PRETRIAL FORMS OF PROTECTION OF BUSINESS ENTITIES’ RIGHTS
In the author’s opinion, the statement that the dynamics of growth of the number of cases submitted to and adjudicated by arbitration courts of the country (along with the growing complexity of these cases) shows that attempts to solve the problem by simple increase of the number of judges in arbitration courts have no prospects, must serve as the premise for raising (and, as far as possible, suggesting solutions of) the problem of forms (as well as of means, and methods, etc.) of a pretrial protection of rights of business entities at the present-day stage of development of the Russian economy. It is necessary to take a complex of organizational, legislative, and other measures, many of which have already been developed and are being implemented (for example, by establishment of the institute of assistants judges of arbitration courts) or contemplated (in particular, in the draft new version of the Code of Arbitration Practice of RF (the CAP of RF) submitted by the High Arbitration Court of RF (the HAC of RF) to the State Duma of RF).
It should be noted that such crucial situation, caused by the growth of the number of cases, has also arisen in the criminal process. It seems that without principally new judicial techniques the judicial system of this country will be unable to solve the problem of the drastic growth in the number of cases. The following measures seem to be rather promising as taken in criminal court proceedings: a) reduced procedure of a judicial investigation of crimes of minor and medium gravity; b) granting a public prosecutor and a counsel for the defense at the initial stage of proceedings (during preliminary hearing) the right to conclude with a defendant’s consent an agreement on the latter’s admission of his guilt, bearing in mind that such procedure presupposes control on the part of a court (a judge) which (who) will impose a respective punishment; on the whole, the attitude of the Federal Council of Judges towards this aspect of the draft Code of Criminal Practice of RF of 1997 is negative - they think that the draft does not take into account the realities that have lately arisen in the sphere of criminal proceedings and, as before, provides for the procedures that will foster procrastination in cases adjudication and make ineffective the protection of individuals’ rights and lawful interests; c) introduction of a so called «criminal warrant», that is widely used in many European countries to facilitate adjudication of minor crimes which entail only fines.
But in the sphere of economic proceedings the desire to transfer the load in settlement of economic disputes from a trial to a pretrial stage must be the strategic trend in solution of the aforementioned problem. During the 60-ies - 80-ies of the last century attempts were made to ensure access to the Soviet public arbitration bodies of only «authentic» economic disputes, i.e. those disputes where contesting parties failed to settle their controversy amicably, and this goal was attained by various means, sometimes fairly effective. Does this goal still persist nowadays, and is it possible «to install» the most effective means of its attainment in the present-day organizational and legal mechanism of economic disputes settlement?
If an economic dispute (i.e. administrative dispute, since during the last years before disintegration of the USSR public arbitration courts tried also some «vertical» disputes) is: a) an opposition of contesting parties’ stands; b) it - the opposition - should be evidently, knowingly expressed by all parties to the dispute, and first of all and at least - by both «principal» parties to the dispute; c) the dispute in which the parties have no antagonistic, insoluble contradictions (nowadays, there are, evidently, some rare exceptions to the rule, but in the majority of cases the parties actively try to settle their dispute and sometimes are inclined to compromise it, and the main point is that this is in full compliance with the Russian traditions and corresponds to our mentality, unlike a criminal process where a similar idea - conclusion of agreements on admission of guilt - will hardly be perceived by the legislator, first of all, because it contradicts our mentality and traditions) etc., then it truly consists of two stages in its development: not during the phases of origination, enhancement of tension and clarification of the contending parties’ stands, but during the phase of its settlement
The second stage is a coercive settlement of a dispute in the action (or any other application submitted by one, both, and sometimes by all parties participating in the dispute) by a special body - a court, public or non-public arbitration courts (both institutional and ad hoc). But this way (to the second stage) is, undoubtedly, not the most optimal from the viewpoint of the interests of the parties to the dispute between whom there are no antagonistic contradictions.
Taking into account that there is no antagonism between the parties, it is optimal for them to settle the dispute at the first stage. And this is the stage of a dispute settlement by the contesting parties themselves and, sometimes, with a certain assistance of a mediator, but the main point is that it is not a coercive dispute settlement. There are many versions of disputes settlement at the first stage, and it makes sense to consider them closer.
