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The focus on increasing the independence of judges represents an attempt to restructure the existing system of relationships in the power triangle between supreme executive power, security services, and courts, by minimizing the informal and extralegal elements in favor of formal and legal ones. It is obvious that these measures will not give us an ideal judiciary system fully immune to any involvement by the executive power. However, they offer the possibility of substantially limiting the nature and scope of such interventions that would be confined to the top tier of the political system2.

The implementation of such measures is only possible upon condition of changing the existing legal policies in the economy where the interests of specific groups and clans concerning the management and use of major Russian assets are currently seen as socially significant, which in turn results in the adoption of laws conflicting with the goals of national economic development and aimed solely at the preservation and redistribution of assets under immediate state control in favour of entities affiliated with the powers that be and of individual businessmen loyal to the authorities.

Issues related to self-regulation of arbitration manager organisations and assessors Starting from the moment when an arbitration manager is appointed for bankruptcy proceedings, he becomes the crucial touch and as an agent carrying out crisis management within the company that has become the subject of an insolvency claim. The competence, independence, and integrity of this manager largely determine the outcome of bankruptcy proceedings.

The number of arbitration managers decreased more than threefold from 2000 to 2007, from 20,000 to 60003. In 2008 there existed 41 self-regulating bodies of arbitration manag O. Pleshanina, A. Zanova. Rules for all judicial occasions. Kommersant, No. 225, December 2. See Property, oil, and bread Expert magazine, No. 20 (609), 19 May 2008 (www.expert.ru/printissues/ expert/2008/20/sobstvennost_neft_i_hleb/) E. Bychkova, Alexander Georgievich Komarov: to me, the company is sacred RUSSIAN ECONOMY IN trends and outlooks ers1, three of which are large, with more than 200 managers in each. However then need to reduce the number of arbitration managers are still being discussed.

The activities of arbitration managers have undergone other significant changes, related to the introduction at the end of 2002 of the institution of self regulation stipulated by the current (third) Federal Law on Insolvency (Bankruptcy). The law defined the structural concept of the market for arbitration manager services. Based on previously existing arbitration manager associations, more than 30 self-regulating arbitration manager organizations were created in a fairly short time.

The new law completely changed the procedure for appointing arbitration managers in bankruptcy cases. Previously, the arbitration manager obtained registration at an arbitration court, and the court used its judgment to select an arbitration manager in a specific case. The new law on bankruptcy determined that each self-regulating organization should have an arbitration manager selection committee. This committee would select three arbitration managers based on applications received from arbitration managers interested in being appointed for a specific procedure and ranks managers in order of decreasing qualifications, will the court only approves the candidates. If all three arbitration managers meet the requirements of the Bankruptcy Law, the court cannot influence the choice of candidate. By adopting this law, the state effectively precluded arbitration courts from exerting influence on the selection of arbitration managers.

Implementing the idea of transferring the supervision and monitoring of arbitration manager activities from the state to self-regulating organizations that started in 2002 received new impetus in 2008 when these organizations were made responsible for the accreditation of assessors and other specialists involved by the arbitration manager in bankruptcy proceedings and gained the right to participate in bankruptcy proceedings directly.

However, according to the data by the State Registration Committee that has been supervising such organizations since 2005, the transfer of broad powers to these bodies has not yet translated into the effective monitoring by them of the observance by arbitration managers of legal requirements relevant to insolvency. Thus, in 2007 the number of complaints to the state registration committee about the unjustified actions of arbitration managers grew approximately threefold compared to 2005 and reached more than 9200 complaints. The number of court rulings imposing administrative liability on arbitration managers increased accordingly, from a total of 425 sanctions including 378 administrative fines and 47 instances of disqualification in 2005 to a total of 1938 sanctions including 1897 administrative fines and 41 disqualifications in 2007, an increase of more than 4.5 times2.

The state registration committee believes that the self-regulating bodies of arbitration managers have failed to establish themselves as efficient professional regulators of their members activities.

A number of self-regulating organizations of arbitration managers failed to take timely measures even in cases of breaches of law by their members that were evidenced by courts. A few examples are below.

Speech by S.D: Denisenko, Deputy Director of the Federal registration service, at the Russian State Duma parliament hearings on the legal aspects of the emerging self regulation in various sectors http://www.rosregistr.ru/to_print.phpid= Speech by S.D: Denisenko, Deputy Director of the Federal registration service, at the Russian State Duma parliament hearings on the legal aspects of the emerging self regulation in various sectors http://www.rosregistr.ru/to_print.phpid=Section Institutional Problems S. V. Bychkovski was dismissed from the self regulating arbitration manager organization of the Central federal region only following 13 court rulings regarding his administrative liability. M.R. Enukashvili was dismissed from the Inter-Regional Investment Centre self regulating arbitration manager organization following 17 court rulings, Sh.A. Fazailov was likewise dismissed from the Inter-Regional Centre of Experts and professional managers following 17 court rulings, while I:R: Mullabaev was dismissed from the Crisis manager association, a self-regulating inter-regional public organization, following eight court rulings.

Furthermore, all the decisions concerning the dismissal of the above arbitration managers from self-regulating organizations were taken only following court rulings regarding their disqualification, and in the cases of Mr. Bychkovski, Mr. Enukashvili, and Mr. Fazailov such decisions were initiated by the Federal registration service. V.D: Nesterov, who incurred administrative liability fines 15 times according to documents held by the Russian Registration Committee as of April 9, 2008, continues his membership in the Siberian Inter-Regional self regulating arbitration manager organization.

