04/18/2012 05:18 pm ET Updated Jun 18, 2012

PSC = Putin [Authorized] Security Contractor

Recent news indicated that Russia may create private military and security companies and possibly use them for missions abroad. Prime Minister and President-elect Vladimir Putin mentioned this possibility after he delivered his report on the government's performance in 2011 to the State Duma.

This raises interesting questions. Since we are talking about the private sector where competition between companies is supposedly the sine qua non of the free market doubtlessly all the other private security contractors welcome this news. Perhaps Academi and Aegis Defence are sending letters of congratulation to President Putin right now. Oh sorry, I know that's as likely as Dick Cheney apologizing for Operation Iraqi Freedom, but I thought we could all use a good laugh.

A more serious concern is just how well prepared is Russia in terms of exercising proper oversight and accountability over any future PSC activities.

Fortunately, a recent book helps answer this question. It is Multilevel Regulation of Military and Security Contractors: The Interplay between International, European and Domestic Norms. The book is a compilation of the reports of the marvelously informative Priv-War research project on the role of human rights and international humanitarian law on the privatization of war phenomenon; especially the role that the European Union may play in promoting compliance with international law by PMSC. The past report on which the Russian chapter of the book is based is here.

In the Russian Federation, there are no laws specifically regulating the conduct of PMSC abroad. But that is not to say there are no relevant laws. In Russia, conduct of private security services and private investigations services is regulated by the Federal Law No. 2487-I "On Private Detective and Security Activity in the Federation of Russia" adopted on March 11, 1992.

As of Jan. 1, 2010 substantial amendments to the Law "On Private Detective and Security Activity in the Federation of Russia" came into force. It specified requirements for PSC and persons willing to become private detectives, the licensing procedure for private detectives and PSC, as well as liability for illegal activities of private detectives and private security companies.

The law sets the legal basis for three types of security agencies and their personnel: private detectives and their associations, private internal security services, and private security companies.

Let's skip over the part dealing with security services within Russia and see what is relevant to PSC operating overseas. It states that Russian Federation legislation regarding security and investigation services to be performed abroad during the armed conflict is applicable only to members of the Armed Forces of the Russian Federation, since only these persons can legally take part as military persons during an armed conflict.

The members of the Russian armed forces may be Russian Federation citizens, who have been drafted into the Russian military or who have been enlisted under the contract, as well as foreigners, who have been enlisted under a contract.

Interestingly, the way to determine, whether Russian PMSC are performing their activities abroad is from the information provided to the tax revenue service. One wonders what happens if a PMSC doesn't send such information. Would there be a Russian equivalent of the FBI to investigate, similar to the way Elliot Ness went after Al Capone?

According to "Statutes on Licensing of Private (Non-governmental) Security Services" non-governmental (private) security services and private detective services are subject to licensing.

Currently, a company having in its Articles of Association a provision that they will carry out personal security services, prior to starting activities, must obtain a license for providing security services. The procedure for obtaining a license is regulated by "Statutes on Licensing of Private (Non-governmental) Security Services."

How about relations between a company and its staff -- a subject that is often contentious in Western companies and has served as the basis for numerous lawsuits over the years.

The Russian Federation Labor Code does not contain any provisions specifically regulating PMSC services. But the Code requires concluding of a written employment contract between an employee and an employer, by which a mutual legal relationship is to be established:

The Code provides that the employment contract shall not contain provisions worsening the status or limiting rights of the employee under the legal acts.

According to Article 13 and 59 of the Code it may be concluded that the Code regulates also the relations between the employers and the employees employed abroad. The Code regulates employment of foreigners in the Russian Federation unless otherwise provided by international agreements of the Russian Federation.

In case of damage to health or if the employee's death resulted from industrial accident or professional disease, the employee (his family) is to be paid the lost earnings (income) as well as extra costs for medical social and professional rehabilitation associated with health damage or the appropriate costs in view of the employee's death. Types, amounts and terms of granting guarantees and compensations in these cases are defined by the Federal Law.

An employment contract or agreements concluded in a written form and attached to it can specify the material responsibility of the parties to the contract. In doing so, the contractual responsibility of the employer against the employee cannot be lower and that of the employee higher than envisioned by the Code or other Federal laws.

Cancellation of the employment contract after causing the damage shall not release the party to this contract from the material responsibility provided by this Code and other federal laws.

Admittedly, there is frequently a difference in what is on the books and what actually happens in reality. Still this compares fairly well to what you see in the United States. A Labor Code, because it has the force of law, is better for a contractor than the voluntary, unenforceable codes of conduct promulgated by trade associations that many Western companies tout.

There is more, including prohibition of mercenary activities but the bottom line is this:

The Russian Federation law does not contain explicit rules regulating the employment of PMCs/PSCs abroad by foreign employers. Russian Federation legislation prescribes that private security services and private investigation services are performed on the basis of a contract. Licenses for these services are issued for activities in the Russian Federation. There is no official information whether these type of companies are performing their services abroad. However, the Russian Federation laws prescribe that under certain conditions civilians might be involved in military State organisations based on contract. Nevertheless, it is to be noted that there is a rather strict regulation and, at least, in law an important State control over the military and related activities. The involvement of civilians in this field is rather limited.