Artur Rokhlin and Victor Fadeev analyse the application of antimonopoly legislation, and provide an overview of how claims originating in foreign jurisdictions are administered by the courts within Russia
1 Are there any particular sectors in your jurisdiction which tend to be a focus for competition damages actions? Why do you think this is the case?
The right to file a competition damages action is provided by sec. 3 of art. 37 of the Federal Law dated 26.07.2006 №135-FZ “On competition protection”.
The basic problem when filing a damages action is proving the cause-and-effect relationship between the breach of the antimonopoly legislation and the extent of the damages.
As distinct from some other jurisdictions, special methods of calculation of damages arising out of antitrust violations have not yet been developed in Russia.
Russian courts, when hearing damages actions arising out of antitrust violations, use the common approach, according to which the plaintiff must prove that the defendant is an entity whose actions caused the damages, the fact of a breach of obligations or cause of harm, and the fact of damages having occurred.
In connection with the application of such common approach, and considering the absence of special rules for the calculation of damages arising from competition violations, in most cases the plaintiffs manage to recover only direct damages. These may have come about, for example: as a result of additional expenses of the plaintiff on remedial measures (in case №А40-135137/12-131-526 the courts satisfied the claim to recover the expenses of the plaintiff for a boiler house which he had to purchase as a result of deviation of the defendant – a heating supplier – from conclusion of the heating supply contract); or to recover excessively paid monetary funds as a result of monopolistically high price establishment (unjustifiable enrichment)(in case №А74-1015/2012 the court, based on the decision of the antimonopoly authority, where the company was recognised to have set a monopolistically high price for aviation fuel, recovered from the defendant the unjustifiable enrichment equal to the difference between the price actually paid and the price determined by the antimonopoly authority as market price.).
In separate cases, plaintiffs have succeeded in recovering lost profits (in case №А40-14800/2014 the Supreme court of the Russian Federation considered reasonable the claim of the plaintiff for recovery of 408 million rubles of lost profits, which arose from the defendant’s breach of antimonopoly legislation. The recovery was calculated as an unreceived bonus payment, which the plaintiff would have received if the defendant had not broken his obligations under the framework agreement).
Meanwhile, the distinctive feature of antimonopoly legislation violations is that in most cases the plaintiff does not have an opportunity to justify, with total authenticity, the extent of damages arising out of antimonopoly violations. For this reason, private actions have not become common practice in Russia.
2 Who do damages claims tend to be brought by in your jurisdiction? (e.g. direct purchasers, indirect purchasers, end consumers?) If claims are not currently being brought by indirect purchasers and/or end consumers, why do you think this is?
Usually the plaintiffs in competition damages claims are the entities that directly cooperate with the violator (counterparties or potential counterparties). This is basically connected with the necessity to show direct evidence that the actions of the defendant specifically resulted in the occurrence of damages, as well as an interrelation between the extent of damages and the actions of the defendant, in order to recover such damages.
3 What approach are the courts taking to claims that originate from investigations or infringements arising out of the jurisdiction?
Russian courts accept the claims, the hearing of which is attributed to their competence under the law. As a general rule, the courts accept the claims against defendants who reside within the territory of Russia.
Administration of justice is normally conducted under the legislation of the Russian Federation. If, while considering the case, foreign legislation is to be applied, the courts must apply foreign laws in accordance with their official interpretation, practical application and the doctrine in the relevant foreign jurisdiction.
The parties involved in the case must present the evidence of the facts to which they refer. In accordance with art. 69 of the Arbitration Procedure Code of the Russian Federation (APC RF), the circumstances established by the effective court decisions or the notarised circumstances do not need to be proved at trial. The same rules are stipulated by art. 61 of the Civil Procedure Code of the Russian Federation (CPC RF). Thus, in accordance with Russian legislation, only Russian court decisions have a prejudicial effect in Russian courts.
Decisions of foreign courts and acts of foreign executive authorities can be recognised in the Russian Federation only if this is stipulated by an international treaty. In the absence of an international treaty, the plaintiffs applying to Russian courts with competition damages claims, in accordance with the common rules, are obliged to present the evidence and grounds of the fact of a violation of competition legislation, as well as the cause-and-effect relationship between the breach of the antimonopoly legislation and the occurrence of damages.
