of publications in regional and federal media (in particular, conclusions were drawn about the unfavorable environmental situation in Chelyabinsk and the Chelyabinsk region due to the criminal inaction of the accused official), is measured, among other things, by the amount of purchases announced by the municipality in September-December 2022 in order to "correct" the business reputation of public education in the field of ecology.

Thus, several tens of millions of rubles have already been spent by the Administration of Chelyabinsk on "Raising public awareness about the activities, key initiatives and projects of local self-government bodies of the city of Chelyabinsk in the field of ecology, social policy and corporate governance, as well as the formation of a positive reputation of the city of Chelyabinsk." Whether there is a relationship (in our opinion, obvious) between such budget expenditures and the negative impact on the business reputation of public education, including as a result of the said criminal inaction of the official responsible for the environment in the subject of the federation, has not been established by the courts.

In 2019-2021 alone, the heads of Novocherkassk, Tuapse, Yevpatoria, Volgodonsk, Tomsk, Ust-Kut, Norilsk, Slavgorod, Mikhaylovka, Georgievsk, Lobnya, Makarovsky, Sakhalin Oblast, Orel, Maykop, etc. were found guilty of crimes against state power, the interests of the civil service and local self-government; in Chelyabinsk, three at once the heads of the regional center were consistently brought to criminal responsibility: "mayors-bribe takers Davydov, Yurevich, Teftelev… it has already become a peculiar and very shameful business card of Chelyabinsk."

The above, undoubtedly, not only has a negative impact on the business reputation of the relevant public entities, but also reduces their investment attractiveness.

An illustration of the direct dependence of the business reputation of a public education authority on the reputation of officials representing it is the decision to resign the Minister of Digital Development of the Republic of Chuvashia, K.A. Mainina, after a public scandal with her minor son, who posted a number of controversial publications on the Internet. The head of the republic, O.A. Nikolaev, explained this decision by the need to "preserve the reputation of the Chuvash government team."

Taking into account the above, it seems that the reputational damage caused to public entities, including municipalities, subjects of the federation, by the arrest and criminal prosecution of their top officials, can and should be assessed, including in the order of general tort liability of these officials with compensation to the affected entity for losses, as well as compensation in addition to compensation for damage in accordance with Article 1064 of the Civil Code of the Russian Federation.

A non-standard civil law approach to offenses entailing not just hypothetical reputational harm, but also quite tangible material, with simultaneous recovery of losses inflicted on public education, to the authority has been demonstrated in the Sverdlovsk region. Obviously, realizing the ambiguous prospects of a civil lawsuit against a public figure, the former mayor of Yekaterinburg, E.V. Roizman (listed as a foreign agent), in accordance with Article 152 of the Civil Code of the Russian Federation (despite obvious reputational losses as a result of his illegal actions, including dozens of publications in the media quoting controversial statements of a politician against law enforcement agencies), The Ministry of Internal Affairs of the Russian Federation in the Sverdlovsk region filed a civil lawsuit in accordance with Article 1064 of the Civil Code of the Russian Federation to recover compensation from E.V. Roizman and four other citizens for their work at an uncoordinated action in January 2021. The amount of claims amounted to 565 thousand rubles. (remuneration of one and a half thousand police officers on a day off, gasoline costs, etc.); previously, all the defendants in the police lawsuit were brought to administrative responsibility under Part 2 of Article 20.2 of the Administrative Code of the Russian Federation. The claim was satisfied by the Oktyabrsky District Court of Yekaterinburg in full.

Obviously, the widespread use of this practice would minimize both the damage to the business reputation of public entities and authorities in specific cases, and reduce the number of such incidents.

An urgent threat to the business reputation of public entities of the Russian Federation, since 2014, when the first measures of influence were introduced against public education – the Russian Federation - by the EU and the USA, are new sanctions procedures that change the "rules of the game" and the market value of assets, including intangible assets, of the state itself as a public entity and its components. At the same time, the calculation of losses incurred as a result of obvious reputational losses, recognition of the country and its defining elements as aggressors, was not carried out.

