Features of legal procedures in the consideration of disputes related to contractual relations

Абдулин Руслан Robertovich judge, Arbitration Court of the Kurgan region 640000, Russia, Kurganskaya oblast', g. Kurgan, ul. Klimova, 105 rus.abdulin.1977@mail.ru

In recent years, research has become relevant in terms of finding alternative ways to settle disputes in contractual relations. In the opinion of E.A. Ivanova, the reason for this was the "annually increasing burden on judges" specializing in civil cases in courts of general jurisdiction and judges of arbitration courts, as well as the "unification of Russian procedural legislation". In her opinion, "reducing the judicial burden is possible by providing interested persons with greater independence in determining the form of legal protection (judicial, extrajudicial jurisdictional, extrajudicial non-jurisdictional), as well as the procedure and conditions for its implementation to reduce the number of court sessions, reduce the likelihood of appealing judicial acts and reduce disputes arising during enforcement"^[1]. However, there is a slightly different point of view on this issue. So, at one time V.F. Yakovlev wrote that "dispute resolution using mediation (mediation) is possible where certain prerequisites and conditions have matured or created for this. The main one is, of course, the willingness of entrepreneurs themselves, a high level of ethics, mutual trust, the ability to negotiate on an equal bilateral basis"^[2]. That is, V.F. Yakovlev drew attention to the fact that it is necessary to reduce the same burden on judges not through the desire of the subjects of contractual relations to the mandatory resolution of their dispute in court, but through the search for various options for alternative ways of settling disputes. At the same time, as we see, V.F. Yakovlev draws attention to the readiness of the conflicting parties themselves to this alternative procedure, first of all. Fully sharing this point of view of V.F. Yakovlev, the author of this work believes that judges themselves play an important role in resolving disputes through alternative methods to the court. As an argument, we can cite the provisions of part 1 of Article 153.1 of the Civil Procedure Code of the Russian Federation, which states that the court takes measures to reconcile the parties, assists them in settling the dispute, while being guided by the interests of the parties and the objectives of the proceedings. And in the same article, it is directly indicated to the judges that reconciliation of the parties is possible at any stage of the civil process and during the execution of a judicial act. Currently, the institution of judicial reconciliation is mainly regulated by Articles 153.6 of the CPC of the Russian Federation, 138.5 of the APC of the Russian Federation, 137.6 of the CAS of the Russian Federation. Among the organizational measures related to the implementation of conciliation procedures, the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 41 dated 31.10.2019 "On approval of the Rules of Judicial reconciliation" occupies an important place.

