Russia

Class actions were introduced in Russia in 2009 by special procedural rules for the consideration of cases affecting the interests of groups of entities and individuals. The provisions for group actions were generally based on US and EU class actions mechanisms but also include features that are unique to the Russian procedure.

In addition, Russian legislation permits complicity and representative actions, which may also be considered to provide collective relief for groups of affected parties.

What forms of collective actions are permitted in this jurisdiction and under what authority?

Group actions, complicity actions and representative actions are permitted under Russian law. Amendments to the legislation in this regard are occasionally discussed but have yet to be introduced.

Group actions

Group actions were introduced in Russia in late 2009. Group actions are currently possible in the following circumstances:

(i) in commercial cases falling within the jurisdiction of the Russian state arbitration courts, under the Arbitration Procedural Code 2002 (“APC”) as amended by the Federal law dated 19 July 2009 No. 205-FZ; and

(ii) in administrative and other public law cases falling within the competence of courts of general jurisdiction, under the Administrative Procedure Code 2015 (“Administrative Code”).

Group actions are a relatively new concept in Russia and as a result (and also because of an element of ambiguity in amendments recently proposed for the АРС and Administrative Code respectively), there is currently a significant level of uncertainty as to the practical application of group actions in Russia.

Under the APC, in general, a group action may be brought where there are at least six claimants, each involved in the same legal relationship out of which the dispute arose. Group actions are expressly permitted (without limitation) in corporate disputes (e.g. disputes concerning corporate governance of Russian legal entities and their transactions) and in disputes arising out of the activity of groups in the professional securities market (banks, depositaries, traders, brokers, etc.).

Under the Administrative Code, group actions may generally be brought where there are at least 21 claimants, each having a similar subject matter and grounds for their claims, against the same defendant. Unlike under the APC, there is no requirement for the same legal relationship to give rise to the dispute for all claimants. Group actions are generally permitted in respect of all disputes within the regulation of the code.

Under both the APC and the Administrative Code, all the individual members of the group must be identified.

Complicity actions


The other form of group action which is permitted by the Russian Civil Procedural Code 2003 (“CPC”), the APC and the Administrative Code is a complicity action. These may be brought where multiple claimants/defendants have similar claims/defences (or similar grounds for their claims/defences) against the same defendant(s)/claimants. Technically, this does not differ greatly from an individual claim; the claims of the various claimants/defendants are simply heard together in the same proceedings.

Complicity actions may be brought where:

  • all co-claimants/defendants possess the same rights that constitute the subject matter of the dispute (e.g. the most common case is a claim against both the main debtor and a secondary debtor);
  • co-claimants/defendants possess very similar rights that constitute the subject matter of the dispute (e.g. employees claiming payment of salaries from the same employer); and
  • the rights of the co-claimants/defendants that constitute the subject matter of the dispute have the same factual and legal grounds (e.g. disputes arising out of contracts with multiple parties).

Under the Administrative Code, if a complicity action complies with the requirements for a group action the court, subject to the circumstances of the case and the parties’ positions, can order that the case be considered as the group action.

Representative Actions

Representative actions may only be brought by those entities expressly authorised to do so under federal law. Authorised entities can be divided into two groups: state and municipal authorities; and non-commercial organisations (legal entities).

State and municipal authorities are entitled to file representative lawsuits within their area of competence. These include:

  • the protection of the rights, freedoms and lawful interests of individuals, legal entities and the state;
  • competition and consumer protection;
  • the securities markets, securities regulations and investor protection;
  • environmental protection and compensation for environmental damage; and
  • matters relating to children.

The range of non-commercial entities entitled to file representative actions is quite narrow under Russian law.

They include:

  • trade unions, for the protection of employees' rights;
  • consumer associations;
  • citizens and non-commercial environmental protection organisations, for the compensation of environmental damage;
  • investors' associations, for damages arising from securities markets matters;
  • bankruptcy administrators, to protect the rights and interests of parties to a bankruptcy;
  • the ombudsman, for the protection of people’s rights;
  • electoral associations, to protect the electoral rights of citizens; and
  • organisations for the collective management of copyrights.

A representative action will usually seek a declaration stating that an activity or the conduct of an entity is illegal and contrary to individuals' rights and interests. Any individual affected by the illegal behaviour (e.g. consumers affected by anti-competitive behaviour) may then commence their own proceedings, relying on the court declarations when seeking redress. In addition, injunctive relief, specific performance and damages are also obtainable in certain types of representative actions.


Who may bring them?

Under the APC, a group action may be brought by a person participating in the legal relationship out of which the dispute arose. A minimum of five additional persons with the same legal relationship to the defendant in the matter of dispute must join the first person's claim by way of written application. The person bringing the claim has the status and rights of a procedural claimant. However, those subsequently joining the action will not become formal procedural parties to it.

Under the Administrative Code, a group action may be brought by a person participating in the legal relationship out of which the dispute arose. A minimum of 20 additional persons, who have similar grounds for a claim must join the action for it to become a group action. They may do so by actively signing up to the original claim or by filing a separate written application. The court will determine the persons who have the status and rights of procedural claimants. Apart from these specified parties, individuals joining the group action will not become formal procedural parties to the action.

A representative action is commenced by an interested organisation, which becomes the procedural claimant (although it has no material interest in the outcome of the proceedings itself). However, the persons on whose behalf the claim is brought do not become procedural formal parties to the action.

Complicity actions are always brought in the name of individual claimants.


Opt in or opt out?