But before doing so, it is necessary to make a certain reservation. It would be wrong to assume that the contesting parties, taking measures to settle a dispute themselves, are absolutely free from any direct or indirect influence of the second stage. The dependence consists here, first of all, in that the conciliating parties cannot but understand that in case of failure to settle the dispute at the first stage they (to be more exact, on the initiative of the interested party) will have to come over to the second stage, and for this purpose, in a number of instances, they will have to adduce the evidence that the efforts to settle the dispute at the first stage were unsuccessful, otherwise, a special body for coercive dispute settlement may (not always, of course) simply reject the dispute. Precisely these circumstances: in what cases a dispute may (or may not) be admitted to the second stage avoiding the first one, and what kind of proof of its consideration at the first stage should be adduced - are, in essence, what can be described as an influence of a court, public or non-public arbitration court on the first stage of a dispute settlement. And the more specific, strict, and explicit is the influence, the more often and eventually to mutual satisfaction, the disputes will be settled at the first stage and, consequently, fewer disputes will come over to the second stage. Therefore, it is necessary to speak about pretrial rather than out-of-court forms of protection of the rights of business entities through settlement of an economic dispute. Meanwhile, the legislator does not take into account this regularity, not, as it seems, because he is afraid of being blamed for that the access to justice is denied as a result of more strict organizational and legal mechanism of a dispute settlement at the first stage. Since there is no doubt that the conception of justice, in this case as a synonym of organizational and legal mechanism of an economic dispute settlement, comprises both the above-mentioned stages (and maybe even the third stage - execution of a judgment delivered at the second stage, but this is not the subject of our discussion).
So, what variants of an economic dispute settlement pertain to the first stage? Apparently, they may be divided into three groups: a) measures taken unilaterally by an «injured» party for restoration of the infringed relationship; b) bilateral independent reconciliation by way of exchanging the information of a certain type; c) bilateral reconciliation with the help of a mediator.
It would be reasonable to call the first group as operative forms of protection of infringed rights of economic subjects. In the scientific juridical literature various terminology is used. For example, means and measures of the operative influence (B.I. Puginsky), ex parte procedure of protection of the rights of enterprises and organizations (T.E. Abova), out-of-court recovery of fines (G.P. Savichev), means of realization of incontrovertible, i.e. non-violated requirements (V.P. Gribanov), operative sanctions (V.M. Ogryzkov), indisputable (without acceptance) debiting of debts as the most swift way of satisfaction of property rights and interests of enterprises and organizations in case these are infringed by other legal entities (R.F. Kallistratova and M.S. Falkovich), measures of operative influence taken in the sphere of administrative relations (V.P. Gribanov and O.A. Krasavchikov), etc. Although the foregoing is the terminology used in the 70-ies - 80-ies, so far it has not been put in order in the scientific literature; unfortunately, no scientific discussions to this effect have taken place, either.
So far, no systematization of legislative and normative acts regulating relations in protection of rights pertaining to the first group variant has been effected; it is good that at least respective collected normative acts have been published.
It should be noted that customs and taxation bodies are entitled to collect indisputably sums of money from enterprises, but these are not «horizontal» relations, besides, the collector is not an entrepreneurial structure. Reverse recovery in an operative – out-of-court - manner is not effected in this case.
The main feature of measures of the operative character taken by an injured enterprise to protect its rights and interests consists in its debiting the accounts of an entrepreneurial structure - violator, without the latter’s consent. There is a special Information Letter to this effect issued by the High Arbitration Court of RF, No. 8, dated October 1, 1996 (as to the legal effect and nature of such letters, it is a separate topic for discussion) On Some of the Issues Related to Debiting the Client’s Account Without the Latter’s Order, which says, in particular, that if a funds debiting procedure without the debtor’s acceptance is provided for by the respective normative acts, including decrees of the Supreme Soviet and the Government of RF, these regulations are to be applied until enactment of a respective law on the matter.
On the whole, the operative measures as the means of a dispute settlement, taken by an injured party to protect his violated or challenged rights and lawful interests, may be characterized as: a) having a long history; b) based on many non-systematized and unconsolidated normative acts of different hierarchical force; c) well proved in practice and, on the whole, rather efficient; d) not, however, being used to a full extent by virtue of a number of objective and subjective reasons (first of all, lack of knowledge about possibilities of the means by officials and respective specialists of the injured business entity).
The sub-variant of a voluntary settlement of economic disputes by the contesting parties themselves (except for a compromise) comes in practice to a claim settlement. This settlement form is well known in our theory and practice. The Russian legislator, as is known, at a certain phase of establishment of the arbitration courts system - in 1995 – actually rejected the stage of claims procedure for settlement of economic disputes resulting from civil relations, as obligatory before filing an action with an arbitration court. Exception is made only for few categories of disputes, for example, disputes with participation of transport, communication organizations and others, or for the cases when such obligation is provided for by a contract between the contesting parties. Therefore, arbitration courts of the Russian Federation entertain the majority of disputes disregarding the fact that, in principle, the contesting parties could settle these disputes themselves without recourse to an arbitration court.