According to the Russian Registration Committee, such cases are due to the absence in most self regulating bodies of the systemic approach to monitoring the professional activities of their members that should be based on an analysis of the activities of member arbitration managers and of their efficiency and should investigate the causes of any legal breaches committed1.

The most typical breaches committed by arbitration managers in their activities include:

Failure to hold creditor assemblies Failure to furnish information to creditors Failure to pay payroll arrears2;

Failure to take measures to ensure the integrity of debtor property Sale of debtor property without a prior inventory taking and valuation and without seeking the prior consent of the creditor assembly3.

The greatest current challenges in the activities of arbitration manager self regulating bodies are the following:

Creating effective member activity monitoring mechanisms and other compliance monitoring mechanisms;

The lack of effective mechanisms for removing disreputable arbitration managers from the professional community Liability insurance for arbitration managers Interactions with arbitration management infrastructure (insurance companies, valuation specialists, auditors, auction organizers) Selective access granted to arbitration managers in bankruptcy proceedings due to the stance of the tax authorities that blacklist arbitration managers and veto their candidacies in arbitration courts using criteria are that are unclear for the professional community4.

Speech by S.D: Denisenko, Deputy Director of the Federal registration service, at the Russian State Duma parliament hearings on the legal aspects of the emerging self regulation in various sectors http://www.rosregistr.ru/to_print.phpid= Data by the Federal Registration Service Vologda regional department, www.rosregistr.ru Data by the Federal Registration Service Ryazan regional department. www.rosregistr.ru.

Summary of the speech by V.A. Varvarin, Director of the corporate relations department of the Russian Industrialist and Entrepreneur Association and Deputy Chairman of the Board of the Russian association of arbitration RUSSIAN ECONOMY IN trends and outlooks The low effectiveness of state control over the activities of arbitration manager self regulating bodies is due to the lack of self regulating traditions in Russia given that it is a recent institution and thus relations in this area are not yet established and the legislative basis for dealing with the issues of state supervision and monitoring is still insufficient.

Necessary prerequisites for developing government monitoring in this area include:

Establishing an official list of documents and information that government agencies are entitled to receive from self regulating organisations and the self regulating organisations are required to furnish Making amendments to the Administrative Code of the Russian Federation with regards to the substance of specific breaches that can result in administrative liability of self regulating organisations and giving government monitoring agency is the right to initiate administrative proceedings for such breaches. At present they only sanction used in cases of noncompliance by self-regulating with the legal requirements is the elimination from the government register of self-regulating organisations.

Meanwhile, in terms of legal implications, such elimination from the register should be a last resort measure as it prohibits the performance of activities that constitute the purpose of the self-regulating organisation. Based on general penal principles, this measure should only be applied after other government sanctions failed to deliver positive results.

The law envisages no other types of liability, including administrative liability.

At present the only other instrument of influencing self-regulating organisations is a document prescribing the elimination of breaches identified during revisions. This measure has proven to be ineffective in practice. Starting from 2003, 79 revisions of self-regulating arbitration manager organisations were performed, including 60 such revisions performed by the State Registration Committee. The activities of more than 30 self-regulating organizations were subject to revision more than once. These revisions formed the basis of prescriptions for the elimination of breaches identified. Statistics show that following reports to the state monitoring agency about the elimination of breaches identified during the revision, selfregulating organizations have continued to breach the legal requirements, and thus that prescriptions are an inefficient government sanction in response to legal breaches. The above statements regarding the inefficiency of government monitoring of the activities of selfregulating organisations apply in equal measure to the activities of assessors that play a crucial role in the bankruptcy process by virtue of valuing debtor assets. Apart from methodological issues that the process entails, especially given the uncertainties imposed by the crisis, the Russian valuation market continues to be plagued by instances of issuing unjustified valuation reports and process abuses committed during valuation. Valuation activities in Russia are likewise self-regulated, however, the self-regulation started somewhat later, in 2006. In August 2007 the Russian Ministry for Economic Development adopted the first three Federal Valuation standards that were developed using international best practices.

These standards were implemented starting from January 1, 2008. By then, seven selfregulating organizations of assessors had been registered, whose function, formerly permanager self regulating bodies, at the Inter-regional conference on bankruptcy and financial rehabilitation on March 28, 2008 - http://www.rspp.ru/Default.aspxCatalogId=234&d_no= Speech by S.D: Denisenko, Deputy Director of the Federal registration service, at the Russian State Duma parliament hearings on the legal aspects of the emerging self regulation in various sectors http://www.rosregistr.ru/to_print.phpid=Section Institutional Problems formed by the state, was to regulate the axis of participants to the valuation market. In these organizations founded the National Council of valuation practitioners.

At present the role of the state in the area of valuation has considerably narrowed, with the state responsible only for registering entities and setting minimal standards. All other tasks have been taken over by the self regulating organizations of assessors.

The key current challenges in the area of valuation are as follows:

The lack of necessary standards for valuation activities including the standards for monitoring and supervision functions of the self regulating organisations being developed by the National Council of valuation practitioners;

The lack of an effective system of ensuring accountability of the self regulating organizations and individual assessors for valuation results;

The lack of methods for large scale real estate valuation;

The need to ensure high professional qualifications of valuation practitioners the;

The lack of an effective mechanism for contesting valuation results, including court claims.

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