Class/collective actions in Russia: overview

A Q&A guide to class/collective actions in the Russian Federation.

The Q&A gives a high level overview of class/collective actions, including current trends; the regulatory framework; limitation periods; standing and the procedural framework for bringing an action; funding and costs; disclosure; damages and relief; settlement; appeals; alternative dispute resolution and proposals for reform.

To compare answers across multiple jurisdictions, visit the Class Actions Country Q&A Tool.

This Q&A is part of the Class Actions Global Guide.

Irina Akimova and Dmitry Gavrilenko, Capital Legal Services
Contents

Overview of class/collective actions and current trends

1. What is the definition of class/collective actions in your jurisdiction? Are they popular and what are the current trends?

Definition of class/collective actions

There is not a concept of class or collective action as such. However, there are legal mechanisms that can be and are used to protect a group of persons, which are initially aimed at simplifying the conduct of proceedings for judges. It allows claims to be considered in a single process where they are similar in substance.

There is no direct definition of this mechanism in the legislation. Based on the interpretation of the rules, it can be formulated as "the right of a person to appeal in court to protect violated or disputed rights and legitimate interests of other persons that are parties to the same relations".

Use of class/collective actions

Currently, the use of class action is not widespread. This is due to the imperfection of the mechanism for the use of class action. Considering that these mechanisms are primarily designed to facilitate the process for the judges, they have not been popular among the public.

Current trends

Currently, there are a few class or collective actions against government agencies, financial companies, banks, real estate companies and pharmacy chains, as well as collective actions that are complaints of minority shareholders.

Most frequently, a class action is used in:

  • Corporate disputes.

  • Disputes related to activities of professional participants of the securities market.

Class actions are commonly used for both:

  • Shareholder lawsuits.

  • Consumer claims.

In recent years, special non-governmental organisations have emerged and provided information on the possible use of class actions to the public. Through these organisations, a group of claimants can be formed for filing a class or collective action. Services of such organisations are not popular with consumers yet.

Abuse of dominant position can be qualified only in case of a violation of rights of an indefinite number of consumers. This could lead to the development of a class actions mechanism.

 

Regulatory framework

2. What are the principal sources of law and regulations relating to class/collective actions? What are the different mechanisms for bringing a class/collective action?

Principal sources of law

The main sources of law are the:

  • Civil Code.

  • Civil Procedural Code.

  • Arbitration Procedural Code.

  • Federal Law No.135-FZ on protection of competition dated 26 July 2006.

  • Law No.2300-1 on consumer protection dated 7 February 1992.

  • Federal Law No.208-FZ on joint stock companies dated 26 December 1995.

Principal institutions

The Federal Service for Supervision of Consumer Rights Protection and Human Welfare and the Federal Anti-Trust Service can:

  • Examine complaints from consumers.

  • Register violations.

  • Impose a fine.

The civil courts and courts of arbitration can examine cases on damages in favour of consumers.

The public prosecutor can apply to the court to protect consumers.

Different mechanisms

Claims by shareholders are combined when filing a lawsuit in court.

For consumer protection, consumers generally turn to the state authorities regarding the violation. Consumers then turn to the courts to recover damages. However, consumers can also go directly to court, but then the burden of proof is on the consumers.

 
3. Are class/collective actions permitted/used in all areas of law, or only in specific areas?

Product liability

Class or collective actions are permitted and used for product liability claims.

Environmental law

Class or collective actions are permitted and used in environmental law.

Competition law

Class or collective actions are permitted and used in competition law.

Pensions disputes

Class or collective actions are permitted and used in pensions disputes.

Financial services: consumer redress

Class or collective actions are permitted and used for financial services claims.

Other areas of law/policy

Class and collective actions are possible for:

  • Corporate disputes.

  • Disputes related to activities of professional participants of the securities market.

  • Consumer protection law claims.

A class or collective action is not possible in criminal proceedings.

 

Limitation

4. What are the key limitation periods for class/collective actions?

The general statute of limitations period is three years from the date of the violation. In preparation for the trial, the court determines the period during which a party can join a class or collective claim. The announcement is advertised to the public.

 

Standing and procedural framework for bringing an action

Standing

5. What are the rules for bringing a claim in a class/collective action?

Definition of class

A class is defined as participants of the same public group regulated by the rule of law arising out of the same subject matter between the same parties.

Potential claimant

A potential claimant is an entity or an individual belonging to a class, public body or other organisation. Any suitably qualified representative body can bring such a claim.

Claimants outside the jurisdiction

Not applicable.

Professional claimants

Not applicable.

Qualification, joinder and test cases

6. What are the key procedural elements for maintaining a case as a class action?

Certification/qualification

All actions are carried out by the court. If it is established that the claim does not meet the requirements of a class or collective claim, the lawsuit is rejected.

Minimum/maximum number of claimants

The minimum number of claimants is six. There is no limitation on the maximum number of claimants.

Joining other claimants

In preparing the case, the court determines the method of notifying the potential participants about the case, for example:

  • Messages in the media.