However, only those disputes, which the contesting parties in spite of their efforts have failed to settle themselves, are submitted, for instance, to the Ukrainian arbitration courts. In the Ukrainian scientific literature this stage is described in detail. There it is obligatory and is called a preparatory stage of arbitration of economic disputes. And although D.N. Prityka unequivocally pointed out (p. 237 of the work mentioned in the footnote) that the Regulations On the Procedure of Submission and Consideration of Claims by Enterprises, Organizations, and Institutions, and Settlement of Disagreements (D.N. Prityka used the word «differences» in his work, which is wrong) in Economic Contracts, approved by the Decree of the Council of Ministers of the USSR dated 17 October 1973, No. 758, is not applicable in the territory of the Ukraine, the analyses of the content of section II, articles 5-11, of the Code of Arbitration Practice of the Ukraine evokes doubts as to the above statement or, to be more exact, makes one firmly convinced that the first three sections of the aforementioned Regulations are in principle and in general incorporated in section II of the CAP of the Ukraine, and the procedure of the claim settlement is spread onto all entities capable of becoming a party to a dispute in arbitration courts of the Ukraine (the point is that the Regulations of 1973 was not applicable to collective farms, participants in foreign economic activities and some others). In fact, Art. 5 of the CAP of the Ukraine established that a dispute might be referred for settlement to an arbitration court subject to observance of the pretrial settlement procedure established for this kind of disputes; pursuant to Art. 6 of the CAP of the Ukraine a pretrial dispute settlement is effected by a written claim that is either sent by a registered mail or value letter, or served on receipt; if the proof of a claimant’s observance of the procedure of a dispute direct settlement is not attached to a statement of claim, pursuant to Art 9 of the CAP of the Ukraine it must be returned without consideration; Art. 9 of the CAP of the Ukraine stipulates material liability for breach of varied (1 or 2 months) period of a claim consideration or for leaving it without reply, etc.
Which approach is right? Especially, taking into account that in both the countries the number of economic disputes referred to arbitration courts increases constantly from year to year: in Russia, on the average, by a quarter per year, and even more in separate regions - for example, in 1998 the number of disputes filed before the arbitration court of the Tyumen Region increased by 40%. For the sake of accuracy, it should be noted that the quantity of disputes arising from administrative relations, whereto the procedure of claim settlement is not applicable, increases to a greater extent.
Unfortunately, D.I. Prityka does not cite any statistic data allowing to judge about effectiveness of the mandatory stage of claim settlement in economic disputes in the Ukraine today. At the same time, and it is very indicative, he does not doubt the general necessity of this stage, he only suggests to improve it: to reduce down to 15 days and to unify the procedural time periods established for consideration of claims; to introduce the right of parties to use alternatives in applying this procedure to consideration of certain disputes (for example, with participation of individual entrepreneurs, some kinds of actio negatoria, replevins, etc.); to expand the categories of disputes which do not require observance of the existent procedure, for example, in disputes related to cancellation of the statutory registration of business entities (but these are administrative, rather than civil disputes).
The author hereof has not managed either to hear, or to read any reasonable argumentation of the reasons for the Russian legislator’s rejection of the common obligation of a claim settlement in the majority of economic disputes arising out of civil relations. The only argument put forward earlier - that while a dispute is being considered according to a claim settlement procedure a party-violator «will hide» its property, and in this connection an aggrieved party will not receive due compensation for damages - is not very significant, especially nowadays. Practically there are no one-day firms that used to be set up in the early 90-ies, sometimes with the only aim «to snatch a large sum» (by way of money receipt as an advance payment or otherwise - it is not the main point), and the counterparts of such «suspicious» firms have become more vigilant. Besides, there exist some forms of insurance against such conduct (a pledge, a security, a guarantee of the third party etc.) And if there are no arguments against a claim settlement procedure or these have lost their significance, then, perhaps, would it not be sensible to consider the possibility to restore it?
