Class actions were introduced in Russia in 2009 by special procedural rules for dealing with 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 included features that were unique to the Russian procedure.
In 2019 a major reform of class actions procedure took place which introduced significant changes to the class actions legislation and aimed to further develop the application of class actions in Russia.
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.
Group actions were first introduced in Russia in late 2009. Recent significant amendments were introduced in 2019 by Federal law No. 191-FZ dated 18 July 2019, which entered into force on 1 October 2019.
Currently, group actions are possible in the following circumstances:
(i) in commercial cases falling within the jurisdiction of the Russian state arbitrazh (commercial) courts, under the Arbitrazh Procedure Code 2002 (the “APC”). Generally, arbitrazh courts consider, among others, commercial disputes between companies and individual entrepreneurs, bankruptcy disputes and corporate disputes;
(ii) in civil cases falling within the jurisdiction of the Russian state general jurisdiction courts, under the Civil Procedure Code 2002 (the “CPC”). General jurisdiction courts predominantly consider disputes between individuals, including those related to consumer rights, housing and utility disputes; and
(iii) in administrative and other public law cases falling within the competence of the Russian state general jurisdiction courts, under the Administrative Procedure Code 2015 (the “Administrative Code”). The scope of application of such actions may include, among others, disputes regarding election legislation and disputes regarding the validity of statutory acts.
Group actions are a relatively new concept in Russia and as a result there has been a significant level of uncertainty as to their practical application. In order to make group actions more attractive to potential claimants and to decrease the number of ambiguities or gaps, new amendments were introduced in 2019.
In general, under the APC a group action may be brought where there are at least six claimants, and:
- the claims are all against the same defendant
- the subject of the dispute arises out of the same or similar legal relationships
- the rights of the members of the group are based on a similar factual background, and
- all members of the group seek the same legal remedy.
Under the CPC, a group action may be brought where there are at least 21 claimants. The other requirements under the CPC are the same as under the APC indicated above (in relation to the same defendant, the similar subject matter of the dispute, factual background and legal remedy).
Under both the APC and CPC rules, in cases expressly specified by law, the group action may also be brought by individuals and organisations that are not members of the group. 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. However, unlike under APC and CPC rules, the Administrative Code does not directly indicate a requirement that therer need be a similar factual background to each dispute.
Under the APC, the CPC and the Administrative Code, all members of the group should be identified.
The other form of group action which is permitted by the APC, the CPC and the Administrative Code is a complicity action. This may be brought where multiple claimants/defendants have similar claims/defences (or similar grounds for their claims/defences) against the same defendant(s)/claimant(s). 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 or obligations 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 or obligations 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 can, subject to the circumstances of the case and the parties’ positions, order that the case be considered as a group action.
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.
- 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/company participating in the legal relationship out of which the dispute arose. At the same time, as noted above, in cases expressly specified by law, a group action may be brought by persons and organisations that are not members of the group. A minimum of five additional persons/companies with the same or similar legal relationship to the same defendant with the same subject matter of dispute must join the first claim by way of written application. The person/company bringing the claim has the status and rights of a procedural claimant. This person/company may also act through a representative unless otherwise provided by the agreement between members of the group.
Persons/companies subsequently joining the action will not become formal procedural parties to it. However, due to the recent amendments to the APC they have certain procedural rights, e.g. to attend the court hearings, to have access to the case documents etc.
It should also be noted that if the subsequently joining persons/companies disagree with a submitted claim, they may join the case as third parties and not be a part of the group action.
Under the CPC, a minimum of 20 additional persons/companies with the same or similar legal relationship to the defendant regarding the same or similar subject matter of the dispute must join the first claim. Similarly, the first person/company bringing a claim may either participate in the legal relationship out of which the dispute arose or, in cases expressly specified by law, a group action may be brought by persons and organisations that are not members of the group. All other features are the same as indicated above in relation to group actions under the APC.
Under the Administrative Code, a group action may be brought by a person/company participating in the legal relationship out of which the dispute arose. A minimum of 20 additional persons/companies, 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 claim should specify a person/company who has the status and rights of a procedural claimant(s). 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 individual or organisation on behalf of and in the interests of another party. The individual or organisation becomes the procedural claimant (although it has no material interest in the outcome of the proceedings itself). However, the persons/companies on whose behalf the claim is brought (substantial claimants) do not become formal parties to the action.
Complicity actions are always brought in the name of individual claimants (individuals and companies).
Opt in or opt out?
To benefit from the judgment in a group action, a person/company should itself be a party to the action. If a 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:
- If the individual claim was brought prior to the group action, consideration of the individual claim will be 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.
- If the group action is still ongoing when the potential claimant brings the parallel proceedings, the potential claimant is invited to join its claim to the existing group action.
- If the potential 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.
- If the group action has already ended with an effective judgment, and an individual claimant refused to join the group action, that claim is terminated completely. The individual claimant will not be able to bring its claim on the same subject matter against the same defendant as considered in the earlier group action, unless the court considers that the reasons for bringing the individual claim are justifiable.
- The CPC generally provide the same consequences for bringing the individual claim and not joining the group action as indicated in relation to APC rules above.
However, unlike the APC, the CPC does not include such strict rules that if the group action has already ended with an effective judgment, the individual claim is terminated as outlined above.
- The regulation under the Administrative Code is similar to the regulation under the CPC and also does not include such specific consequences as terminating an individual claim if there is a judgment on the group 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 this case, the court will not make any binding conclusions regarding that claimant other than to declare he has revoked his claim.
- As mentioned above, in representative actions, a claim is brought by an individual or a company (procedural claimant) on behalf of and in the interests of another party (substantial claimant).
- If a procedural claimant abandons a claim, consideration of a case on its merits will continue unless a substantive claimant abandons the claim as well.
- If the claim is abandoned by both the procedural claimant and the substantive claimant, the court terminates the claim with prejudice unless the third parties’ rights are infringed by the dismissal.
There are various technical limitations on group actions. The regulation, inter alia, includes a specific mechanism for making an offer to opt into the action, the latest deadline for joining the claim etc.
There are also other technical limitations on the actions that may be brought as representative or complicity actions, which are not considered here.
Group actions, representative actions and complicity actions are procedural mechanisms for the consideration of cases and they do not have any specific impact on limitation periods. Therefore, claims under this mechanism should be submitted within the general limitation of action periods.
Judge or jury?
What relief may be obtained?
How are such actions funded?
There is no specific government funding available for the actions discussed above. The state fees and legal costs are paid and may be compensated under general procedural rules.
Some persons/companies may be released from payment of the state fee for bringing the action, but this is decided on a case by case basis.
Generally, for group, representative and complicity actions, the losing party is obliged to pay the successful party’s “reasonable legal 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/company who has the status and rights of a procedural claimant. At the same time, the person/company who is a procedural claimant and other members of the group can enter into a legal costs agreement whereby the parties can define an amount of the legal costs to be incurred by each party. This agreement should be notarised or it may be considered void by the court. If such an agreement is concluded, the court has to allocate the legal costs among the parties to the agreement in accordance with its provisions.