  • Direct messages.

  • Other forms of notification.

The court also determines the time during which a person can join the collective action. On expiration, the person that filed the lawsuit informs the court of all parties that have joined. The term for examining the case cannot exceed five months from the date the complaint is filed.

Test cases

The law does not allow "test cases" to be used by the courts. This also applies to class or collective action.

Timetabling

7. What is the usual procedural timetable for a case?

A class action trial cannot be examined for longer than five months from the date of the claim. The timetable is defined in the law, rather than by the courts.

The timetable includes:

  • Acceptance of the claim.

  • Preparation for the court hearing.

  • Parties joining the class or collective claim.

  • Preliminary hearing.

  • Hearing.

  • Decision.

Effect of the area of law on the procedural system

8. Does the applicable procedural system vary depending on the relevant area of law in which the class/collective action is brought?

There are two main procedural systems:

  • Arbitration (commercial).

  • Civil.

The procedure used depends on the subject matter, and whether it involves economic or civil relations.

The procedure varies greatly depending on whether the examination is made in court or by a public body. Public authorities collect evidence themselves and only the claimant must provide evidence. In court, the claimant must prove the damage using his own resources.

 

Funding and costs

Funding

9. What are the rules governing lawyer's fees in class/collective actions?

The legislation does not contain special rules for lawyer's fees in a class or collective action. The lawyer's fees depend on the agreement with the clients. The agreement can provide for a success fee.

 
10. Is third party funding of class/collective actions permitted?

The legislation does not regulate third party funding. However, there is no direct prohibition of such funding. In practice, third party funding is not used.

 
11. Is financial support available from any government or other public body for class/collective action litigation?

Financial support from any government or other public body for class or collective action litigation is not available as such. However, if a state body applies to the court, then all the costs of the case are borne by the state body. Appeals to state bodies for the protection of rights are free of charge for individuals.

 
12. Are other funding options available to claimants in class/collective actions?

There are no other funding options available to claimants in class or collective actions.

Costs

13. What are the key rules for costs/fees in class/collective action litigation?

Costs are determined by the person that filed the lawsuit on the basis of damages suffered due to the illegal actions. The validity of the statement is established during the course of the proceedings. The court can reduce the total amount of expected compensation.

Generally, the "loser pays" principle applies. Compensation under this rule is subject to legal fees and expenses of the representatives of the parties, within reasonable limits. Claims related to violations of consumer rights are not subject to court fees.

Costs are assessed by the court at the end of the proceedings.

If the case is settled, the fees are split between parties.

Key effects of the costs/funding regime

14. What are the key effects of the current costs/funding regime?

There is no set amount of remuneration for lawyers, which reduces the attractiveness of participating in collective or class actions for highly qualified lawyers. Therefore, there is no category of lawyers that specialises in this type of litigation.

There are also no clear rules for determining the losses incurred by participants in illegal actions. Therefore, a person cannot accurately assess remuneration, and the attractiveness and frequency of collective or class actions are low.

The mechanisms used to protect a group of persons are not collective lawsuits in the traditional international understanding. There are quasi-mechanisms of collective action. There are no rules on the remuneration of lawyers in these cases.

 

Disclosure and privilege

15. What is the procedure for disclosure of documents in a class/collective action?

Before litigation

In proceedings before a governmental body, the claimant does not need to collect evidence and documents. The governmental body obtains all the necessary documents and evidence itself.

In court proceedings, the claimant can indicate that he was unable to obtain any documents and ask the court to order the defendant to provide them.

During litigation

There are no special rules for disclosure in a class or collective action after litigation.

 
16. Are there special considerations for privilege in relation to class/collective actions?

There are no special considerations for privilege in class or collective actions. The parties can ask the court to grant special status to certain secret documents. The documents are only available for the court and the parties to the case.

 

Evidence

17. What is the procedure for filing factual and expert witness evidence in class/collective actions?

The law does not provide for any special treatment for filing factual and expert witness evidence. If necessary, the court or governmental body can request any necessary expert examination or can call witnesses.

 

Defence

18. Can one defendant apply to join other possible defendants in a class/collective action?

Joining other defendants

A defendant can apply to join other defendants in the class or collective action. In such a case, the general rule on consideration of cases in court applies.

Rights of multiple defendants

Defendants can use the same lawyer and the same expert. The basic rule is that there must not be a conflict of interest between the lawyer's clients.

 

Damages and relief

19. What is the measure of damages under national law in the field of class/collective actions?

Damages

The measure of damages can be:

  • Real damage.

  • Lost profit.

Each of the claimant's damages are calculated separately and each claimant must prove the validity of the calculation.

There is no cap on the amount of damages that can be recovered.

Recovering damages

Generally, contribution claims can be used in a class or collective action.

Interest on damages

There are no special rules for the payment of interest on damages.

 
20. What rules apply to declaratory relief and interim awards in class/collective actions?

Declaratory relief

Generally, declaratory relief can be used at any stage of judicial review. The court hears the arguments of the claimant and can grant or reject them.

