With almost double the cases as two years ago, Russia's court system needs to undergo a reformation to improve the quality of its judgments. Maxim Kulkov sets out the case for a new, specialised court structure

A series of laws are currently being drafted in Russia with a view to establishing a set of specific courts for certain types of disputes, including financial services, intellectual property (IP) rights or tax.

The creation of the IP court – which is likely to be the first one established, since the draft law has been already submitted to the Parliament by Russia's Supreme Court – caused some controversy in the country. It is also likely to have a significant impact for the international community if it goes ahead as planned, paving the way for a new finance court.

The overall aim is to ensure transparency and quality of the judgments of the Russian court system, but there are still questions over the advantages of this split system and how it will work in practice.

IP court paves the way

Since the beginning of the 1990s, Russian judges, academics and law practitioners have been discussing the idea of special courts dedicated exclusively to certain types of disputes, such as IP, tax, financial and insolvency cases.

The proponents argue that such courts could contribute greatly to improving judgments through a higher level of professional expertise on the part of judges that focus on specific issues, compared to generalist judges. The proof here is evident in Germany and Japan which use IP courts to hear specific cases. Dubai established a specialised financial court exclusively to resolve disputes in the financial sector a few years ago and this has been very successful. There is no reason why Moscow will not experience the same success.

To see if these specialised courts are the way forward, we have to look at the alternative, which is to maintain specialisation between judges at the same court. Would this system not work instead?

In short, no. Russian judges are now receiving 90% more cases than two years ago. Consequently, judges are overloaded and this impacts the quality of the hearings because judges are under a great amount of time pressure.

In many courts where judges are already divided between certain cases – administrative, bankruptcy, real estate, IP, etc – this can create a bottleneck of cases, or a judge without the correct expertise having to cover a case. Each judge hears about 100 cases per month and when one judge is particularly overloaded due to an influx of a particular type of case, for example insurance, a judge focusing on tax disputes has to take an insurance dispute whether they have the experience in insurance or not. Additionally, for the smaller courts a division according to specialisation does not work well as there are fewer judges than areas of law.

Therefore, Russia has to build a system that has the correct capacity for hearings and expertise at its fingertips to handle this swell in activity to ensure the quality of the judgments. A specialised court system would mean that there would be a specific court set up with judges who are complete experts in that particular area of the law and with a transparent process in place for hearing cases.

This step will also have a positive impact on the international business community because currently international businesses tend not to trust Russian courts, partly because they are not confident about the professional quality of judges.

However, it must be noted that modern business disputes have become very complicated and there are dozens of narrow areas of law that require a deep professional knowledge. It would be rather difficult to set up a new, separate court for each particular area. This means that the main way to improve the quality of judgments would be by increasing the professionalism of judges by having them specialise in certain disputes within the same court. This requires a considerable decrease in the number of cases per judge to leave enough time to hear the cases properly and to keep professional knowledge up to date.

A change will do good

It is worth remembering that these proposed changes come on the back of a programme of modernisation in the Russian court system, which has so far had a positive impact. Just last year a number of important changes came into force:

 - Compensation for protracted court proceedings and court judgment enforcement. Such compensation was introduced in order to establish a Russian mechanism to provide reimbursement for adverse consequences of excessively lengthy court proceedings or unreasonably protracted enforcement of a court judgment as an alternative to applying to the European Human Rights Court.

The affected party can bring a claim against the Russian Federation. If the claim is satisfied, the Government may recourse the sum of compensation from the official (ie, judge, court clerk, court bailiff) to blame for violating the court procedure terms.

So far, about a dozen claims based on these amendments have been satisfied. Most of the winning cases are associated with protracted enforcement of judgments rather than lengthy court proceedings. This may be because a judge would hesitate less to render a judgment against a court bailiff than against a fellow judge.

 - Submission of documents via the internet. Procedural documents and evidence may now be submitted in electronic format by completing special forms on the court website but the court can still subsequently demand the originals.

E-submission would certainly simplify the process, yet so far most documents are still submitted in the traditional way, by post or directly to the court office. This is partly because many courts are not yet equipped technically to receive e-documents and partly because most litigators do not really trust the new options.

 - Video conferencing in the courtroom. Participation in a court hearing by video conference is now permitted. This saves on the costs of actually attending a hearing, which, considering the geographical size of Russia, may be held some distance from the court.

Most counsel still prefer face-to-face participation at hearings but, for certain types of case and hearing (ie, simple, straightforward cases or preliminary hearings), attendance at a hearing in Vladivostok via video conference might be an attractive option for a Moscow-based party.

 - Changed rules governing notification by the court of participants in a dispute. If a participant in a court case has been served properly once, they will subsequently be deemed to have been duly notified by the court posting information about the hearings on the internet.

The course of the proceedings must therefore be monitored carefully by all those involved in the case via the arbitration cases log on the website of the Supreme Arbitration Court of the Russian Federation. The introduction in March 2010 of this unified court database where everyone can easily find information about any arbitration court case was a major development and has made the life of litigators much easier.

 - Distribution of the burden of proof. Unless a party disputes circumstances referred to by another party in the proceedings, they will be deemed accepted by the former. This rule greatly increases the risks for a party that fails to attend a hearing or to file a statement of defence.

On the whole, most of the amendments introduced in 2010 are greatly appreciated by judges and practitioners as being intended to simplify court procedure and to bring it in line with modern means of communications. Modernising the system has thus far been well received and going one step further in establishing specific courts follows an already successful trend.

The IP court is expected to open on 1 January 2012 once the bill is signed into law. Its performance will be key in ushering in the financial services or tax courts. But in weighing up the alternatives, it is clear that judges becoming more specialised in their areas will greatly improve the quality of the decisions and the transparency of the system.

Maxim Kulkov is a partner and head of dispute resolution at Goltsblat BLP.