Some twenty years ago the author hereof happened to examine the effectiveness of a claim settlement procedure for economic disputes in different economic and legal conditions. The results of the local study (dozens of leading legal advisers of the largest enterprises and associations of Dushanbe were questioned in an exclusively confidential manner about their practice for the last 2-3 years), which was not intended to claim an official significance, showed that: only every seventh case was filed before public and institutional arbitration courts, whereas six out seven were settled and terminated at the claim stage of a dispute settlement. It is possible to assume more or less confidently that had the claim stage been in general optional at that time (the author counted a total of seven claim regimes, and only one of these was governed by the Regulations of 1973), the statistics would have been absolutely opposite, and it means that six (!) times more actions would have been filed before the public and institutional arbitration courts, common courts, and other bodies and instances which adjudicated economic disputes pursuant to the laws in force at that time. By the way, the contemporary national juridical literature also underlines that «the quantity of claims exceeds the number of actions by 8-10 times» and says that when the laws are changed or by virtue of the parties’ agreement, the observance of the claim procedure of disputes settlement will become obligatory (at the same time, the illogical conclusion is made that such conduct is fraught with serious consequences, since it entails a considerable increase of the number of actions, but «it will be possible to solve this problem by increasing a number of judges of arbitration courts» - just on the contrary: the number of actions filed before arbitration courts will considerably decrease, since the significant share of economic disputes being currently submitted to arbitration courts will be settled according to the claim procedure (I would like to underline, that with such approach the claim procedure is obligatory for the contesting parties).
But all the above reasoning is tinted by scholasticism. Does it mean that in the present-day situation the claim procedure of economic disputes settlement, even if arising only from civil relations, and far from all of these, will prove to be as effective as it seemed to be (at least to the author hereof) twenty years ago? Not in the least - a lot has changed. But if it is so, how attractive it would be to restore the forgotten good. Only the confidence is missing. To acquire it, it is necessary: a) to carry out a local experiment; b) to perform a sociological study by questioning arbitration judges, legal advisers, and other specialists, etc.
As to the third sub-variant of the first stage of economic disputes settlement - assistance of a mediator, we have no experience in application of such form. That does not prevent addressing the foreign practice.
E.I. Nosyreva has shown, fairly convincingly, the advantage of intermediary procedures in civil disputes settlement over arbitration and public court proceedings by the example from the experience of the USA. For instance, she points out that it takes 3 to 6 weeks to hear a case with a mediator’s participation, the price is low, there are no rules of proving, the relations between the parties in the course of proceedings are cooperative, the principle of a dispute settlement is to compromise, the proceedings are oriented to the future, a material result of such settlement is a mutual benefit, and emotional results are the removal of an emotional tension and the possibility to continue to cooperate; and it takes 3 to 6 months to conduct arbitration proceedings (and in public courts - 2 years and even more), the price is average (in public courts - significantly high), the rules of proceedings - informal (in public courts - strict distribution of duties of proving), the parties’ relations in proceedings, both in arbitration and public courts, are of the antagonistic nature, the principle of adjudication of a dispute in both the cases is of the adversarial character, orientation of proceedings, in both cases, is to the past, the material result, in both cases, consists in that one of the parties always looses, and the emotional result, also in both cases, is the persistence of the emotional tension, the impossibility to continue further cooperation.
Evidently, being guided by these or similar arguments, the leaders of the High Arbitration Court of RF «prescribed» in detail and to the point the intermediary procedures in the draft CAP of RF (in its new version) submitted as a legislative initiative to the State Duma in August 2000. Unfortunately, this suggestion was not supported by the working group for improvement of law on the judicial system set up by the Decree of the President of RF dated November 28, 2000, No. 534-rp. To be more exact, the working group preferred using mediation in settlement of economic disputes which are not settled under the aegis of public arbitration courts, but in arbitral procedures, or in independent reconciliation procedures where especially the structures established for the purpose and not incorporated in the courts will play the role of a mediator. It does not seem to be altogether right - just under the aegis of an arbitration court the reconciliation of parties may be effected more quickly and effectively, especially if a mediator’s role will be played by retired arbitration judges, experienced arbitration assessors, or regular assistants of arbitration judges, and not lawyers but experienced procurers, aspiring for termination of a dispute not only legally, but also by way of compensation of goods not delivered under a contract by goods of another assortment, etc., will act as representatives of the contesting parties to cases of default on or improper performance of purchase and sale contracts, etc.
