Collective Redress & Class Actions 2023 Comparisons

The inception of the class action mechanism within Armenia’s legal system occurred in 2018, coinciding with the adoption of the new Civil Procedure Code. Prior to this pivotal development, the preceding legal code, enacted in 1998, did not encompass the class action institution. Instead, it operated under a distinct framework known as co-accused. Pursuant to Article 30 of the 1998 Judicial Code, multiple plaintiffs, referred to as co-plaintiffs, were permitted to collectively initiate legal proceedings in civil cases. Each co-plaintiff possessed the discretion to either independently partake in the legal process or designate one among them to represent their interests, as delineated in Article 30.

The co-accused system was marked by inherent inefficiencies that hampered the effective investigation of cases. These issues encompassed the presence of autonomous positions among the array of participants, the potential incongruity between the grounds for the claim and its subject matter, the absence of limitations on co-plaintiffs regarding the factual circumstances presented during the trial, and disputes arising from divergent factual narratives. Consequently, the demands of each co-plaintiff imposed a substantial burden on the court, necessitating an autonomous examination, the determination of objections, the ascertainment of proper plaintiff status, and the overall complication of the case assessment process.

In a group lawsuit, the participation of a designated representative obviates the requirement for individual involvement by the plaintiffs. The position articulated by the representative is regarded as the collective stance of all the claimants, and any legal actions taken against the representative are considered as actions directed at the entire body of claimants.

It is imperative to acknowledge that this class action mechanism represents a relatively recent innovation in the Armenian legal framework, and its applicability is confined to civil procedure law. Notably, in 2012, a proposal to amend the legal code with regard to the introduction of the collective/group lawsuit institution was submitted for deliberation to the National Assembly of Armenia, but it was not ratified at that time.

Armenia’s class action regime is not directly based on the class action system in the United States. However, there are both similarities and differences between the two systems.

Key similarities include the following features:

• Group litigation – both Armenia and the United States allow for group litigation, where multiple individuals with common legal interests or grievances can collectively initiate a lawsuit.
• Efficiency and access to justice – the primary goal in both systems is to enhance the efficiency of legal proceedings and provide a mechanism for individuals who may lack the resources to pursue individual claims to seek redress for their grievances.

Key differences between the US and Armenian systems include the following:

• Legal framework – Armenia’s class action regime operates under its specific legal framework, while the United States has its own set of federal and state rules governing class actions; legal provisions, including certification criteria, notice requirements, and class action procedures, can differ substantially.
• Procedural rules – differences may exist in the procedural rules, such as the process for opt-in or opt-out class actions, notice requirements, settlement approval, and attorneys’ fees, between the Armenian and US class action systems.

In summary, while Armenia’s class action regime is not directly modelled on that of the United States, there are certain similarities in the fundamental concept of group litigation and the goal of enhancing access to justice. However, the specific legal provisions, processes, and cultural contexts of the two systems can result in notable differences in their implementation and operation.

This does not apply in Armenia, which is not an EU member state.

In Armenia, the primary and sole regulatory legal act governing collective redress and class actions is the RA Civil Procedure Code, adopted in 2018.

The legislative framework concerning class actions in Armenia, notably the RA Civil Procedure Code (Chapter 26), is exclusively applicable within the domain of civil procedure. It is crucial to emphasise that the legislation does not categorise types of disputes or issues; rather, it extends its applicability to all disputes for which an individual may approach a civil court of first instance. In essence, any legal dispute that falls under the jurisdiction of the civil courts can potentially serve as the basis for initiating a class action in connection with that specific dispute.

As an exception to this, it should be noted that the Civil Procedure Code includes provisions for the initiation of class actions in the context of corporate disputes, which are – in fact – treated as a distinct category. While cases originating from class actions in corporate disputes adhere to the general rules for group actions outlined in Chapter 26, specific rules have been established to govern the examination of corporate disputes. These special rules encompass various aspects of corporate disputes, including the adjudication process, requirements associated with the lawsuit, provisions for corporate dispute waivers, conciliation agreements, and conciliation processes. This ensures that the legal framework for class actions in corporate disputes aligns with the unique characteristics and nuances of these cases.

In accordance with Article 224 of the Code of Civil Procedure of the Republic of Armenia, a collective redress or class action suit is defined as a lawsuit that is filed jointly by a minimum of 20 co-plaintiffs. For such a lawsuit to be categorised as a group action, it must be directed against the same defendant(s), and the subject matter and legal basis of the lawsuit must be identical among the co-plaintiffs

To bring a collective class action suit to court the following requirements should be met simultaneously:

• the number of claimants should be at least 20;
• the claim should be against the same respondent(s); and
• the subject and the basis of the claim should be the same.

