Pre-trial dispute settlement ⚖️ pre-trial procedure for the settlement of the dispute in the civil process ?‍⚖️

There are two main dispute resolution mechanisms in the Russian legal system. The main and most frequently used method is the judicial procedure for conflict resolution. However, the second method, the pre–trial dispute settlement procedure, is gaining popularity for various reasons.

When carrying out business activities of any company, it is often necessary to face a situation when its interests conflict with the interests of a counterparty, partner or government agency. Due to the inability to resolve the existing contradiction, claims and disputes often arise, mostly ending in lawsuits.

A few years ago, compliance or non-compliance with the pre-trial procedure for resolving contradictions was applied at the discretion of the parties: as a rule, the contract provided for the possibility of pre-trial settlement. However, today, due to changes in the civil and arbitration legislation of the Russian Federation, the pre-trial (or claim) procedure has become mandatory for resolving a number of categories of cases. Moreover, failure to comply with this procedure leads to the return of the statement of claim by the court.

Cases of mandatory pre-trial dispute settlement procedure

In Russian civil legislation, the provisions on the mandatory claim (pre-trial) dispute settlement procedure are enshrined in the Arbitration Procedure Code of the Russian Federation (APC RF), the Civil Procedure Code of the Russian Federation (CPC RF) and the Code of Administrative Procedure (CAS RF). The condition of mandatory pre-trial procedure may also be provided for by the contract between the parties.

The provisions of Article 4 of the APC of the Russian Federation determine in which cases compliance with the claim settlement procedure is not mandatory. Refusal of pre-trial settlement of the dispute is possible in such cases:

• on the establishment of facts of legal significance;
• award of compensation for violation of the right to legal proceedings or the right to execute a judicial act within a reasonable time;
• on insolvency (bankruptcy);
• corporate disputes;
• protection of the rights and legitimate interests of a group of persons;
• ordered production;
• related to the performance by arbitration courts of the functions of assistance and control in relation to arbitration courts;
• on recognition and enforcement of decisions of foreign courts and foreign arbitral awards;
• when applying to the arbitration court of the prosecutor, state bodies in defense of public and legitimate interests and rights of organizations and citizens in the field of entrepreneurial and other economic activities.

Mandatory compliance with the pre-trial (claim) dispute settlement procedure is provided for a wide category of disputable situations. The most common of which, within the framework of the implementation of economic activities by companies, are the following:

• on the collection of mandatory payments and sanctions;
• on the collection of tax sanctions (fines, penalties) from individuals, as well as from legal entities (if an out-of-court procedure is not allowed);
• collection of customs duties, special, anti-dumping, countervailing duties, interest and penalties;
• litigation on appeal of decisions (requirements, acts) of the tax authority;
• disputes at the conclusion of the contract are mandatory;
• disputes in case of modification, termination of the contract, including the lease, lease agreement;
• termination of the bank account agreement;
• on the protection of the rights of consumers of financial services.

At the same time, it is also established that non-compliance with the pre-trial procedure entails the return of the statement of claim by the court (Article 129 of the APC RF, Article 135 of the CPC RF, Article 129 of the CAS RF) or the abandonment of the statement of claim without consideration if it is accepted for production (Article 148 of the APC RF, Article 222 of the CPC RF, Article 196 of the CAS RF).

Pre-trial settlement of disputes

The essence of the pre–trial procedure for conflict resolution is to avoid lengthy trials and related financial, time and other costs for both parties. There are several types of pre-trial settlement of disputes between the parties:

• mediation (using an intermediary);
• arbitration court;
• claim procedure.

Mediation is a pre–trial settlement procedure when an intermediary is used to reconcile the parties and resolve a dispute. The law prescribes to appoint individuals as mediators. They do not take sides without providing her with consulting or legal assistance. This procedure is regulated by Federal Law No. 193-FZ of 27.07.2010 “On Alternative Dispute Settlement Procedure with the Participation of an Intermediary (mediation procedure)”.

Arbitration court is another kind of conflict resolution without involving state judicial bodies. An arbitration court is a court created by a society of entrepreneurs to resolve disputes that arise. Their activities are regulated by Federal Law No. 102-FZ of 24.07.2002 “On Arbitration Courts in the Russian Federation”, Law of the Russian Federation No. 5338-1 of 07.07.1993 “On International Commercial Arbitration”.

The claim procedure is one of the most frequently used forms of pre–trial dispute settlement in civil proceedings. The claim procedure for dispute settlement may be provided for by legislation and a civil contract between the subjects.

As a rule, the terms of the contract prescribe the obligation of the party to send to the other party a written claim containing the requirement of proper performance of obligations, refund of funds, etc. In addition, the submission of a claim entails the interruption of the limitation period if the debtor acknowledges the debt or non-fulfillment of contractual obligations in response to the claim.

