Consideration of applications for reimbursement of legal costs under Chapter 29 of the Arbitration Procedure Code

The issue of distribution of legal costs occupies a special place in the arbitration process. The possibility of recovering legal costs and their estimated amount often plays an important role in making a decision to apply to the court for the protection of violated rights.

On January 5, 2024, Federal Law No. 667-FZ of December 25, 2023 entered into force, introducing a number of amendments to the Arbitration Procedure Code of the Russian Federation and providing for special procedural mechanisms that allow for the consideration of applications for reimbursement of legal costs in summary proceedings.

In this article, it is proposed to consider what the essence of these changes is, what are their pros and cons and what should be taken into account by representatives and principals.

Procedure for simplified proceedings: concept and features

The procedure for summary proceedings is regulated by Chapter 29 of the Arbitration Procedure Code of the Russian Federation. This mechanism is aimed at speeding up the consideration of cases and reducing the burden on the judiciary.

The essence of the simplified procedure is as follows.

The judge considers the case in summary proceedings without summoning the parties after the expiration of the time limits established by the court for the submission of evidence and other documents (Part 5 of Article 228 of the Arbitration Procedure Code of the Russian Federation).

In accordance with Part 3 of Article 228 of the Arbitration Procedure Code of the Russian Federation, the court sets a period of at least 15 working days from the date of the ruling on the acceptance of the application for proceedings to be submitted by the parties to the commercial court considering the case, and to send to each other the evidence to which they refer as the basis for their claims and objections.

For the submission of additional documents containing explanations on the merits of the stated claims and objections in support of its position, but not containing a reference to evidence, the court sets a period of at least 30 working days from the date of this ruling (paragraph 2 of paragraph 3 of Article 228 of the Arbitration Procedure Code of the Russian Federation).

The court shall make a decision on the basis of the documents submitted by the parties within a period not exceeding two months from the date of receipt of the statement of claim, application to the arbitration court. The operative part shall be published on the Internet.

Thus, simplified proceedings are a written form of the process, where the decisive role is played by documents, and not by oral arguments of the parties. This is convenient for indisputable claims, but can cause difficulties when considering issues that require a detailed analysis of the circumstances.

Consideration of applications for the recovery of legal costs

Legal costs are not only the state duty, but also other costs associated with the protection of rights in court. These include:

• expenses for the services of representatives;
• costs for experts, specialists, translators;
• expenses for travel of representatives;
• postal and other costs associated with the process.

In practice, it is the amount of the representative's remuneration that causes the greatest disputes. The court assesses not only the fact of the provision of services, but also their quality, volume, complexity of the case, as well as the proportionality of the claimed amounts to the market value of such services.

When considering applications for the recovery of costs, the court is guided by the principle of reasonableness.

According to the legal position set forth in the ruling of the Constitutional Court of the Russian Federation of 21.12.2004 No 454-O, the court may reduce the amount of recovered legal costs only if it recognizes such costs as excessive due to the specific circumstances of the case.

Paragraph 13 of the Plenum of the Supreme Court of the Russian Federation dated 21.01.2016 No 1 "On Certain Issues of Application of the Legislation on Reimbursement of Costs Related to the Consideration of a Case" defines the concept of reasonable legal expenses, according to which such expenses for the services of a representative should be considered reasonable, which, under comparable circumstances, are usually charged for similar services.

When determining reasonableness, the volume of the claims filed, the amount of the claim, the complexity of the case, the volume of services provided by the representative, the time required for the preparation of procedural documents, the duration of the case consideration and other circumstances may be taken into account. The reasonableness of the legal costs for the payment of the representative's services cannot be justified by the knowledge of the representative of the person participating in the case.

Based on the above, the significant evaluation criteria (when deciding on legal costs) are the volume and complexity of the work (services) performed for the preparation of procedural documents, the presentation of evidence, participation in court hearings, taking into account the subject and grounds of the claim.

The reasonableness of the legal costs recovered by the court as an estimated category is determined by the arbitration court individually, taking into account the specifics of a particular case, the complexity and duration of the trial, the current level of payment for the services of representatives in the arbitration process.

Judicial practice shows that not all the claimed amounts are satisfied: usually from 20% to 50% of the costs are recovered.

Innovations in the agro-industrial complex

Prior to the innovations of 2024, applications for reimbursement of legal costs were considered by the courts in accordance with the general procedure. This meant summoning the parties, holding a full-fledged court session, hearing the positions of the participants in the process. In practice, this led to an additional burden on the courts and delays in the consideration of cases.

Amendments to the legislation regarding the consideration of the issue of the distribution of legal costs in a simplified manner are due to several factors:

• Procedural economy

The legislator sought to relieve the judicial system. According to statistics, in a significant number of cases, the dispute over legal costs is "secondary" in relation to the main dispute and does not require a deep legal assessment of the circumstances.

• Emphasis on written evidence

Legal costs are a category of claims, which in most cases are confirmed by written evidence: contracts with a representative, acts of work performed, payment orders, etc.

• Shorter time limits

In accordance with Part 2 of Article 226 of the Arbitration Procedure Code of the Russian Federation, cases under the simplified procedure are considered by a judge alone within a period not exceeding two months from the date of receipt of the statement of claim, application to the arbitration court.

Thus, the legislator considered it reasonable to simplify the procedure for considering issues of legal costs, based on the principles of accessibility of justice, reducing the burden on the courts and speeding up procedures.

Advantages and disadvantages

Consideration of applications for legal costs in a simplified manner has both pros and cons.

Advantages:

• reducing the burden on judges and court staff;
• accelerated terms of consideration of applications;
• disciplining the parties, who are obliged to submit all evidence within the established time limit.

Disadvantages:

• limiting the ability of the parties to speak orally and convince the court of their position;
• the risk of incomplete consideration of the specifics of the case;
• weak applicability of the simplified procedure to disputes about the reasonableness of expenses, since it is in this category of cases that the subjective factor plays a significant role.

Thus, the introduction of a simplified procedure for considering applications for legal costs is a logical step in the development of the procedural system. It allows you to relieve the courts and speed up the process, but it does not always meet the interests of the parties to the dispute.

In the preparation of such statements, the quality of written argumentation and evidence plays a key role. The positions of the highest courts confirm that the courts have the right to reduce clearly inflated costs, focusing on the criterion of reasonableness.

The chances of recovering the full amount increase if there is a clear record of the amount of work, confirmation of payment and justification of the proportionality of expenses.