To benefit from the judgment in a group action, a person must itself be a party to the action. If the potential claimant does not opt in, the consequences of bringing an individual claim on the same subject matter against the same defendant as in the group action are as follows:

APC

  • If the group action is still on-going when the potential claimant brings the parallel proceedings, the parallel proceedings are not considered on their merits and the claimant is advised to join its claim to the existing group action.
  • If the group action has already ended with an effective judgment, the individual claim is dismissed with prejudice, i.e. the individual claimant is not and will not be able to bring the claim on the same subject matter against the same defendant as considered in the earlier group action.

Administrative Code

  • If the group action is still on-going when the potential claimant brings the parallel proceedings, the parallel proceedings are not considered on their merits and the claimant is advised to join its claim to the existing group action.
  • If the claimant does not join the group action, consideration of the individual claim is postponed until after the resolution of the group action, when it will be recommenced. The court will then consider the individual claim on the basis of the judgment in the group action proceedings. 

Complicity action

  • The judgment in a complicity action will bind all parties to that action. It is possible to opt into an existing complicity action before the final judgment of the trial court in the case. Since, as a general rule, only the parties to proceedings are bound by the court's decision, the individual claimants have to opt into the action if they want to take advantage of the judgment. This can be achieved by commencing one set of proceedings at the outset as co-claimants or bringing separate proceedings subsequently, which are then consolidated with the existing action.
  • Conversely, whilst remaining a party to the proceedings, a claimant may not opt out of the judgment's effect unless he revokes his claim, in which case the court will not make any binding conclusions regarding that claimant other than to declare he has revoked his claim.

Limitations?

There are also other technical limitations on the actions that may be brought as representative or complicity actions beyond those noted above, which are not considered here.

Judge or jury?

Judge.

What relief may be obtained?

Generally, the relief obtainable includes: a declaration that a certain activity or conduct by an entity is illegal; injunctive relief; specific performance; and damages. However, punitive damages are not recoverable under Russian law.

How are such actions funded?

Normally, the losing party is obliged to pay the successful party's "reasonable costs". The reasonableness of such costs is determined by the court. Recent case law has demonstrated a new approach — it is now crucial for the successful party to prove the reasonableness and sufficiency of all incurred legal costs in order to receive repayment of such costs.

In the case of group actions, legal costs are generally paid to or by the person who has the status and rights of a procedural claimant. At the same time, the legislation and case law are not entirely clear in this regard. Contingency fees are not permitted in Russia although, pursuant to recent case law, a success fee can be claimed by a lawyer from the client as a contractual obligation. However, that fee cannot be reclaimed as legal costs by the successful party from the losing party. This is because the losing party is not a party to the agreement between the successful party and its lawyer that specified the payment of a success fee. 

There is no specific government funding available for civil proceedings. However, some of the entities entitled to file representative actions do not have to pay the court fee.

Is pre-trial disclosure available?

There is no "pure" pre-trial disclosure in Russia. However, a claimant may seek interim relief and ask the court to secure evidence before the trial where there is reason to believe that otherwise it will be destroyed. Accordingly, if the court has reason to believe that a witness may, for any reason, not be able to testify in court, it may rule to have his statement obtained before trial. However, this is not common practice in Russia.

Likely future scope and development?

At the end of 2018, a new draft law in relation to group actions was submitted to the State Duma1 for consideration. The draft law suggests amendments to the APC and proposes inclusion of the rules dealing with group actions into the CPC2 . Currently the CPC does not include any provisions in relation to group actions but sets out rules for complicity and representative actions.

The draft law expands the situations in which a group action may be initiated. It suggests that a group action may be brought when at least five members of the group decided to join the group, and (i) the claims are all against the same defendant, (ii) the subject of the dispute arises out of the same or similar relationships, or (iii) the rights of the members of the group are based on a similar factual background.

The draft law also directly indicates that a group action may be brought by a person or a legal entity who is not a member of the group but who has the power to bring such claims under the law. This provision seems to widen the ability to bring representative actions. 

As before, the draft law provides that in order to participate in the group action, the member of the group should directly opt in, clarifying that the decision whether to join the claim may be taken up until the court issues the order scheduling the hearing on the case. 

The draft law directly provides that the default position is that the representative of the group will act as a procedural claimant and be liable to pay the legal costs should the claim be unsuccessful. At the same time, the draft law allows the representative of the group and the members of the group to enter into a legal costs agreement, which should be approved by the court and under which the costs may be paid by or claimed from the members of the group.

The draft law states that members of the group who do not agree with the submitted claim may join the case as third parties and not be part of the group action. However, if the member of the group submits an independent claim on the same grounds as the group action and declines to join the group action, the court will suspend consideration of his claim until the decision under the group action is reached. If there is a judgment on the group action, the court will terminate the individual proceedings unless it confirms that it was reasonable for that claimant to pursue his claim independently.

The draft law proposes that a judgment in a group action should include conclusions about the claims of each of the members who joined the group.

Currently the draft law is at the early stages of consideration. Any updates in relation to its status may be expected during spring session of the State Duma. At the same time, the amendments outlined above generally represent the approach to group actions worked out in the case law. They may therefore be expected to be approved at least to some extent.

(1) The lower chamber of the Russian Parliament

(2) The APC is used for consideration of the business related and economic disputes in the Arbitrazh Court, while the CPC is used for consideration of the general civil cases (e.g. family disputes, inheritance disputes etc) in the general jurisdiction courts.