In some cases, the contract does not specify a deadline for the fulfillment of obligations, and in order to determine the date of the beginning of the delay in the fulfillment of the obligation, it is necessary to send a claim (paragraph 2 of Article 314 of the Civil Code of the Russian Federation), in fulfillment of which the debtor is obliged to fulfill the obligation within seven days after its receipt.

Pre-trial dispute settlement procedure in judicial practice

Currently, there is no single definition of a claim in the legislation. But based on judicial practice, it can be concluded that the claim is a claim of an interested person, sent directly to the counterparty, to settle a dispute between these parties by voluntarily applying a method of protecting the violated right provided for by law (Resolution of the West Siberian District of 06.12.2016 No. F04–6126/2016 in case No. A75-7089/2016). At the same time, the claim must be made in writing and contain clearly formulated requirements, the amount and their calculation.

As indicated by the First Arbitration Court of Appeal in its ruling of 03.02.2017 in case No. A43-28926/2016, a claim that does not contain the amount of the claim, as well as the periods of occurrence of debt, will most likely not be accepted by the court as evidence of a pre-trial dispute settlement procedure. Therefore, when drawing up a claim, the interested party must carefully approach its preparation, describing its essence in as much detail as possible, the amount of claims, give its calculation and send it to the other party in writing.

Please note that in the case when the claim settlement is provided for by the law, and when it is carried out on the basis of a concluded contract, the resolution of the conflict is transferred to the court only after compliance with its procedure in accordance with paragraph 5 of Article 4 of the Arbitration Procedural Code of the Russian Federation and Article 132 of the Civil Procedure Code of the Russian Federation. At the same time, the procedure is not always established by Federal law, it is often regulated by legislative acts for a specific industry.

Address and method of sending the claim

The law does not contain regulations on the issue of the address of the claim. Thus, it can be sent to the party to the contract in any available way that ensures its receipt. It can be sent by: Russian Post, courier service or by express. In accordance with established practice, the acceptable address for sending a claim is the address of the party specified in the Unified State Register of Legal Entities or the Unified State Register of Legal Entities, as well as the address specified in the contract itself.

When the claim documentation is sent by mail, the best option would be to make an inventory of all attachments. The fact is that the court may consider that if there was no inventory of documents, it is impossible to reliably establish which papers were sent. I.e. in this case, it will be extremely difficult to prove the fact of sending claims to the responsible party. At the same time, there have been cases (resolution of the Moscow District Court of 09.02.2017 No. F05-1104/2017 in case No. A41-59746/16) when the court did not consider the inventory necessary. In any case, a registered letter with an inventory will help clarify this issue in court.

The best option is to hand over the requirements to the defendant personally under the signature.

Proof and terms of the pre-trial dispute settlement procedure

In cases where the settlement of the dispute in the pre-trial claim procedure failed, the parties move to the judicial plane of conflict resolution. At this stage, the plaintiff will need to prove to the court that the claim was sent to the other party to the contract.

Today, as a general rule, a statement of claim filed without evidence of compliance with the claim procedure attached to it is returned by the court. At the same time, if the court accepted a statement of claim for production without appropriate evidence, but it will be later established that the pre-trial procedure for settling the dispute in civil proceedings was not observed, at the request of the party or on its own initiative, the court has the right to leave the statement of claim without consideration in accordance with Article 148 of the APC of the Russian Federation.

The deadlines for responding to the claim are provided for in Article 4 of the APC of the Russian Federation: disputes from civil legal relations are transferred to the arbitration court only after taking measures for pre–trial settlement, namely, after 30 calendar days from the date of sending the claim to the opponent, unless another deadline and (or) pre-trial dispute settlement procedure is established in the contract or in the law.

As evidence of compliance with the claim procedure for dispute settlement, information about the consideration of the claim by the respondent in the form of a written response, or the expiration of the response period to the claim can be considered. Thus, before filing a claim, it is necessary to make sure not only that the claim is drawn up and sent correctly, but also that the deadlines stipulated by the contract or the law for responding to it are met.

VALEN lawyers will analyze your situation, help to study and analyze the documents on the disputed issue, conduct a comprehensive analysis of the conflict situation based on the documents and information provided by the client, and develop an optimal solution to the conflict. We will draft the text of the requirements to the opposing party, form a legal position and act in negotiations with the counterparty.

Our company specializes in the settlement and resolution of economic, corporate, tax and other disputes, we help organizations and individual entrepreneurs to successfully resolve conflicts with counterparties and clients both in court and in a claim procedure.

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