Types of class action mechanisms. General characteristics

The institution of the class action was, in the narrow sense, introduced into Russian law as a consequence of the amendment of the Russian Commercial Procedure Code of 19th July 2009 which entered into force on 21st October 2009. The party to the proceedings (the claimant) is only the person initiating an action in the capacity of the representative, acting on behalf of the remaining group members. These people, however, do not enjoy the status of being a party to the proceedings. The group representative may be a natural person or a legal person and should have a claim against the defendant, analogous (having the same legal basis) to the claims pursued by other group members.

Class actions are admissible in the following cases:

  1. in commercial cases falling under the jurisdiction of Russian state arbitration courts pursuant to the Arbitration Procedure Code of 2002 amended by the abovementioned Act of 19th July 2009;
  2. in administrative cases and other cases regarding public law falling within the jurisdiction of common courts pursuant to the Administrative Procedure Code of 2015.

The Russian collective action model is a solution that may be placed between the opt-in and opt-out model. Although group proceedings cover the persons who submitted a declaration on joining the group, but the judgement issued in the case is also effective for those who did not join the proceedings within the time limit set forth by the court because not joining the group is an obstacle to initiate an individual case for analogous claims, such as those that were the subject of group proceedings.

Conditions of admissibility and the procedure

A class action may be brought in any civil or commercial case, i.e. any case to be heard by a commercial court, in particular in corporate matters and in disputes related to capital market transactions, in which the claims pursued against the defendant have the same legal basis (“the same legal relationship” binds individual group members and the defendant).

The notification of a class action, which other participants may choose to opt in, may be performed publically, by the media, by registered mail with confirmation of receipt or in another form.

However, atypically for the opt-in model, if a person who has a claim arising from the same legal relationship towards the same defendant does not join the initiated collective action within the specified time limit, they may no longer pursue this claim individually.

It is assumed that pending group proceedings (as well as the judgement which will be delivered) are procedural obstacles for the potential group member’s individual case; whereby in the event of submitting an individual claim – the court will inform the claimant about the possibility of taking part in group proceedings. Importantly, Russian law does not provide for the possibility of leaving the group.

Russian law does not provide for a specific certification procedure. The condition for the initiation of group proceedings is, in fact, the submission of written declarations to the group representative, before the submission of the statement of claim, by at least five people, being parties to the same legal relationship which is the source of claims pursued in the case, submit written declarations prior to initiating the proceedings (the group must consist in at least six people – c.f. Article 225.10 para 2 of Commercial Procedure Code). The group (class) should be defined by the court.

The type of relief (legal protection) that can be obtained (court decision)

A class action, in the narrow sense, may aim to ascertain that a given act of a given entity was unlawful, obtaining cash compensation, obtaining a judgement ordering or prohibiting the defendant from engaging in a given conduct, or obtaining an injunctive relief. Russian law does not permit awarding any so-called punitive damages.

Costs and manner of financing the proceedings

In the case of all of the above indicated mechanisms, general terms regarding the bearing of the costs of the proceedings by the parties. Usually, the losing party is obligated to reimburse the winning party for the costs incurred in connection with the pursuit of their claims. The court decides which costs are pertinent. However, if the parties enter into a settlement, the costs of the proceedings are shared between them.

Russian law does not permit the so-called contingency fee, i.e. an attorney’s fee dependent solely on the outcome of the case. However, according to the latest jurisprudence, the attorney may request a success fee from the client, if it was previously agreed upon. The fee cannot be recovered from the losing party, as it is not the cost of the proceedings and the losing party is not a party to the contract between the winning party and its representative.

Practice and significance of the institution. Development trends

In Russia, a class action is a rarely used mechanism. It is said that the main reason for that is the difficulty in distinguishing between group proceedings and the institution of combining cases to be heard jointly by Russian courts. The courts often refuse to hear cases in group proceedings due to the failure to meet the (statutory unspecified) condition of the equal legal basis of the claims of the representative and other group members (“the same legal relationship” between all group members and the defendant). This happened, for example, in the case of Nikitina Anna Nikolaevna, acting on her own and on behalf of 229 other co-owners of land in Omsk. It is therefore argued that in order for group proceedings to become an effective means of protecting citizens’ rights, it is necessary to amend the current statutory regulations.

At the moment, Russian procedural law regarding class actions remains internally inconsistent. The class action mechanism, or more strictly group proceedings of a “private” nature, i.e. a class action sensu stricto, is provided only under the Commercial Procedure Code, exclusively concerning proceedings in commercial cases, and not in the Civil Procedure Code, which, currently, regulates only other institutions of group redress (sensu largo; in particular, representative actions – which, however, in principle, cannot lead to judgements adjudicating payment, but only to judgements determining that the law was violated and imposing specific orders or prohibitions on the defendant).

Moreover, it is argued that the current Russian class action mechanism, which does not provide for the possibility for potential group members to exclude themselves from the proceedings, so that their rights and obligations will not be covered by the binding force of the final judgement, is inconsistent with the Constitution of the Russian Federation, and with the very provisions of the Commercial Procedure Code. In the present legal standing, a person who does not join the class action because of, for example, shortcomings of the notification procedure carried out in a given case, will not be able to pursue their rights covered by the group proceedings, and therefore, will be deprived of the right to court, without any impact on this state of affairs (possibility to opt-out is also excluded).

On 8th December 2014, in the committee of the State Duma of the Russian Federation, i.e. the lower house of the parliament of the Russian Federation (Государственная Дума Российской Федерации, Государственная Дума), on civil, criminal, commercial and procedural law, the concept of the unification of civil procedure, currently provided in Commercial Procedure Code and Civil Procedure Code, was adopted. The concept assumes, among other things, limiting, as part of this unified procedure, the possibility of bringing a class action in such cases where it is not possible to hear cases jointly due to the inability to identify all members of the group.

However, the abovementioned works were suspended upon entry into force, on 15th September 2015, of the Russian Code of Administrative Court Proceedings (Кодекс административного судопроизводства Российской Федерации), which in Article 42 stipulates the institution of a class action under the administrative court procedure. Among the premises of its admissibility, 20 persons were indicated as the minimum number of group members, whose requests must be similar and have a common (or at least similar) legal basis. In addition, all potential group members should seek the same type of legal protection from the same entity.

On the other hand, regarding the scope of the subject matter of the regulation on civil group proceedings in Russia, at the moment, an amendment enabling the use of the class action mechanism in the field of antitrust law should be expected first.

In October 2017, the Ministry of Justice of the Russian Federation prepared another draft of law on group proceedings. The project assumes amendments to the Arbitration Procedure Code, Civil Procedure Code and Administrative Procedure Code and extends the catalog of persons and cases which group proceedings may be initiated in. However, the drafted amendment has not yet entered into force.