Dismissing a claim without consideration under the Arbitration Procedure Code (Art.148)

Procedural law provides various grounds for dismissing a claim without consideration, including the plaintiff's failure to comply with pre-trial or other dispute resolution procedures with the defendant. This is outlined in Article 148, Part 1, Paragraph 2 of the Arbitration Procedural Code of the Russian Federation. In addition to not taking action to send a letter of claim to the defendant as such, in practice there are many other situations in which the defendant can declare in court to leave the statement of claim without consideration on this basis. In this article we will look at some of them.

A Few Introductory Words

Parts 1 and 5 of Article 4 of the Arbitration Procedure Code of the Russian Federation establish the right of every interested person to apply to an arbitration court for the protection of his violated or disputed rights and legitimate interests, including with a request to award him compensation for violation of the right to a trial within a reasonable time or the right to execute a judicial proceeding act within a reasonable time, in the manner established by this Code.

Other disputes arising from civil legal relations are referred to the arbitration court after observing the pre-trial procedure for resolving the dispute only if such a procedure is established by federal law or agreement.

Regarding disputes related to intellectual property, it is necessary for the plaintiff to follow the pre-trial dispute resolution procedure with the defendant under Article 1252, Paragraph 5.1 of the Civil Code of the Russian Federation when filing a claim for damages or compensation, if the rights holder and the infringer are legal entities and/or individual entrepreneurs, and the dispute is subject to arbitration. This also applies when an interested party intends to initiate a dispute over the premature termination of trademark protection due to non-use under Article 1486 of the Civil Code.

Sending a Proposal to a Foreign Entity in Russian

In case No. SIP-360/2022, the defendant (a foreign entity) requested the court to dismiss the claim without consideration due to the plaintiff's failure to comply with the mandatory pre-trial dispute resolution procedure under Article 1486 of the Civil Code. The proposal from the interested party was sent to the defendant in Russian, preventing the foreign entity from understanding the nature and details of the correspondence.

In the first instance, the Intellectual Rights Court, leaving the statement of claim without consideration, in its ruling dated August 8, 2022, indicated that the provisions of Article 1486 of the Civil Code of the Russian Federation do not stipulate in what language the proposal of the interested party sent to the foreign copyright holder should be drawn up.

However, this circumstance does not indicate that sending a proposal of an interested person in Russian to a foreign person - a copyright holder located in a country where Russian is not the state language or the language of communication, in all cases should be considered proper compliance with the established pre-trial procedure. As a result, sending postal correspondence to a foreign person with a translation of the document into a foreign language (at least into English) is one of the customs (Article 5 of the Civil Code of the Russian Federation), widely used in business activities, and meets the requirements of good faith, reasonableness and fairness (Article 6 of the Civil Code of the Russian Federation).

When checking the legality and validity of the ruling adopted by the court of first instance, the Presidium of the Intellectual Rights Court did not agree with the conclusion that there were grounds for leaving the claim without consideration, indicating in the resolution dated October 19, 2022 that the mandatory pre-trial dispute resolution procedure is not a barrier to going to court , but by resolving the dispute peacefully (clause I of Recommendation No. R (86) 12 of the Committee of Ministers of the Council of Europe “On measures to prevent and reduce excessive workload on the courts”, adopted on September 16, 1986 at the 399th meeting of ministerial representatives).

The reasoning of the trial court about the desirability of sending the proposal of the interested party in the language of the addressee is reasonable, since the purpose of such a proposal is a real attempt at reconciliation.

At the same time, the desirability of using the language of the addressee does not imply that if the proposal of the interested party is sent in Russian (in the state language of the Russian Federation - the country of validity of the trademark in respect of which a dispute has arisen), the same consequences will occur as if the proposal had not been sent at all. Moreover, the Presidium of the Intellectual Rights Court took note that in this particular case, sending the proposal of the interested party in Russian achieved its intermediate goal: as the court of first instance established, correspondence between the interested party and the copyright holder began.

Thus, we can conclude that, despite the absence of language requirements in the current Russian legislation when observing the pre-trial procedure for resolving a dispute, nevertheless, in a dispute with foreign persons, it is advisable to prepare bilingual pre-trial documents with translation into at least English, which is currently the most used in the international community.

