Moving towards a system for class actions
Class actions will become an attractive way for business entities to protect themselves from bad-faith competition only if gaps in the regulation of this type of dispute are filled in, and also only if certain substantive legal institutions are applied.
One of the difficulties is that the role of the representative plaintiff in collective lawsuits is insufficiently regulated. In this case, unlike under the general rule, a representative plaintiff in a group of persons exercises their powers without a power of attorney, and they may engage an expert who is qualified to provide legal assistance to take part in the process. Undoubtedly it will be necessary to involve such an expert in disputes regarding the recovery of losses when there is a need to prove that the substance of an offence under antimonopoly law has taken place. However, there is currently no regulation specifying what powers are vested in a professional legal adviser in relation to class actions.
A further problem relates to court costs. In those countries where class actions are most widespread, their effectiveness can be explained among other things by the ability for expenses on handling the case to be distributed among members of the group. Chapter 28.2 of Russia’s Arbitration Procedural Code (APC) governs the procedure under which class actions are examined; it lacks any rules dealing with court costs being allocated among members of the group or with the person handling the litigation being paid any kind of fee. Uncertainty in terms of incurring legal expenses may be a reason for victims of a violation of antimonopoly legislation (particularly in the case of small and medium-sized businesses) turn their backs on the chance to protect their rights by joining a class action. Moreover, if a party that sets a class action in motion cannot be sure that it will recover part of the resources it expends, this will be a further factor pushing it towards filing an individual lawsuit of its own.
An issue that is just as important but which is also still not legally regulated is withdrawal from a class action. Difficulties occur both when one member pulls out of the claim, resulting in the number of claimants going below that required by law, and when the representative plaintiff in a group withdraws from the claim.
If a group’s representative plaintiff withdraws from the case, this may result in proceedings in the case being terminated, and therefore in other members being unable to apply to the court again with the same claim on the same grounds. To this end, it would be reasonable to enact a provision in the APC allowing members of a group to reissue proceedings if they have not formally withdrawn their claims.
Finally regulation is needed in relation to the mechanism and procedural consequences of the group’s representative plaintiff losing its powers, for example if it has committed a gross breach of the powers entrusted to it or has abused them.
One of the difficulties is that the role of the representative plaintiff in collective lawsuits is insufficiently regulated. In this case, unlike under the general rule, a representative plaintiff in a group of persons exercises their powers without a power of attorney, and they may engage an expert who is qualified to provide legal assistance to take part in the process. Undoubtedly it will be necessary to involve such an expert in disputes regarding the recovery of losses when there is a need to prove that the substance of an offence under antimonopoly law has taken place. However, there is currently no regulation specifying what powers are vested in a professional legal adviser in relation to class actions.
A further problem relates to court costs. In those countries where class actions are most widespread, their effectiveness can be explained among other things by the ability for expenses on handling the case to be distributed among members of the group. Chapter 28.2 of Russia’s Arbitration Procedural Code (APC) governs the procedure under which class actions are examined; it lacks any rules dealing with court costs being allocated among members of the group or with the person handling the litigation being paid any kind of fee. Uncertainty in terms of incurring legal expenses may be a reason for victims of a violation of antimonopoly legislation (particularly in the case of small and medium-sized businesses) turn their backs on the chance to protect their rights by joining a class action. Moreover, if a party that sets a class action in motion cannot be sure that it will recover part of the resources it expends, this will be a further factor pushing it towards filing an individual lawsuit of its own.
An issue that is just as important but which is also still not legally regulated is withdrawal from a class action. Difficulties occur both when one member pulls out of the claim, resulting in the number of claimants going below that required by law, and when the representative plaintiff in a group withdraws from the claim.
If a group’s representative plaintiff withdraws from the case, this may result in proceedings in the case being terminated, and therefore in other members being unable to apply to the court again with the same claim on the same grounds. To this end, it would be reasonable to enact a provision in the APC allowing members of a group to reissue proceedings if they have not formally withdrawn their claims.
Finally regulation is needed in relation to the mechanism and procedural consequences of the group’s representative plaintiff losing its powers, for example if it has committed a gross breach of the powers entrusted to it or has abused them.