Summary Proceedings and ‘Judicial Mediation’ in Commercial Courts

Statistics show that commercial courts are overburdened: in 2011 only regional courts, the ‘foundation’ of the system of commercial courts, reviewed 1,403,706 cases; a judge considers in average 52 cases per month. Can summary proceedings and ‘judicial mediation’ ease the caseload in commercial courts?

We will focus on two measures proposed by the Supreme Commercial Court: summary proceedings and judicial mediation in the pre-trial stage.

In summary proceedings, a single judge considers a case within a shorter period of time, without hearings, on the basis of submitted documents and evidence. At the moment, the scope of cases which can be considered this way is limited to claims of recovery of costs associated with the use of premises, demands that had been admitted but not fulfilled, demands for up to 20,000 roubles ($670) for legal entities and 2,000 roubles ($67) for individual entrepreneurs.

This, relatively narrow, range of cases is getting even narrower due to the fact that if a party objects to summary proceedings the dispute is settled according the general rules of procedure. Thus, in 2011 less than 20,000 disputes (less than 1.5% of the total caseload) were resolved in summary proceedings. As one can see, the number is insignificant.

In February, the State Duma has passed in the first reading a bill, introduced by the Supreme Commercial Court of Russia, expanding the range of cases that can be settled by summary procedure.

These cases include (besides collecting money if the amount of claim does not exceed 300,000 roubles ($10,000) for legal entities and 100,000 roubles ($3,500) for sole traders), disputes about administrative responsibility (for fines less than 100,000 roubles), about collection of compulsory payments and penalties (up to 100,000 roubles), about monetary claims admitted but not fulfilled (regardless of the amount), claims based on documents proving the arrears under a contract and claims based on promissory notes protested by a notary public, non-acceptance of promissory notes or the failure to date acceptance.

The main novelty, however, is that the defendant's objections to summary proceedings will not be considered.

Courts, though, will have the right - if a judge deems it necessary to clarify further the circumstances, to investigate additional evidence or he/she comes to conclusion that considering the case in summary proceedings would not meet the aims of justice - to switch to the general rules. Thus, the transition to general procedure will be left in the discretion of courts.

If the bill is passed, this is going to be an important change for commercial disputes. On the one hand, the number of cases dealt in summary proceedings will substantially increase; on the other hand, there will be arguments about respecting the right to judicial protection in matters resolved in such simplified manner.

Not all these cases are deprived off the disputes about matters of law. Thus, cases in the first two categories can contain arguments about law, and this raises serious questions about the rationality of such cases being resolved in a simplified manner. In addition, small businesses may be susceptible to resolving disputes about administrative fines under the simplified procedure, since the imposition of a few unjustified fines can bring a small company to insolvency.

By now, the State Duma committees and the government have made the following reservations:

1) time for appeal is significantly reduced (to 10 days) on the decisions made in the summary proceedings, 2) the unequal status of persons who have submitted a statement of the case in on paper and those who filed it in electronic form, in terms of the time for acceptance; 3) fee for the transfer of paper documents into electronic form (10 roubles ($0.35) per sheet) does not fall under the concept of ‘state duty’ as this is a service and not a legal action, and some others. In this regard, we can assume that the bill will see further amendments.

One of the provisions of the bill is that only parties to a dispute will have remote access to the documents: the statement of claim, other documents are to be placed on the official website of the relevant commercial court and access to these documents should be available only to persons involved in the case. It is not yet clear how this will be realized in practice: whether the parties will be given a login and a password or there will be some other way to achieve this.

Moving to mediation, we’d like to note that in spite of a special federal law on mediation adopted in July 2010, the pre-trial settlements of disputes is developed very poorly in Russia, the reasons lying in the attitude to justice and the legal culture of Russian businessmen.

The Supreme Commercial Court of Russia has developed a draft law so that assistant judges or other court personnel as well as, for example, retired judges will conduct mediation. At the meeting on January 25 the Chairman of the Supreme Commercial Court Anton Ivanov has confirmed the plan to introduce judicial mediation. Participation in this procedure, according to the authors of the bill, will be voluntary with the exception, perhaps, of public bodies for which it will be mandatory.

This initiative seems reasonable because it leaves choice: it does not exclude private mediation or, for example, arbitration. In any case, we can support the inclusion of clerks in mediation only if the state mediation will be combined with the access to a private mediator.

The introduction of such a procedure will reduce the number of cases in courts. Introduction of the judicial mediation will also help building skills and habits of mediation and culture of friendly settlement of disputes which will contribute to the spread of the non-judicial mediation.

Non-judicial mediation may be more attractive for many than the judicial meditation proposed by the Supreme Commercial Court: in contrast to the court mediator, the private mediator is not allowed to assess the legality of the parties’ positions and must try to find and to agree the parties' interests.

It is obvious that at first the judicial mediation will have all the disadvantages of resolution of disputes by the state bodies. These are, first of all, the failure to find a balance of interests and mutually beneficial solution. In addition, we can assume that the state mediator will not always be able to facilitate pre-trial settlement within a reasonable period of time. However, over time this procedure, with proper management, can be perfected.

In addition, the designation to the court employees of the functions of mediators inevitably raises the question of their legal status.

In conclusion, until judicial and non-judicial mediation become a widely spread practice, increasing the state duty as a stimulus to refer to pre-trial settlement is unacceptable. This practice, in effect, would deprive the vast number of businessmen of the right to judicial protection.

Muranov, Chernyakov & Partners