Dispute resolution

General

Disputes can be resolved by state-run courts or through alternative dispute resolution (“ADR”) mechanisms such as arbitration, reconciliation, and mediation. Most disputes are resolved by state-run courts. Arbitration usually concerns high-value and confidential commercial disputes. Reconciliation and mediation are not frequently used.

The state-run judicial system

It has two “branches”: courts of general jurisdiction, including magistrate courts, and commercial (“arbitrazh”) courts.

Courts of general jurisdiction hear disputes arising out of civil-law relations, family and housing cases, inheritance and labour, consumer protection disputes, administrative cases involving individuals, as well as criminal cases.

Commercial (“arbitrazh”) courts decide on commercial disputes involving legal entities and entrepreneurs. They also hear business-related administrative cases, disputes between legal entities and state authorities, and bankruptcy cases. The Intellectual Property Court¹ is also the part of this system.

The Supreme Court is the highest judicial body that supervises over commercial courts and courts of general jurisdiction.

The judicial system also includes the Constitutional Court and the constitutional courts of the constituent entities of the Russian Federation. They rule on the conformity of legal acts to the Constitution, hear disputes between state authorities and complaints about violation of constitutional rights and freedoms.

Martial courts hear cases involving military personnel.

Legal framework

The following key legislation governs court procedures:

· Federal Constitutional Laws “On the Judicial System” and “On Commercial Courts”;

· Procedural codes – the Commercial Procedure Code, the Civil Procedure Code, the Code of Administrative Judicial Procedure and the Criminal Procedure Code.

ADR procedures are governed by:

· The Law on Arbitration;

· The Law on International Commercial Arbitration; and

· The Law on Mediation.

Judicial practice

Russia is a civil law country. So, court judgements do not represent a formal source of law.

At the same time, summaries of court practice issued as Resolutions of the Presidium of the Supreme Court, are generally recognised as a functional source of law. It provides mandatory interpretation and ensures uniform application of law. Other positions stated by the Supreme Court are also commonly followed by the courts.

Digitalisation

Over a decade ago, an open database (the “Commercial Court Files” - kad.arbitr.ru) was established. It has information on all open proceedings before the commercial courts in Russia. It also publishes the judgements of these courts. So, one can basically track and find the necessary case and find out its status by entering the case number or party’s name.

Most pleadings can now also be filed electronically (e-submission).

Parties’ representatives may now access the hearings online in most courts. To this end, one should file the relevant petition and get access to the user account.

A party’s representative may now get online access to the documents that had been filed by the other party through the e-submission service.

¹ Please see the Intellectual Property section.

Commercial litigation

Jurisdiction
A statement of claim is filed with a commercial court at the defendant’s location. This is a default rule that applies to most cases.

In some specific situations the law provides for different rules of jurisdiction. For example, a claim against a foreign defendant can be filed with the court at the location of the assets in Russia.

Also, Russian courts have exclusive jurisdiction over disputes involving sanctioned Russian individuals and corporates.

The parties may enter into a special prorogation agreement providing for jurisdiction that differ from statutory rules. However, this agreement cannot cover disputes falling within the exclusive jurisdiction of Russian courts (e.g. disputes concerning real estate located in Russia, bankruptcy cases, disputes arising from the registration or liquidation of Russian legal entities etc.).

If, due to any sanctions, a Russian company or individual cannot participate in foreign legal or arbitration proceedings, the arbitration or prorogation agreement can be recognised as incapable of being performed. In this situation the dispute should be considered by a Russian court.

Also, a sanctioned Russian party may apply to the Russian court with a request to issue an anti-suit injunction (“ASI”). ASI is designed to prevent the foreign party, subject to a financial penalty, from opening or continuing legal proceedings abroad against the sanctioned Russian party.

Court instances

There is a hierarchy of five instances for considering commercial disputes:

It is very common that litigants use most of the appeal remedies available to them. This is why most of the high-value cases usually go through all five instances.

In practice, it takes up to two years in total until all instances would hear the case. Sometimes a reviewing instance remands the case for a new trial, which would add another year or so to the longevity of a legal battle.

Pre-trial formalities

For most monetary claims (e.g. recovery of penalties and debts, unjust enrichment, losses) there is a mandatory pre-trial procedure. A claim may be filed only after the expiry of a 30-day period from the date when the pre-claim letter was sent, subject to defendant’s refusal to satisfy it.

