Team works. Novelties in class action lawsuits in the Russian Arbitration and Civil Procedural Codes

On October 1, 2019, new Federal Law No.191-FZ dated 18.07.2019 takes effect. This law introduces certain amendments to the Russian Commercial Arbitration Procedural Code governing particular issues tied to class action lawsuits in the commercial arbitration process, and introduced a similar institute to the Russian Civil Procedural Code.

For the first time in Russia, groups of persons being victims of manufacturers, builders and other entities working under standard contracts with a large number of individuals and organizations, can file a single lawsuit containing their common claims. In an explanatory note, the lawmakers stipulated that these lawsuits in particular apply to claims based on the consumer protection and antitrust laws.

It is obvious that the lawmakers aspired to unburden the courts of general jurisdiction, which often examine cases with a multitude of similar claims against the same defendant, such as with the Labirint travel agency in 2014 (the company misappropriated client money and did not pay for air travel services). This “unburdening” will be good for both the courts and the plaintiffs who can expect a balanced decision and acceptable procedural timeframes.

The concept of class action lawsuits itself came to Russia from abroad where it has long been in use. There are many examples of class action suits against such titans as SAMSUNG, Volkswagen and Philip Morris. Another notable case is the broadly publicized class action by former students of Trump University. The lawsuit resulted in the students getting a $25 million settlement.

In Russia, as the lawmakers intend, class action will be available to groups of at least 20 persons against the same defendant, with unified violations of their rights, similar circumstances and uniformity of claims. The group will independently choose one of their own to represent them in the case. Such an appointment is not indispensable and can be withdrawn if the group has doubts as to the representative’s good faith, which they will need to justify before the court.

As in any other process, a person in charge of the case can retain a professional lawyer or law firm to represent them. In other countries, the services of a law firm in such costly cases as class action are usually paid out of the monies awarded by the court, which include both compensatory damages and punitive damages. In Russia, the use of such a scheme raises problems, since the representative’s success fee protected by the court doesn’t exist, same as the institute of punitive damages. This means that plaintiffs who aren’t qualified enough to handle the case and do not have ample funds to pay for an expensive representative could in fact be limited in the opportunity to protect their lawful rights and interests in the context of class action suits.

In general, it is difficult at this point to speak of benefits and disadvantages of the new process capability until there are actual cases and court decisions. There is indeed demand in society for class action. One should hope that this institute with time will be developed through the court practice and improved by the lawmakers.