However, before proceeding to the coverage of legal procedures in conciliation processes, we will consider the main ways to protect subjective civil rights listed in Article 12 of the Civil Code of the Russian Federation, among which there are ways related to contract law. In particular, this is the recognition of the right; restoration of the situation that existed before the violation of the right, and the suppression of actions that violate the right or create a threat to its violation; recognition of the disputed transaction as invalid and the application of the consequences of its invalidity, the application of the consequences of the invalidity of an insignificant transaction; award to the performance of duties in kind; compensation for damages; recovery of penalties; termination or change of legal relationship. Such an opportunity is provided to the conflicting parties both by a substantive norm (paragraph 2 of Article 11 of the Civil Code of the Russian Federation), which establishes the protection of violated or disputed civil rights through a court of general jurisdiction, an arbitration court or an arbitration court in accordance with their competence, and procedural norms (part 4 of Article 3 of the CPC of the Russian Federation, part 5 of Article 4 of the APC of the Russian Federation) in according to which a dispute arising from civil law relations may, by their agreement, be referred to an arbitration court. Thus, the parties, exercising their subjective and objective rights established in the above–mentioned norms, even after applying to a court of general jurisdiction or an arbitration court, have the right to use conciliation procedures to resolve the conflict.  Details about the pre-trial settlement procedure are set out in the resolution of the Plenum of the Supreme Court of the Russian Federation dated 06/22/2021 No. 18 "On some issues of pre-trial settlement of disputes considered in civil and arbitration proceedings". It follows that the subjects of contractual relations for dispute resolution are always entitled to choose the type of specific behavior based on the analysis of possible ways (options), as long as they are not illegal. Schematically, it may look like this: each of the parties has the opportunity to choose one of the ways to protect their rights. Further, conciliation procedures follow between the parties according to the method satisfying both disputing parties, which can be achieved as a result of negotiations independently by the disputing parties themselves or with the help of a conciliator. And, finally, the achievement of a mutually beneficial, compromise agreement that meets the specific needs of the disputing parties and that, in fact, is the central link in the reconciliation process. Such a procedure is most acceptable in the exercise of rights and the proper performance of obligations in contract law, since it can be established by the contracting parties even before the legal relationship arises or after the contractual relationship has arisen. Thus, the parties implement a regulatory and security function, expressed in the establishment (emergence) of a contractual legal relationship, changing the content and termination of contractual relations, changing the subject matter of the contract, recognition and confirmation of the right, as well as the elimination of controversy (conflict) in contractual relations. The key to this maxim is that the parties, as bearers of a subjective right or legal obligation in the event of a dispute (conflict), have the opportunity to choose a method provided for by law or a reasonable model of behavior for reconciliation, as well as the procedure for its implementation. Of course, each of the parties acts in its own interest and, in order to achieve the goal, faces the choice of the most optimal behavior model.   And here an important role is played by persons and organizations involved in the reconciliation of the parties (professional judges, arbitration courts, mediators, consultants, intermediaries, financial ombudsmen) helping not only to conclude compromise agreements, but also creating an atmosphere of trust and cooperation ^[3]. At the same time, it should be noted that conciliation procedures consist of a specific set of consistently performed legal procedures that can be interrupted, resumed, moved from one stage to another or, conversely, returned to the previous stage by agreement of the parties or on the recommendation of the mediator. And all these actions to achieve a specific result of reconciliation are elements of legal procedures. Proceeding from the above, it can be concluded briefly that legal procedures in the implementation of reconciliation of the parties in pre-trial, judicial and other alternative methods of dispute settlement are contractual in nature, that is, contractual legal procedures are used to settle a dispute (conflict) at any stage of contractual relations, which is not typical for other types of civil relations. I must say that this is a very important sign, which once again confirms that the conflicting parties have dispositive principles that give them the opportunity to freely dispose of material and procedural rights in order to reach consensus in the settlement of the dispute existing between them. Although, in fairness, it should be noted that not all norms of civil proceedings reflect this feature in full. For example, let us turn to Article 33 of the APC of the Russian Federation, according to which disputes between the parties to civil law relations that are subject to consideration by arbitration courts may be referred to an arbitration court if there is a valid arbitration agreement between the parties to the dispute. Meanwhile, such dispositive powers of the conflicting parties, writes I.N. Balashova, as the rejection of the claim or the recognition of the claim in the form of reconciliation, indicating the termination of the case by the proceedings and the conflict liquidated, are not named in this norm ^[4].

Differentiation of legal procedures in pre-trial, judicial and other alternative methods of dispute settlement in contract law can be carried out on the following grounds:

– legislative establishment or judicial practice, that is, when a pre-trial dispute settlement procedure is mandatory if such an obligation is explicitly specified in the laws (Part 5 of Article 4 of the APC of the Russian Federation, paragraph 3 of Article 132 of the CPC of the Russian Federation) or in court decisions. For example, a conflict (dispute) on the recovery of funds on a claim arising from a contract or other transaction, as a result of unjustified enrichment, may be submitted to the arbitration court for resolution after the parties have taken measures for pre-trial settlement after thirty calendar days from the date of sending the claim (claim), if other terms and (or) the procedure is not established by law or contract. Or another example. Thus, in the case of the application of procedural estoppel, the right of the parties who have concluded a settlement agreement to put forward new requirements is lost, if the condition on the need to fulfill additional obligations was not included in the settlement agreement ^[5].

–established by agreement of the parties. In this case, the legal procedures for dispute settlement are chosen by the disputing parties themselves based on various options that do not contradict the law (mediation agreement; conciliation procedure; settlement agreement; arbitration; conciliation procedures involving a third party, etc.);

–established by regulations and other non-legal norms that also regulate a specific area of contractual relations. For example, such regulators include the custom of business turnover, the norms of traditions, customs in the field of bill law, trade customs, customs used in banking practice. The custom is subject to application as fixed in any document, and existing independently of such fixation. According to the resolution of the Plenum of the Supreme Court of the Russian Federation dated 06/23/2015 No. 25 "On the application by courts of Certain Provisions of Section I of Part One of the Civil Code of the Russian Federation", the custom, which by virtue of Article 5 of the Civil Code of the Russian Federation can be applied by a court in resolving a civil dispute, should be understood not provided for by legislation, but established, that is, sufficiently defined in in its content, a widely applied rule of conduct in the establishment and exercise of civil rights and the performance of civil duties, not only in business, but also in other activities.