The parties can contractually agree another pre-trial procedure.

Certain types of claims may be filed without observing this pre-trial procedure, including bankruptcy claims, corporate dispute claims, class actions.

Court representation

A corporate may be represented by a person so authorised by law (e.g. the general director) or by a power of attorney.

Currently, only persons with higher legal education or a postgraduate degree in law, or lawyers admitted to a Russian Bar (attorneys-at-law – “advokaty”) may be representatives of a party before a court. An exception has been made for representation in the district courts and before magistrates.

Interim measures

Russian courts may impose interim measures to secure the interests of claimants while the case is being reviewed. These can be:

· Preliminary measures – i.e. those applied before the commencement of proceedings; or

· Ordinary measures – i.e. those applied at any stage of the case.

Interim measures normally include assets freezing, prohibition to dispose of the subject-matter of a dispute, suspension of performance of an obligation.

A court grants an application if failure to take interim measures would complicate or make it impossible to enforce the judgement or cause significant damage to the claimant. The claimant must prove that these circumstances exist.

In certain cases, for interim measures to be granted, the claimant is required to give a cross-undertaking by lodging a security deposit with the court or providing the court with a bank guarantee.

Domestic service of process

Because of the digitalised proceedings, the procedural law requires the court to notify that a claim has been accepted only once, when issuing its initial ruling on the case. Usually, such notification is made by postal service. Subsequently, it is sufficient for the court to publish information and updates on the case, and the dates of ensuing hearings, in the online database.

Russian companies bear the risk of not receiving correspondence sent to their official registered address.

Evidence

Each party must provide evidence supporting the circumstances underlying its claims or objections. If a party is unable to obtain evidence itself, it can apply to the court for assistance by filing a motion for discovery.

Legal disputes are largely based on documents. All evidence must be provided in writing. In commercial cases, courts rarely grant applications to summon a witness, if certain fact is supported by written evidence.

Copies of documents are usually accepted. However, the court can request that original evidence be provided. If evidence is in electronic form (e.g. e-mail correspondence, information on a website), the court can accept such evidence in the form of a printout, or request that the relevant information be certified by a notary (if the other party objects that the content is authentic).

Documents in a foreign language must be translated into Russian, and the translator’s signature should be certified by a notary.

Official documents obtained in a foreign state must be legalised in Russia via a consulate legalisation procedure or apostilled in accordance with the 1961 Hague Convention (unless otherwise is provided for by an international treaty to which Russia is a party).

Certain disputes may require expert examination. An out-of-court expert report can be submitted by a party. The court may also appoint a forensic examination at the request of a party.

Legal costs

When filing a claim with a state court, the claimant must pay a state duty. The amount of the state duty depends on the amount claimed. In 2024 the amounts were increased. The maximum fee for filing a claim to the commercial court is now RUB 10,000,000.

Once the final court decision is issued, the winning party can demand the recovery of legal costs including the state duty, translation and legalisation costs, notary fees, travelling expenses, expert’s and lawyer’s fees.

As a rule, reasonable expenses that can be evidenced are recovered almost in full. They can however be reduced if they are deemed irrelevant, optional, etc. In practice, courts tend to significantly reduce the amount of legal representation fees awarded.

Enforcement

A judgement becomes final if (i) the deadline for filing an appeal has expired or (ii) if the appeal was not granted. It comes into force once the appeal court renders its decision and can be enforced after that. The creditor may apply to the court for a writ of execution and, if the creditor knows where the debtor’s accounts are held, submit it to the debtor’s bank.

If the judgement may not be enforced against the debtor’s bank account, the claimant may apply to the Court Bailiffs Service. Bailiffs collect information and trace assets. They also seize and auction them.
Success of enforcement depends on whether the debtor has any assets.

Recognition and enforcement of foreign court decisions and arbitral awards

To enforce a foreign court decision on an economic dispute or an arbitral award in Russia, a party to the dispute must comply with a statutory recognition procedure before the competent Russian commercial court.

As a rule, foreign court decisions are enforced provided there is a relevant international treaty or, in exceptional cases, when the principles of international comity or reciprocity are applied by the Russian court.

Mutual recognition and enforcement of foreign court decisions is provided, for example, by the Russian bilateral treaties with Vietnam (Moscow, 1998), Egypt (Moscow, 1997), India (New Delhi, 2000), and China (Beijing, 1992).