At the moment, it is not possible to determine all the negative reputational, legal, economic risk appetites of Russian legal entities, as well as the state as a public entity, in the context of the new sanctions procedures, however, it would be legitimate to designate the subsequent vector of development of law enforcement, judicial practice in this direction as extra jus: denunciation, but not implementation of international legal norms, the universally implemented principle of compensatory justice of Talion - ("an eye for an eye" - approx.) and symmetrical measures, including external reputational impact, which has both direct and indirect impact on civil law relations in the corporate sector of the Russian Federation. It seems to be about the "confrontation of states as corporations", the results of which are extrapolated to the internal legal field of each of the participants.

Thus, the legal consequence of the recognition of the Russian Federation as an aggressor (in the civil law sector) and high reputational losses of the state have already become: the legalization of parallel imports;  taking into account sanctions in intellectual property protection cases (the decision of the Kirov Region AC to refuse to satisfy the claims of the British company Entertainment One UK Limited on the basis that the plaintiff's country of registration joined the sanctions against the Russian Federation, which means that there is abuse of the right, which is an independent basis for refusing the claim); withdrawal from the Board The denunciation of the Convention on Human Rights and Fundamental Freedoms of 1950; the permission of the regulator not to publish mandatory information on the composition of the owners of credit institutions until the end of 2022, as well as dozens of other, less obvious results of the implementation of reputational risk scenarios due to geo-political decisions. Such as the published text of the Decree of the Government of the Russian Federation on the concealment of information from the Unified State Register of Legal Entities and balance sheets.

In this regard, it seems expedient and extremely urgent to take into account the existing country, macroeconomic, and reputational risks by public entities of the Russian Federation; the introduction of timely legislative initiatives regulating the relevant industry; the full use of the newly introduced legal tools in the Russian Federation, including legalizing previously directly prohibited actions and methods of work. These methods of self-defense will minimize the material damage caused by the negative impact on the reputation of the state and its individual segments in the conditions of innocence and illegal actions of third parties - public entities.

Borrowing and direct reproduction in specific legal norms, including the norms of public law, along with private, of the European thesis about "the right of the state itself to compensation for non–property damage due to defamation that damaged the image and authority of the state, and, consequently, moral harm," the more relevant for the Russian Federation, the more intense sanctions and foreign policy processes are becoming. So, the reception into the civil legislation of Russia of an analogue, for example, Article 2 of the Italian Constitution, recognizing and guaranteeing the inalienable rights not only of citizens as individuals, but also the rights of citizens in social, public entities, including protection from reputational harm, seems more than appropriate.

It also seems necessary to consolidate in public legal documents the powers of Russia as a state, a legal entity with a specific legal capacity, to compensate for non-property damage due to defamation that damaged the image and authority of the state, and, consequently, the powers to compensate for the damage caused by applying to the International Court of Justice of the United Nations.

Despite the fact that Russia, of course, needs to conform to the experience of regulating the relevant institution in other legal systems, primarily European ones, first of all, it seems that it should be based on the goals and objectives of the development of the Russian economy, formulated in the "National Security Strategy of the Russian Federation" of 02.07.2021 (including through effective legal protection of public entities of the Russian Federation, authorities and their representatives both inside and outside the state).

Legislative fixation:

- effective novelties developed by the judicial doctrine since the last amendments made to Article 152 of the Civil Code of the Russian Federation and related to the protection of the business reputation of legal entities, including public entities, taking into account the analysis of law enforcement practice in this area of regulation of civil law relations;

- introduced by public entities, authorities of various subjects of the federation of various compliance practices for the settlement of legal, reputational risks,

it will allow to effectively resolve disputes on the protection of the business reputation of this segment of legal entities with fair compensation for losses, without contradicting the public interest and the principles of civil justice.