Submitting a Claim Without Specifying A Material Requirement

As one of the arguments for leaving the statement of claim without progress due to non-compliance with the pre-trial procedure for resolving the dispute, the defendants state that the letter of claim contains no indication of the material (property) claim, including its size.

Meanwhile, judicial practice proceeds from the fact that the absence of the amount of claims for compensation is not a violation of the claims procedure for resolving disputes. In this case, it is enough to refer to the provisions establishing liability for the illegal use of a specific object of intellectual property, namely, Articles 1301, 1311, 1406.1, 1472, 1515, 1537 of the Civil Code of the Russian Federation, specifying a specific point in the method of calculating compensation. Since these rules provide for limits on the amount of compensation within which the copyright holder of a violated exclusive right can file a corresponding claim for its recovery, it is assumed that the violator is aware of the possibility of imposing liability of a material nature on him.

However, in order to eliminate the need for additional actions to challenge the unfounded conclusions of the courts on this issue, it is advisable to indicate not only articles of civil legislation, but also to specify property claims that may possibly be satisfied, including at the pre-trial stage dispute resolution procedure.

A similar legal position was presented in the decisions of the Intellectual Rights Court dated October 9, 2019 in case No. A68-3008/2018, dated September 19, 2019 in case No. A45-17103/2018, dated April 9, 2019 in case No. A09-1510/2018, Seventh Arbitration Court of Appeal dated May 19, 2020 in case No. A03-20313/2019 and others.

Submitting a Claim Without an Inventory List

In one of the cases, the defendant referred to the plaintiff’s failure to comply with the pre-trial procedure for resolving the dispute due to the absence in the case materials of an inventory of the attachments to the postal item sent to him containing the claim, and therefore, in his opinion, it was impossible to determine the actual contents of the postal item.

This case was included in the Review of the practice of application by arbitration courts of the provisions of procedural legislation on the mandatory pre-trial procedure for resolving a dispute, approved by the Presidium of the Supreme Court of the Russian Federation on July 22, 2020, where in paragraph 9 it was noted that “the company’s reference to the fact that the receipt for sending registered mail does not contain an inventory of the attachment, which does not allow establishing the content of the correspondence, rejected by the cassation court, since The norms of the current legislation do not contain a requirement to send a pre-trial claim exclusively by a valuable letter with an inventory of the attachments, and the company did not provide evidence that the city administration sent other documentation to it.”

This aligns with Article 10, Paragraph 5 of the Civil Code, which presumes that“the good faith of participants in civil legal relations and the reasonableness of their actions are assumed.”

From the meaning of this rule of law it follows that on the basis of the presumption of good faith and reasonableness of participants in civil legal relations, as well as the general principle of proof in arbitration proceedings, a person from whom reasonableness or good faith is required in the exercise of a right is recognized as acting on the basis of these principles until the contrary is proven. At the same time, the burden of proving the opposite lies with the person claiming such circumstances.

This position seems justified, since, for example, according to information from the official website of JSC Russian Post, presented in the section “Inventory of investments”, the service on drawing up an inventory of the attachment as a legally significant description of the contents with the obligatory indication of the full postal address and name of the recipient, drawn up on a special Post form, available only for sending postal items within Russia.

In this regard, when sending international postal items, it is not provided for the preparation of such an inventory of the attachment, which remains with the sender and which can reflect information about the contents of the postal item.

The above was also noted in the decision of the Thirteenth Arbitration Court of Appeal dated July 18, 2022 in case No. A56-76050/2021.

Meanwhile, in order to avoid delaying the trial and increasing costs, it is advisable to take measures to maximally record compliance with the pre-trial procedure for resolving the dispute by photographing the envelope with stamps and other details of the Russian Post, collecting receipts, lists of attachments, notifications of receipt/delivery of postal correspondence (indicating they contain a list of investments in the absence of the possibility of drawing up a separate record).

To summarize, I would like to note that in the framework of court proceedings, defendants in the fight for refusal to satisfy a claim filed against them can sometimes state a variety of arguments, which often seem completely unobvious at the initial stage of initiating a dispute. In order to avoid prolongation of the dispute or the need to re-initiate it, you should carefully approach the issue of pre-trial dispute resolution.