As for the arbitral awards, Russia is a contracting state to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Russia applies it based on the reciprocity principle, i.e. only to awards made in the territories of other contracting states.

Based on the convention, Russian courts generally recognise foreign arbitral awards. They may also refuse enforcement based on the ground provided in the convention, including based on the public policy exception.

ADR

Mediation and reconciliation

Parties to a dispute can use judicial reconciliation or non-judicial mediation.

Judicial conciliators are retired judges.

Their services are free, and there is no court fee to be paid.

Judicial reconciliation can be used not only in civil proceedings, but also in the disputes arising from administrative or other public legal relations.

Non-judicial mediation (also known as commercial mediation) is also available and actively developing nowadays.

Mediation can be arranged without preliminary court actions or after starting court proceedings. It is confidential.

Judicial conciliators, as a rule, act more actively during the procedure, comparing to mediators.

The role of the mediator is to organise and hold meetings of the parties to a dispute, create favourable conditions for them to reach a mutually acceptable agreement.

Nowadays reconciliation and mediation are not very popular in Russia.

Arbitral tribunals

The landscape of the Russian arbitration has materially changed after the major reform of 2016 – 2019.

A set of new laws provided for obtaining an official status of permanent arbitration institutions (“PAI”); introduced a requirement for licensing of Russian PAIs and for foreign arbitral institutions; established the different regimes for PAIs and ad hoc arbitral tribunals; and clarified many issues related to arbitrability of disputes, including those qualified as corporate.

Under the new legislation, only those arbitral institutions that received an official PAI status may administer arbitral proceedings with a seat in Russia.

Organisations acting without a PAI status are forbidden from administering disputes.

PAI (under the auspices of which an arbitration court operates) can only be created within a non-profit organisation with the consent of the Russian Government.

The new law on arbitration bans state bodies and local authorities, state corporations and companies, political parties, religious organisations, as well as notarial or advocates’ bodies from establishing PAIs.

Currently there are seven Russian forums that have a status of PAI:

· the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation (ICAC);

· the Maritime Arbitration Commission at the Chamber of Commerce and Industry of the Russian Federation (MAC);

· the Russian Arbitration Center at the Russian Institute of Modern Arbitration (RAC);

· the Arbitration Centre at the Russian Union of Industrialists and Entrepreneurs (AC at the RSPP);

· The Arbitration Institution under the Russian Engineering Union;

· The Arbitration Center under the National Institute for the Development of Arbitration in the Fuel and Energy Sector; and

· the National Sports Arbitration Center.

The status of a PAI provides for certain advantages for parties to a dispute, as compared with ad hoc arbitration. Namely, only a PAI may administer arbitration of corporate disputes involving Russian companies (including M&A disputes arising from sale and purchase agreements). Moreover, a special wording to an arbitration agreement that allows to “fine-tune” an arbitration (excluding possibility of challenging of the award in state courts and other forms of their intervention in the arbitration proceedings) may be introduced, if a dispute is to be referred to PAI.

If an award is rendered in Russia by an arbitration court under the auspices of a foreign arbitral institution which does not qualify as a PAI, such award will be considered as having been rendered by an ad hoc tribunal.

Currently, there are five foreign forums that have a status of a foreign PAI in Russia:

· Hong Kong International Arbitration Centre (HKIAC);

· Vienna International Arbitral Centre (VIAC);

· International Court of Arbitration of the International Chamber of Commerce (ICC);

· Singapore International Arbitration Centre (SIAC);

· Dubai International Arbitration Centre (DIAC).

Ad hoc arbitration

Many restrictions apply to ad hoc arbitration. They are not authorised to consider any corporate disputes. State courts will not assist them with collecting evidence. The parties may not exclude the right to challenge an arbitrator in the state court, as well as the possibility to cancel an award.

Arbitrability

Under Russian law any civil law dispute is arbitrable, unless otherwise is provided by a federal law.

The law sets out a list of disputes that are non-arbitrable:

· Insolvency and bankruptcy disputes;

· Antitrust disputes;

· Family and inheritance law matters;

· Administrative disputes;

· Labour disputes;

· Class actions;

· Disputes involving state registration matters (for example, disputes concerning immovable property located in Russia); and

· Disputes relating to public procurement (until a specific PAI is established to hear such disputes).

This list is designed to be exhaustive. However, a set of very specific rules are applied in relation to corporate disputes involving Russian companies. Some of them are not arbitrable, and some of them are arbitrable subject to certain conditions.