Russia Overview – Dispute resolution

25.04.2014

Chambers and Partners

Contributed by Goltsblat BLP

For more than 20 years, the Russian court system handling civil cases and economic disputes has had two branches: state arbitration (commercial) courts and general jurisdiction courts. The last year has seen significant changes to this structure.

The widely discussed merger of the Supreme Commercial Court of the Russian Federation (the highest instance of state arbitration courts) and the Supreme Court of the Russian Federation (the highest instance of general jurisdiction courts) was launched in the middle of 2013. The intention was originally mentioned by Russian President Vladimir Putin in his speech at the International Economic Forum in St Petersburg and was virtually completed by the end of 2013. The relevant bill was approved by the President on 13 March 2014 and amendments to the Constitution of the Russian Federation are to come into force.

The reform abolishes the Supreme Commercial Court and makes the Supreme Court the highest judicial body for civil cases and economic, criminal, administrative and other types of disputes of both the state arbitration and general jurisdiction courts. The jurisdiction of the Supreme Commercial Court passes fully to the Supreme Court within six months of the law being adopted.

So far, it is still hard to predict what impact and consequences the merger of the highest courts of the Russian Federation’s judicial system may have. Yet it is evident that the reform is more than just a structural modification. As is being widely discussed within the legal community, it will not only formally change the Russian judicial system but also influence the panel judges, thereby possibly changing judicial approaches and practices in the country.

Also worth mentioning is the launch of the Intellectual Property Court in Moscow on 3 July 2013. The purpose of the IP Court is to promote more efficient handling of the growing number of IP lawsuits, which are typically more complex than standard commercial disputes. Consequently, their resolution generally requires not only legal but also specialist technical knowledge to ensure timely, accurate and consistent outcomes. The specialised IP court dedicated to such cases is also supposed to help minimise judicial errors, lower litigation costs and boost business confidence.

In its first four months, from 3 July 2013 to 29 November 2013, in its capacity as a first instance court, the IP Court received over 350 claims (a decision was passed in 146 of them) whereas, in its capacity as a cassation court, it handled 390 appeals. Although the IP Court is still in its infancy, it is already proving to be an effective forum for handling IP-related disputes in a timely and efficient manner.

As for statistics, certain increases in numbers deserve mention. For instance, the number of cases tried in the Moscow Arbitration Court under summary jurisdiction rose 30-fold over the previous year. Claims filed with the Moscow Arbitration Court also went up by 9% in 2013 (189,389 claims compared to 173,686 in 2012) and the number of cases it tried grew by 4.6%. Overall, each judge of the court is believed to hear 127 cases a month.

Overall, within the Russian Federation, 24.1% of arbitration court decisions were appealed during 2013, but only 3% of the first instance court decisions were overruled. Russian cassation courts (courts of the third instance) received 104,726 cassation claims but overruled only 12.56% of the appealed lower-court decisions (1.1% of the total judgments made by the first instance courts). During its last year, the Presidium of the Supreme Commercial Court tried 464 cases but it should be underlined that more than 80% of the decisions were overruled.

The Russian state arbitration courts continue to take an advanced stand and extend the “online justice” system for submitting procedural documents to the courts electronically. In a number of recent cases, the courts concurred that a printed page of the Russian Post website confirming receipt of letter by the recipient constituted valid evidence that the opposing party had been notified (no paper stub of a postal notification was necessary). This approach is welcome as Russian proceedings are usually very formal.

Another important development in 2013 was a bill reforming the system of Russian domestic arbitration tribunals (treteiskiy sud). The law is to come into force on 1 January 2015. In contrast to the current law on domestic arbitration tribunals, the bill will also partially apply to international arbitration. For instance, it will cover arbitrability and arbitrator liability. The arbitrability of disputes is broadened: even certain types of corporate dispute will now be arbitrable under certain circumstances. The bill also changes the enforcement and challenging authority within the system of state courts.

Current state arbitration courts are to be replaced by standing arbitration institutions, which will be tested and certified by a Ministry of Justice commission. Each standing arbitration institution will administer and guide the arbitration process, draft arbitration rules, maintain the list of the institution’s arbitrators and inform parties if their award is nullified. Moreover, the requirements on arbitrators listed with the institution are minimised. The bill offers arbitrators immunity from civil liability for their awards apart from civil liability as part of a criminal investigation.

There were several remarkable breakthroughs during 2013 in relation to certain procedural matters. The most significant cases of 2013 include, firstly, the Billa case (No. A40-35715/2010), in which the Supreme Commercial Court confirmed that legal representation fees of approximately RUB 33 million, or USD 0.94 million, were justified and reflected the qualifications and amount of work performed by the lawyers during the case. Secondly, in the Marinicheva case (No. A40-8090/2012), the Supreme Commercial Court confirmed that a success fee agreement with lawyers was legal in certain circumstances. Overall, it is expected that the work of the courts will continue improving during 2014, accompanied by significant changes to the Russian judicial system.

http://www.chambersandpartners.com/180/467/Editorial/7/1

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