Judicial Odyssey. How the Increase in Court Fees Will Impact
Table of Contents
C Cases has prepared an analysis of amendments to the Tax Code of the Russian Federation (hereinafter – "Tax Code"), which will affect many participants in the legal services market, as well as business representatives and ordinary citizens.
On July 23, 2024, the State Duma adopted a law in its second and third readings on amendments to the Tax Code of the Russian Federation, which will significantly change the amount of state duty when applying to courts.
We will not list all the changes, but will only mention the most significant and substantial ones.
Claims
Property claims. For civil and administrative cases, the minimum duty will increase 10-fold (from ₽400 to ₽4,000), and the maximum 15-fold (from ₽60,000 to ₽900,000).
For comparison, if currently, for a claim amount of ₽8,500,000, the state duty is ₽50,700, after the law is adopted, it will be ₽81,750.
For non-property claims, the duty will increase from ₽300 to ₽3,000 for individuals, and from ₽6,000 to ₽20,000 for legal entities.
Arbitration Proceedings
The most significant changes have affected arbitration proceedings.
The minimum duty will increase 5-fold (from ₽2,000 to ₽10,000), and the maximum 50-fold (!) (from ₽200,000 to ₽10,000,000).
If filing a claim for ₽20,000,000, one would currently have to pay ₽123,000, but if one waits for the changes, the duty will be a modest ₽425,000.
Appealing court decisions
For individuals, the fee for appealing a court order will be 3,000₽ instead of 150₽ for civil and administrative cases, and 10,000₽ for commercial cases. For businesses, the increase will be from 3,000₽ to 15,000₽ and 30,000₽ respectively.
The fee for cassation appeals will increase for individuals from 150₽ to 500₽ for civil and administrative cases, and up to 20,000₽ for commercial disputes. For legal entities, it will increase from the current 3,000₽ to 20,000₽ and 50,000₽ respectively.
If an application is filed to declare a debtor insolvent (bankrupt), the fee for individuals will increase 33-fold — from 300₽ to 10,000₽, and for legal entities, it will increase from 6,000₽ to 100,000₽.
The law entails a significant increase in state fees for filing various applications and appeals, but we believe there is no practical need to list them all.
Advantages and disadvantages of the upcoming changes.
Disadvantages of the changes
- Restriction of citizens' and businesses' right to access justice. Simply put, due to high fees, many people (especially in Russian regions) and micro/small businesses will have fewer opportunities to go to court and appeal unlawful decisions.
- The increase in state fees will significantly raise the total litigation costs, as in addition to the fee, expenses for legal services and, often, costly expert examinations must be covered.
- Private practitioners and small law firms, especially in the regions, will lose a significant number of clients (stemming from the first two points), which, in turn, will have a negative economic impact.
Benefits of the Changes
- Reduced workload for courts and individual judges, especially in Moscow and other major cities, should lead to more detailed and accurate case reviews (in theory). Currently, about 50% of decisions are appealed in appellate courts (around 400,000 cases!), and then another 40% of those cases are appealed in cassation courts (about 170,000 cases), even though appeals are upheld in only about 10% of instances.
- Court hearings being postponed for several months, multi-hour delays in court sessions, and waiting 2-3 months for judicial acts to be drafted should also become a thing of the past.
- The number of unsubstantiated or clearly inflated claims will significantly decrease, which will also positively impact the work of courts and qualified legal representatives.
- The role of mediation and arbitration courts will grow. For many everyday issues, people will start to reach agreements more often. Businesses will prefer arbitration courts, as their proceedings are faster and of higher quality than those in state courts. Many were previously deterred by high arbitration fees, which have now become comparable to state duties, and in some cases, even lower.
- The role of highly qualified legal representatives will be strengthened, because now, when formulating claims, representatives will need to pay extra attention to arguments and documents to save the client's money.
It is currently difficult to foresee all the changes the new law will bring, however, C Cases lawyers are confident that this will not negatively impact our practices, as we always objectively assess case prospects, without subjecting clients to unjustified expenses.