The collective redress action suit can be brought only within civil cases (the competent court is the First Instance Court of General Jurisdiction).

Unlike other types of lawsuits, claimants must conduct their cases in court through a class action representative and the number of the representatives cannot exceed five. The presence of the representative excludes the participation of the claimants in the trial.

A human rights NGO can be a representative of the claimant within collective class action lawsuits.

If the powers of the claimants’ representative are terminated and the claimants do not appoint a new representative within a month after that termination then the court leaves the claim without consideration, but the claimants can still protect their rights by filing a separate claim(s) in court.

In class action lawsuits, plaintiffs pursue their legal claims in court using a class action representative. These representatives are limited to a maximum of five individuals, and they are responsible for equally advocating for the interests of all the claimants involved. The class action representative in court can be selected from among the claimants themselves, a human rights non-governmental organisation, or an attorney who holds the appropriate legal authority to handle the case within a court of law.

In Armenia, the concept of distinct classes does not apply to collective redress or class action litigation. Instead, the determination of who may participate in a collective redress or class action lawsuit is primarily guided by provisions within the Code of Civil Procedure.

Minimum Co-Plaintiffs Requirement

To initiate a class action, a minimum of 20 co-plaintiffs must come together to jointly file a lawsuit. These co-plaintiffs are expected to share a common dispute, have the same defendant(s), and base their claims on the same subject and legal basis. This statutory requirement establishes a specific minimum threshold of 20 co-plaintiffs for a case to qualify as a class action.

Mechanism for Joining an Action

In Armenia, the mechanism for joining an action in a class action suit is exclusive to the co-plaintiffs who initially apply to the court together. Once the court process begins, individuals who did not initially apply to join the class action cannot typically join the proceedings after the lawsuit is initiated. This practice adheres to the specific requirements of the Armenian legal system, where class action participants must collectively initiate the case, and joining after the court process commences is generally not permitted.

There is no procedure for third parties to join the presented collective class action suit. This means that the class action is generally limited to the claimants initially involved, the class action representative. The structure and composition of class actions in Armenia do not allow for additional parties to join the lawsuit once it has been initiated. It is essential for potential claimants to assess their eligibility and involvement at the outset of the case to ensure they are properly represented.

Regarding the procedure for examining a class action case in Armenia, the following key points apply:

• The court is required to promptly transmit the decision to accept the class action as a proceeding, along with all judicial acts adopted in the case, within three days of their adoption. These documents are sent to the representative of the class action, following the procedures outlined in the legal code.
• Each plaintiff who initiated the class action is entitled to receive the judicial act they have requested within three days of submitting the corresponding written application to the court.
• If one of the plaintiffs decides to withdraw from the group action, the case continues to be examined concerning the other plaintiffs as per the rules outlined in the relevant legal chapter, provided that their number remains at 20 or more. If the number falls below this threshold, the case proceeds under the general procedure defined by the legal code.
• In cases where all plaintiffs opt to withdraw their claims, the court terminates the proceedings of the case.

These procedural guidelines ensure transparency and efficiency in the handling of class action cases in Armenia and are in line with the legal framework established by the Armenian legal code.

In Armenia, the occurrence of class action suits is quite rare, making it challenging to provide a precise estimate of the average duration for the consideration of such cases. Nevertheless, drawing from the broader court experience, it is anticipated that the average processing time in the initial instance would likely span around one year.

The RA Civil Procedure Code establishes specific mechanisms to shorten the time taken by proceedings: the simplified procedure and accelerated forensic investigation.

Furthermore, in the context of class actions, the Code specifies that price-related matters cannot be addressed through the simplified procedure. However, the option of an accelerated trial is available.

An accelerated trial may be invoked by the court of first instance when the following conditions are met:

• the claim involves the confiscation of an amount not exceeding AMD50,000;
• the claim is founded on a written transaction, and the defendant does not contest its validity;
• all parties involved have formally communicated their non-participation in the trial to the court;
• the involved parties have collectively submitted a written agreement endorsing the use of an accelerated trial in the case; and
• the essential facts for case resolution are uncontested, and the court’s role is primarily to address legal matters, or the defendant has conceded the claims.

Upon the decision to implement an accelerated trial, the court of first instance proceeds swiftly to produce the final judicial judgment. The final judicial judgment must be made accessible to the public no later than one month from the date on which the decision to employ the accelerated trial was made.

The general rule for costs and funding for legal actions in this context is as follows: In the Republic of Armenia (RA), the amount of the state duty for a claim filed in cases examined under special procedures is fixed at AMD20,000. This amount is established by the Law on State Duty of the RA.

It is important to note that the state duty is a standard fee associated with filing a legal claim and initiating legal proceedings in these particular cases.

