(Aug. 26, 2019) On July 18, 2019, the President of the Russian Federation signed into law a bill allowing class action lawsuits in the courts of general jurisdiction. The new law, the Law on Amending Select Legislative Acts of the Russian Federation, July 18, 2019, also amended the Arbitration Procedure Code to allow individuals to bring class action lawsuits. Previously only legal persons could seek remedies for the protection of their collective rights in arbitration courts. The Law will enter into force on October 1, 2019 (art. 4).
Provisions Regarding Groups Bringing Suits
According to the Law, the group (which can be comprised of members who are both physical and legal persons) has a standing at an arbitration court or a court of general jurisdiction if it meets the following conditions:
- it has one common respondent;
- the subject matter of the dispute is the common rights and legal interests of the members of the group;
- the rights of the members of the group and obligations of the respondent are founded on similar factual circumstances; and
- the members of the group apply similar remedies for the protection of their rights (art. 2, § 4; art. 3, § 5).
Members of the group who are in disagreement over the subject matter of the claim can participate in the proceedings as third persons. The Law also allows organizations or other bodies that are not members of the group to seek protection of their rights. In this case the organization or body must establish standing by referencing federal legislation that allows it to bring the lawsuit to the court and to seek remedies on behalf of the group. (art. 2, §§ 4, 5; art. 3, § 5)
The group must appoint a person who will be responsible for representing the interests of the members of the group and payment of litigation costs The courts are authorized to fine a responsible person for negligence in carrying out his or her procedural duties, including in cases when that person has delegated his or her responsibilities to another person. (art 2, § 5.3; art. 3, § 5)
The law requires that the group be composed of at least five members to have standing in arbitration court and 20 members for the courts of general jurisdiction. Members can join the claim (before the start of the court hearing) by submitting a written request either to the court itself or to an authorized person responsible for representing the group’s interests, or online, including via the “Moi Arbitr” state automated site for arbitration courts and the “Pravosodiye” state automated site for courts of general jurisdiction. (art. 2, § 4; art. 3, § 5)
At the beginning of the court proceedings, the authorized person may reach out to other potential members of the group with a call to join the claimants. The judge is to set the time frame within which potential members can join the group. Should the authorized person fail to reach out to other potential members of the group in the order specified by law, the court will not consider the claim. (art. 2, § 7)
During the preliminary court hearing, the court determines whether the group meets the requirements for bringing a class action lawsuit. Should the court determine that the group does not meet the requirements, the court issues the corresponding decision and proceeds to deliberations according to the general rules of arbitral, civil, or administrative procedures, accordingly. In this case, the members of the group can bring individual claims. During the preliminary hearing stage, the court may decide to replace an authorized person responsible for representing the interests of the group. In this case the court may delay the hearing for up to two months, until the new authorized person is appointed. If the group fails to choose its new authorized person within the time frame established by the court, the court dismisses the claim and ceases the deliberations of the court case. The law sets a time limit of eight months for class action proceedings. (art. 2, § 7)
Consideration of Third Party Claims
The law establishes priority in settling lawsuits brought by the group before individual lawsuits concerning the same subject matter and against the same respondent. In such cases the court suspends deliberations on cases brought by independent third parties until the court issues a verdict in the group action lawsuit. (art. 2, § 7; art. 3) While hearing the case of the third party that did not join the group action but whose case has the same subject matter and respondent, the court will not consider evidence produced in the group action lawsuit (art. 3, § 5). The court will also suspend proceedings in the third party suit if the suit is followed by a group action claim (art. 3, § 6).
Informing Participants About the Court Verdict
In its ruling, the court may order the respondent to inform (through mass media or other means) the members of the group about resolutions concerning each member of the group (art. 2, § 9; art. 3).
Reactions to the Law
Generally, the Law has been positively received by legal experts, who agree that it will streamline the administration of justice, make courts more accessible and court practice more uniform, and provide more avenues for individuals to seek remedies for the protection of their rights. Others, however, believe that the court system of the Russian Federation is not ready for class action lawsuits, and is vulnerable to abuse by dishonest claimants, which may lead to an increased number of bankruptcies among Russian businesses.