4 Do claimants favour your jurisdiction when they have a choice as to where to lodge a claim? Why?
Claimants normally favour filing a suit with the Russian courts when the recovery of damages will take place on the territory of the Russian Federation, as far as the execution of the foreign court decision requires an additional recognition procedure.
The recognition of foreign court decisions is conducted by the Russian courts based on an appropriate application by the party in favour of whom the decision was rendered. The courts satisfy the application for recognition of the foreign court decision if an international treaty or the relevant domestic law provides such an opportunity.
Among other “pluses” in favour of filing claims with the Russian courts are the speed of trial and the low costs.
5 In practice, are the courts generous to claimants when awarding disclosure, including pre-action disclosure?
Each party involved in the case must prove the circumstances to which he/she refers. All the evidence should be disclosed to the other parties involved in the case before the court sessions or within the term determined by the court. The parties are entitled to refer only to those pieces of evidence which were disclosed to the other parties duly in advance.
If a party does not independently have an opportunity to obtain the evidence which is in the possession of the other party, he/she is entitled to file a motion with the court to call evidence.
The motion should contain the evidence, the circumstances that can be proved by the evidence, the place of its location, as well as the reasons preventing the party from obtaining the evidence independently. If the court considers it necessary to obtain the evidence in order to render the right decision, and the party filing the motion genuinely does not have an opportunity to obtain it independently, the court can grant the motion and call for the evidence.
Russian procedural law provides an opportunity for the calling of evidence within the framework of the legal proceedings. “Pre-action disclosure”, which is used in some other jurisdictions, is not applied in Russia.
6 How do the dynamics of a settlement really work in your jurisdiction? Is there a mechanism by which a "global settlement" can be approved/enforced?
In Russia, settlement is acceptable at any stage of trial. A settlement is concluded by the parties involved in the case and, after that, it should be submitted to the court for approval. If there are a few plaintiffs or a few defendants in the case, the settlement can be concluded between all the plaintiffs and defendants or between some of them. Under the common rules, the courts will not approve the settlement if it contravenes the law or offends the rights and lawful interests of the other entities.
The settlement is fulfilled by the parties voluntarily. If any party refuses to fulfil it, the settlement is subject to execution under an order of enforcement.
7 How long do damages actions take? What is the likely range of costs required to defend a claim?
The average term for consideration of damages claim cases in the Russian courts is three to six months in the first instance. The legal costs include state duty and expenses. The state duty is determined in accordance with the Tax Code of the Russian Federation, based on the sum of the claim, and may amount to between 400 and 200,000 rubles. The expenses may comprise the representative’s fee, interpreter’s fee, payments to experts, etc.
8 What funding options are available for (i) claimants and, (ii) defendants, in your jurisdiction?
Third-party funding of trials is not widespread in Russia. Normally the parties bear their expenses independently. The state duty is paid by the plaintiff when filing a suit, in the sum determined in accordance with the Tax Code. The monetary sums due to the experts, specialists, and other costs arising from the trial, should be preliminarily transferred to the deposit of the court by the party claiming an appropriate motion. In certain cases, stipulated by the legislation, the plaintiffs may be granted a delay of payment of the state duty, or payment by instalments. Separate categories of plaintiffs can be released from payment of the state duty.
Under the common rules, the legal costs must be met by the unsuccessful party.
9 Do you anticipate any significant increase in damages actions in your jurisdiction over the next year or two? If so, where and why do you anticipate these increases coming?
No fundamental changes in the regulation of competition damages actions are expected in the near future. In connection with this, a significant increase in competition damages actions is highly unlikely.
10 In your opinion, what are the key changes (if any) required in your jurisdiction to improve the effectiveness of private enforcement of competition law?
In our opinion, the development of special methodologies for the calculation of damages arising from the violation of antimonopoly laws, could improve the effectiveness of private actions brought for breaches of competition law. The Supreme Court of the Russian Federation could issue the relevant instructions for the lower courts. It would also be useful if the antimonopoly authority participated more actively in trials, as in many cases it takes a neutral position.