As commerce in Russia gets more complex, potential disputes between businesses and their customers become more complicated. In some instances, this results in protracted lawsuits with many participating parties.

Originally developed within the common law system, the concept of class action serves for resolution of disputes where a group of persons sues a person, a group of persons sues another group of persons, or a person sues a group of persons. Its main advantages are that it aggregates multiple individualised claims into one action, offers efficient legal process and reduced litigation costs, and ensures there are no conflicting judgments related to the same legal cause.

The need for the class actions concept in Russian procedural legislation was first recognised by the Russian Government’s program for social and economic development back in 2001. It took another eight years, until late 2009, for lawmakers to finally introduce the first regulations on class action into the Code of Commercial Procedure (Chapter 28.2).

According to Chapter 28.2, a class action proceeding may be initiated in: (i) corporate disputes; (ii) disputes related to the business of professional security markets participants; and (iii) other disputes provided they match certain criteria indicated by law. Once such proceedings are commenced, the court indicates a special timeframe within which all interested parties are allowed to join the claim. Besides the representing claimant, the minimum number of parties joining the claim should be not less than five. It is widely considered that the main purpose of this amendment was to avoid situations where conflicting shareholders of a company initiate parallel legal proceedings which could result in incompatible judgments.

Initiation of the first class action in Russia was attempted by Bank Uralsib towards the end of 2009 (case No. A40-44402/2009). The bank, subsequently joined by 10 other claimants, claimed recovery under the bonds issued by JSC Zavody Gross Group of Companies. However, the case was not a success. The courts dismissed the claims and declared them to be independent from each other, thus delimiting the scope of Chapter 28.2.

Jan-Mar 2014 issue

Freshfields Bruckhaus Deringer