It should be emphasized that the types of legal procedures for dispute settlement in contractual relations in courts of general jurisdiction, arbitration courts (pre-trial), arbitration or by agreement of the parties (out-of-court or alternative), do not have much difference. These include: claims, negotiations; mediation, including mediation; judicial reconciliation; consulting; applying to an independent legal assessment or obtaining an independent expert assessment and other procedures that may lead to reconciliation of the parties.  It should be noted that the list of legal procedures for the settlement of disputes arising in connection with transactions is supplemented by holding online arbitration meetings and negotiations of the parties to the dispute through the use of the Internet information and communication network. There are two types of Internet proceedings in the legal literature: 1) settlement of the conflict (dispute) through online arbitration; 2) online settlement of the dispute by the disputing parties themselves (independently or with the involvement of a third party) ^[6].  However, in this regard, I would like to draw attention to the following. According to A. Panov, the characteristic features of the national online arbitration for the settlement of disputes between conflicting parties are: correspondence between them, as well as arbitrators and the secretariat of the arbitration institution by e-mail; submission of procedural papers and evidence in electronic form; meetings, interrogations of witnesses and hearings conducted entirely using telephone or videoconferences, etc. At the same time, A. Panov emphasizes the absence of obstacles to conducting online arbitration within the framework of traditional arbitration proceedings, which, in his opinion, requires only the identification of the parties (and their representatives), as well as the creation of an electronic document exchange system. Fully agreeing with the position expressed by A.Panova, you can only supplement it. The fact is that in conducting online arbitration for the settlement of disputed relations, one of the key legal procedures is the issuance of an electronic arbitration award, which should be put on a par with a written one ^[7]. Moreover, an electronic arbitration award must be executed on paper by online arbitrators, signed and sent to the parties, which will ensure the possibility of its recognition and enforcement in the future, and most importantly, the risk of its change by one of the disputing parties is prevented.  This approach, in the author's opinion, is fully consistent with the UNCITRAL Technical Comments on Online Dispute Resolution (paragraph 2), which states that this electronic platform "covers a wide range of approaches and forms (including, among other things, dispute resolution by the Ombudsman or the Complaints Commission, negotiations, conciliation, mediation, settlement assistance, arbitration and others) and the possibility of using hybrid procedures that include both online and offline elements." In the notes to this paragraph, it is specifically noted that the listed names of procedures are given solely as an example and may vary depending on the legal system, and it is quite acceptable to use several names from this list for the same procedure ^[8], which, of course, does not exclude the execution of an electronic arbitration award in writing.

So, let's summarize. From the point of view of the functional approach, extrajudicial, judicial and other methods of protecting the rights of participants in contractual relations can act as an effective tool for resolving conflicts arising between the parties. However, it has to be stated that at the moment their potential, including in contract law, is far from being used to the proper extent. The Supreme Court of the Russian Federation considers that the legal procedures for the reconciliation of the parties are too concise and fragmented, which does not allow this institution to become an effective tool for dispute settlement. According to him, for the period from 2011 to 2021, conciliation procedures with the participation of mediators were used in the consideration of an extremely small number of cases: only about 0.008% of cases by courts of general jurisdiction and when considering about 0.002% of cases by arbitration courts ^[9]. For example, we can also cite the indicators of the Arbitration Court of the Sverdlovsk region, in which in recent years the number of cases ending with the conclusion of a mediation agreement, or cases considered with the participation of an intermediary, on average does not exceed 10 cases per year ^[10], which is negligible. Although, as can be seen from the above, legal procedures for judicial reconciliation, mediation and other methods of peaceful settlement of disputes are available to a wide range of disputing parties. Moreover, in addition to the traditional legal procedures provided by law to courts of general jurisdiction and the system of arbitration courts in the field of reconciliation of conflicting parties (negotiations, claims procedure for dispute settlement, mediation, settlement agreement), the list of legal procedures in other types of alternative dispute resolution is constantly expanding, which integrate not only freedom of choice in the ways of dispute resolution issues such as, for example, the choice of arbitration proceedings, but also use legal procedures in combination with traditional ones. For example, "negotiations–claim procedure", "mediation-arbitration proceedings", "negotiations and/or mediation-settlement agreement", "conciliation procedure involving a conciliator". In follow-up to the above, it should be noted that legal procedures in the settlement of disputed relations in contract law are supplemented by the use of modern technologies (legal procedures for holding online arbitration meetings and other means of information and communication network Internet). As we can see, in contract law, a variety of tools are used to protect the rights and legitimate interests of participants, giving the conflicting parties the freedom to choose the method of reconciliation of the parties and a legal procedure that meets their interests.

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