The aforesaid allows to make several conclusions:
- the described pretrial procedures of dispute (above all, economic ones) settlement are, first of all, the stage which is obligatory in rare cases of disputes settlement expressly provided for by a law or a contract, and which precedes the referral of this dispute to an arbitration court. The connection: a pretrial procedure - a court is practically limited to this. There is almost no reverse influence of a court on a pretrial stage of a dispute settlement;
- the first two procedures are based on a lot of legal prescriptions which have no common basis. In practice, as a result, by virtue of various reasons and, first of all, simply because of non-awareness of their existence, they are used far from completely. There is a big potential promising, in aggregate, good economic results;
- occurring in business practice provisions of the contracts concluded between two business entities, like: «in case of any dispute arising out of or in connection with this contract, the contracting parties will take every measure to settle it voluntarily» has no procedural meaning, they do not create any reliable opportunities for the parties to settle the dispute out of court or before the trial but, on the contrary, create an illusion that the dispute may be settled quickly, efficiently, and equitably without any court. But this is a mere illusion, because such provision of a contract does not contain even any hint either to an organizational part (for example, the procedure and time of forming a commission from representatives of the contesting parties) or procedural part of the mechanism determining settlement procedures pursuant to which the dispute will be settled. At the same time, such provision may become an obstacle for direct referral of the dispute to a court, unless, at least formally, the parties try to overcome this obstacle;
- it is pretrial procedures terminated by reconciliation of the parties that are the most optimal form of settlement of economic disputes. In the preamble to the Recommendations No. R(81)7 of the Committee of Ministers to the member-states of the Council of Europe regarding the ways to facilitate the access to justice, one of the reasons of giving such recommendations was named : «...proceedings have so complicated, lengthy, and costly character that individuals, especially those having a bad financial standing, experience difficulties in exercise of their rights in the member-states». In its other recommendations No. R(86)12 dated 16.09.86, regarding measures of prevention and reduction of the work overload on courts, the Committee of Ministers of the Council of Europe expressly recommended: «1. To promote, wherever necessary, reconciliation of parties both out of court and before or during court proceedings. For this purpose the following measures could be considered: a) along with respective incentives, to provide for pretrial reconciliation procedures or any other means of disputes settlement out of court;...» ;
- proper account of these Recommendations in the course of respective law drafting activities, naturally, with due regard for the Russian specific situation and according to the traditions of Russian legislation (for example, codification of legislation on pretrial procedures of settlement of economic disputes; restoration of an obligatory claim procedure of an economic dispute settlement prior to its referral to a court) will make it possible to find one more potential which could yield a considerable economic result by using legal means;
- our systems of judicature and court proceedings, at least in the sphere of settlement of economic disputes, practically does not use the institute of mediation. On the one hand, mediation in settlement of economic disputes may be considered as a mechanism alternative to a judicial mechanism of disputes settlement; but on the other hand, it may be considered as a means of a dispute settlement through pretrial procedures. Development of simulation models of such mediator, its experimental approbation at the level of a subject of the Russian Federation are an important goal of the jurisprudence;
- an overwhelming majority of pretrial procedures, if not all, of settlement of economic disputes must be somehow conducted under the aegis, or better under the direct control, of an arbitration court; the conception «settlement of an economic dispute» should be applicable to both stages of a dispute development with the totality of rules of the uniform arbitration process; the CAP of RF, in principle, should provide for starting the process of a dispute settlement from pretrial stages, including intermediary reconciliation procedures.
  Rossijskaya yustitsiya (The Russian Justice) , 1998, No. 6, p.4.
  Teiman Steven, Sdelki o priznanii viny ili sokraschenie formy sudoproizvodstva: po kakomu puti poidet Rossiya? (Agreements on Admission of a Guilt or Reduced Forms of Court Proceedings: Which Way Russia Will Follow?) in: Rossijskaya yustitsiya (The Russian Justice), 1998, No. 11, p.35.
  For example: Besspornoye (bezaktseptnoye) spisaniye denezhnyh sredstv: Sbornik normativnyh aktov po sostoyaniyu na 15 fevralya 1998 (Indisputable (without Acceptance) Debiting of Funds: Collected Normative Acts as on February 1998). Moscow: Yurait LLC, 1998, p. 128 (The Russian Federal Laws)
  D.N. Prityka, Arbityrazhnyi sud: problemy organizatsii i deyatelnost (The Arbitration Court: Problems of Organization and Activity) Kiev: Oriyane, 2000, p. 320 (in Russian).
  V.S. Anokhin, B.D. Zavidov, V.I. Sereev, Zaschita dogovornyh obyazatelstv (Protection of Contactual Obligations). Moscow: INFRA-M, 1998, p. 52
  E.I. Nosyreva, Alternativnoye razresheniye grazhdansko-pravovykh sporov v SShA (Alternative Settlement of Civil Disputes in the USA). Voronezh, published by the Voronezh University, 1999, pp. 95-96.
  Rossijskaya Yustitsiya (The Russian Justice), 1997, No. 6, p.4.
  Rossijskaya Yustitsiya (The Russian Justice), 1997, No. 7, p.8.