Pre-trial dispute settlement

Jan, 16 2020

Contents:

According to the Russian law, should a conflict of interest arise, it can be resolved in two ways – in a judicial order or in a pre-trial order. The first option is used more often nowadays, however, there is a positive trend towards an increase in the popularity of pre-trial settlement of disputes since a legal process can be disadvantageous to both parties for various reasons.

Any business can whenever face a situation of a conflict of interest, inconsistency in actions, or failure to fulfill contractual obligations with partners, suppliers, or contractors. If it is impossible to resolve such a conflict situation voluntarily, one of the parties, or even both of them, most often go to court. The legal process is usually a lengthy procedure that takes time and money.

Until recently, the possibility of pre-trial dispute resolution could be implemented voluntarily (indicated in the contract), but amendments to the legislation of the Russian Federation have been introduced, thus the option of pre-trial proceedings has become a priority for certain categories of cases, and even the court will now have to refuse to consider the case without a pre-trial settlement.

When is pre-trial dispute resolution mandatory?

Taking into account the Russian legislation, it should be mentioned that it provides for a mandatory pre-trial resolution of disputes. Here is a list of the laws governing this area:

  • Arbitration Procedure Code;
  • Civil Procedure Code;
  • Code of Administrative Procedure.

Besides, the procedure for pre-trial proceedings is most often described in a general agreement between the parties.

Meanwhile, the law provides for the following basic cases, when the pre-trial procedure of dispute settlement is not applicable:

  • cases when it is necessary to establish legally significant facts;
  • cases when it is necessary to resolve the issue of compensation should the conditions of the trial or the execution of judicial acts be violated;
  • bankruptcy cases;
  • corporate events;
  • cases when it is necessary to protect group interests;
  • cases of foreign courts decisions’ enforcement;
  • when the prosecutor’s office or other public service applies to the arbitration court.

In other cases, pre-trial proceedings are mandatory. Here are some of the most common cases of this practice:

  • cases when it is necessary to resolve the issue of fees or fines;
  • cases of appeal against decisions of state services (for example, tax);
  • cases when it is necessary to resolve the issue related to the contract;
  • cases with controversial issues with banks;
  • cases of violation of the rights of consumers of financial services.

Types of pre-trial dispute settlement

Pre-trial resolution of disputes is an option for resolving a conflict situation when the parties avoid lengthy and costly legal processes. This solution will be preferable to all parties, as it gives a quick result. According to local legislation, the parties can choose one of the possible methods for resolving a conflict situation:

  1. arbitration;
  2. mediation;
  3. pre-trial settlement of disputes.

Arbitration is a commonly used tool for resolving conflict situations without applying to the court. This method involves an arbitral tribunal. An arbitral tribunal in its decisions is guided by the Law of the Russian Federation No. 102-FZ On Arbitration Courts in the Russian Federation.

The second possible scheme is mediation. In this case, a special person is addressed – a mediator. A mediator acts as a judge, advising both parties and providing them with assistance in assessing the situation. The work of a mediator is also regulated by federal legislation, namely, Law No. 193-FZ On the Mediation Procedure.

The third option for resolving conflict situations is a pre-trial settlement of disputes. This option is often used in practice. 

In most cases, the current contract between the parties provides for a mechanism of resolving a dispute as well as for the possibility of filing a claim and a requirement to comply with the terms and conditions of the contract, or to return the money, etc. 

Sometimes the documents do not directly indicate the deadlines for fulfilling the obligations, therefore the party can send a complaint to determine the beginning of the deferral. In this case, the debtor has to fulfill his obligations within 7 days after receiving such claim. Also, this document does not exempt from compliance with measures to resolve a conflict situation.

According to the current laws of the Russian Federation, there is no clear definition of the complaint, but in the current practice, it is a document-requirement that one party sends to the other. The purpose of the complaint is to inform the other party about violations of obligations and to demand these violations to be eliminated. In this case, the methods of protecting rights provided for by law are applied. Thus, a complaint is a well-formed written document that describes in detail the essence of the problem and clearly indicates the ways of its resolution.

Besides, if a complaint does not clearly indicate the amount of the claims and the time frame, then it will not be considered as evidence of the use of the dispute resolution scheme. That is why the parties must very responsibly draw up complaints and indicate there all the necessary information. The more detailed, the better, since this document can subsequently be used as an additional argument in court.

In cases where the relationship of the parties is governed by an agreement, a lawsuit can be filed only if the methods of resolving the conflict situation prescribed in this agreement were first applied. Besides, sometimes the relationship between the parties is governed by various special laws (depending on the field of activity).

Where and how is it possible to file a complaint?

The Russian legislation does not clearly prescribes the procedure for filing a complaint; however, the sending party must necessarily control its delivery (so that to be able to confirm the fact of complaint’s receipt by the other party). To do so, it is better to use postal services, or hire a courier. The legal address of the company is used for sending, the one that is indicated in the state register, or the address specified in the contract.

If you need to send several documents, it is necessary to make a list of all documents to be sent (this can then be used to prove that all marked documents have been sent and subsequently received). In future, should the court proceedings be started, this will act as evidence of the transfer of all necessary documents to the other party. For such situation, a certified letter is well suited, which must be personally handed over to the receiving party and requires a signature on receipt.

What can be used as evidence? What are the terms of pre-trial proceedings?

As practice shows, it is not always possible to resolve the conflict using pre-trial dispute settlement. In this case, it only remains to file a claim. The party that files a claim will have to provide evidence that the dispute has passed the stage of pre-trial procedure, otherwise, the court may refuse to consider the case.

This requirement is provided for by the Arbitration Procedure Code of the Russian Federation, therefore, if you have exhausted the possibilities of pre-trial settlement and did not get the necessary result, then the only possible way is to apply to court and provide relevant evidence that the means prescribed by the Law have already been used. Without this documentary evidence, the court may not accept the case for consideration, or, moreover, should the fact of violation of the procedure for pre-trial dispute settlement be found out, the consideration of the case by the court will be suspended immediately. 

A written confirmation from the other party or the fact that the period for responding to the complaint has expired can be used as an evidence that the prescribed procedure for resolving the dispute has been complied with. Therefore, it is necessary to collect all the relevant documents before applying to the court.

VALEN assists you with a pre-trial dispute settlement

Any case of resolving a disputable situation is individual, there are quite a few factors that must be taken into account to correctly assess the situation and make the best possible decision. This is why a professional legal advice is always necessary. VALEN specialists will always be glad to help you.

Our experts will help to collect all the necessary documents, file a claim, draw up a complaint as well as to protect client’s rights and interests in court.

Legal assistance in the Russian Federation is our specialization. All our employees are highly qualified specialists with up-to-date knowledge and extensive practical experience. Thus, should the necessity to protect your rights arise, do not hesitate to contact us and we will help you at all stages of the process.

Author of the article
Pre-trial dispute settlement
Valentina Khlavich
Managing Partner
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