Interim awards

Interim awards are not allowed under Russian law.

 

Settlement

21. What rules apply to settlement of class/collective actions?

Settlement rules

The law does not contain any specific rules on settlements in class or collective actions. Generally, in the preliminary stage of the trial, the court invites the parties to a pre-trial settlement. This settlement can be signed at any stage of the process. The approval of a set percentage of claimants under the settlement is not required.

Separate settlements

Each defendant acts independently. If the claims against a defendant are withdrawn, then further proceedings only apply to the remaining defendants.

 

Appeals

22. Do parties have a right to appeal decisions relating to class actions, such as a decision granting or denying certification of a class action?

The law does not contain any specific rules on rights to appeal decisions in a class or collective action.

Generally, there are three stages of appeal:

  • Appeal. At this stage, the parties can present new evidence (provided that the party can explain why the evidence was not presented earlier).

  • Cassation. At this stage, only procedural aspects can be appealed and new evidence can no longer be presented.

  • Оversight. This stage allows appeals in extreme cases to bring new legal proceedings.

 

Alternative dispute resolution

23. Is alternative dispute resolution (ADR) available in class/collective actions?

In relation to alternative dispute resolution (ADR), it is possible to use mediation. However, ADR cannot be used in a class or collective action related to labour legislation. Mediation can be used in the event of a dispute before going to court, and after the trial, including on a proposal of a judge.

 

Proposals for reform

24. Are there any proposals for reform concerning class/collective actions?

Currently, large-scale reforms relating to the institution of class actions are being prepared. This is due to the fact that the existing mechanisms of collective actions in the Russian Federation are not developed, and therefore not widely used. A special mechanism of class actions is expected to be developed for anti-trust law. The first step is making amendments so that an abuse of a dominant position can be qualified only where the rights of an indefinite number of consumers are violated.

There are two main areas to consider in commencing class actions:

  • Procedural law.

  • Substantive law.

The introduction of a procedural mechanism for class or collective claims will be carried out by creating a single civil procedural code. Work on its creation is linked to the reform of the higher courts and the creation of a single supreme court.

There are problems associated with the absence of specific procedural rules for collective claims in court. The existing procedural mechanism is not effective and does not take into account many aspects. Many of the points of particular importance are resolved through general trial procedures.

The development of class actions in the field of substantive law mainly concerns anti-trust law. The state programme of development of competition provides for the active improvement of class actions.

One major problem is the difficulty of assessing the losses suffered by consumers. Therefore, a clear mechanism is being developed for determining these damages. The anti-trust body has developed special recommendations for calculating losses resulting from violation of the anti-trust law. Meanwhile, a clear mechanism is still being developed for determining these damages.

These reforms are currently under way and it is not clear when the commencement of class actions will be open to the general public. The creation of class actions is supported by social organisations and public authorities. However, big businesses have criticised such reforms, referring to possible major losses from "consumer extremism".

 

Contributor profiles

Irina Akimova, Of Counsel

Capital Legal Services

T +7 495 970 1090
F +7 495 970 1091
E iakimova@cls.ru
W www.cls.ru

Professional qualifications. Russia and CIS, lawyer

Areas of practice. Anti-trust law; financial markets.

Non-professional qualifications. Major in Law, Moscow University for Psychology and Social Science, 2000

Recent transactions

Advising the following:

  • Leading automobile dealers in the course of drafting contracts in new business areas.
  • A leading manufacturer of commercial transport equipment in the course of setting up a dealership network.
  • Major Russian and foreign companies on issues of structuring and approval of global transactions.
  • A major food manufacturer in the course of developing commercial and bonus policies and distribution agreements.
  • A major pharmaceutical company after the Federal Anti-Trust Service initiated several cases against the company alleging a cartel agreement and violation of anti-trust law.
  • An international company providing medical services, on issues of unfair competition by competitors.
  • A major international pharmaceutical company that the Federal Anti-Trust Service suspected of controlling the activities of its contractors.
  • A Russian company that is a natural monopoly, on issues of determining the geographical boundaries of a market.
  • Major international manufacturer of office equipment, on issues of interacting with a dealership network.
  • An international manufacturer of consumer and pharmaceutical products on compliance of an advertising campaign for a medical equipment item with Russian legislation.
  • An international manufacturer of plumbing equipment in relation to unlawful use of facilities that are its intellectual property.
  • A major European manufacturer of personal hygiene goods on compliance of a distribution agreement with the Russian anti-trust legislation.
  • An agent of a major international sea and ocean shipping operator in the course of an unscheduled inspection of the Federal Anti-Trust Service.
  • A major Japanese automobile corporation on analysing the commercial policies on interaction with service dealers.

Languages. Russian, English

Professional associations/memberships. Member of Competition Support; member of Supporting Competition in CIS Countries.

Dmitry Gavrilenko

Capital Legal Services

T +7 495 970 1090
F +7 495 970 1091
E dgavrilenko@cls.ru
W www.cls.ru


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