Comments to the report on the work of commercial courts

The Supreme Commercial Court has published statistics about the work of commercial courts in Russia. Irina Panina from KPMG in Russia and CIS shares her comments on the document.

Irina Panina
senior consultant
KPMG in Russia and CIS

+7 495 937 4477

One of the characters in the famous Soviet comedy ‘Prisoner of the Caucasus, or the new adventures of Shurik’ says: 'Long live our courts! The most humane court in the world!’ Can the same be said about the commercial courts of the Russian Federation?

I think if we ask an ordinary man what he thinks of courts in Russia, the answer might well be: 'There is no justice! It’s all about money!'. This view may well be right and may be a reaction to a series of court cases, widely reported in the press and on television, which have certain political overtones. People spend a lot of time watching television.

However, if you ignore the emotions and turn to statistics, it is not so bad! An analysis of the report on the work of commercial courts shows that:

  • Compared with 2009 there is a 15% decline in the number of applications to commercial courts;
  • Compared with 2009, 19% of cases considered in the first instance were brought to the appellate courts. However, only 3% of such cases were cancelled or changed on appeal;
  • There is an 18% reduction in the number of cases in cassation. Only 1.8% of cases considered by courts of the first instance were cancelled or changed on appeal;
  • Of all cases considered in cassation, 17% were appealed to the Presidium of the Supreme Commercial Court. However, only 2.5% of those applications were considered and 81% of them were cancelled.
  • Being a lawyer specializing in resolving tax disputes, I cannot objectively assess and analyze trends in resolving disputes in all types of cases. However, I can speak about tax disputes.

    Despite the fact that, according to statistics, the total number of tax cases went up, the number of cases challenging the decisions of tax authorities has fallen. This suggests the following conclusions:

    After the financial crisis taxpayers have become more cost-conscious and seek, where possible, to optimize their taxes - which inevitably entails claims from tax authorities trying by hook or by crook to patch the hole in the budget.

    The introduction in 2009 of compulsory pre-trial procedures for appeals against the decisions of tax authorities to prosecute for tax offences allows (subject to the development of a good and logical legal position) part of the claims to be removed without any need to go to court.

    I would also like to point out that courts sometimes have to solve disputes in the absence of any clear legislative rule governing the relationship in question. We should not therefore belittle the role of the courts in the development of law and the formation of law enforcement practice. The case law lets us identify gaps in legislation and provide guidance for making changes in legislation.

    Talking about courts and the judicial system of Russia, it would be unfair to say that ‘There is no justice! It’s all about money! ‘