In Armenia, there is no formalised pre-trial disclosure process in the context of class actions. Class actions typically proceed directly to trial without a separate pre-trial stage. Parties involved are expected to present their evidence and arguments during the trial.

Regarding trial disclosure and rules of privilege, the principles of transparency and fairness guide the proceedings. While there are no specific pre-trial disclosure rules, the court may request parties to share relevant documents and information during the trial phase. This is usually based on the court’s discretion and the need for a fair and just resolution of the case.

It’s essential to note that while there may not be formal pre-trial disclosure processes, the court may still request information during the trial phase as necessary for the case’s adjudication, aligning with principles of fairness and justice.

Collective redress or class actions in Armenia offer a mechanism for individuals to collectively seek remedies for various legal issues. The available remedies can include the following:

• Compensation – class members may seek monetary compensation for damages or losses they have suffered due to the defendant’s actions or negligence. This compensation can cover financial losses, medical expenses, property damage, or other financial harm.
• Injunctions – in some cases, class actions can result in injunctive relief. This may involve court orders requiring the defendant to cease certain practices, change their behaviour, or take specific actions to rectify the situation.
• Declaratory relief – class actions can also lead to declaratory judgments, where the court formally declares the rights and obligations of the parties involved in the dispute.
• Restitution – class actions can seek restitution, requiring the defendant to reimburse class members for unjustly gained profits.
• Rescission – in some cases, the court may order rescission, which effectively cancels a contract or transaction and restores the parties to their pre-contractual positions.
• Attorney’s fees and costs – in successful class actions, plaintiffs’ attorneys may recover their fees and costs from the defendant, ensuring that pursuing the case does not create a financial burden for class members.
• Equitable remedies – equitable remedies, such as specific performance or injunctions, may be sought in cases where monetary damages are insufficient to address the harm.

It’s important to note that the specific remedies available in class actions can vary depending on the nature of the case, the applicable laws, and the court’s discretion. The remedies sought and awarded are determined on a case-by-case basis, taking into account the particular circumstances and legal requirements of each class action lawsuit.

The court, in order to resolve the dispute between the parties amicably, with their consent or motion at any stage of the proceedings, has the right to start a mediation process with the participation of a licensed mediator. If the dispute is very likely to be settled amicably, the court can appoint mediation on its own initiative.

If the claimants and the respondent(s) had an arbitration clause regarding the matter of the claim in their contract, then the case should be considered by a suitably composed arbitration panel.

In these matters, the judgment delivered is legally binding for all parties participating in the case. However, it is important to note that the judgment does not come with a built-in enforcement mechanism by default. If the parties do not voluntarily comply with the court’s decision, the plaintiff must take further steps to initiate enforcement.

After the publication of the verdict, the plaintiff is required to submit an application to the court, requesting the issuance of a writ of execution. This writ of execution is a formal document that empowers the enforcement of the court’s judgment. Once the court receives the plaintiff’s application and approves it, the court issues the writ of execution.

Subsequently, the court sends the issued writ of execution to the Compulsory Enforcement Service, which is the designated administrative body responsible for enforcing court judgments and decisions. The Compulsory Enforcement Service then undertakes the necessary actions to execute the judgment in accordance with the law.

In summary, the judgment in class actions and collective redress matters is binding on the parties involved, and the enforcement mechanism, if necessary, is initiated by the plaintiff through an application for the issuance of a writ of execution. The court then forwards the writ of execution to the Compulsory Enforcement Service, which carries out the enforcement process.

For the current period, there are no specific policy developments or initiatives to report in relation to the matters discussed in this chapter.

At time of writing (October 2023), there were no legislative reforms in progress or foreshadowed with respect to the matters mentioned in this chapter.

The legal framework pertaining to class actions in Armenia appears to remain unchanged at this time.

Brexit has had limited direct impact on matters in Armenia. Armenia is not a member of the EU, and its legal and regulatory frameworks are primarily shaped by its domestic legislation and the international agreements to which it is a party.

Some countries may adjust their trade and diplomatic relations as a result of Brexit, which could have indirect implications for Armenia. For instance, changes in EU trade policies or international agreements could potentially affect Armenia’s trade relations with the EU and the UK. Nevertheless, the impact of Brexit on Armenia is likely to be more indirect and dependent on how international trade dynamics and agreements evolve in the wake of Brexit, rather than through direct changes to Armenian law or regulations.

In the context of class action law and practice, the impact of environmental, social, and governance (ESG) issues may indirectly influence the nature and causes of class action lawsuits in Armenia. ESG considerations can potentially lead to class actions related to environmental damage, corporate disclosure, labour rights, discrimination, product safety, corporate mismanagement, breach of fiduciary duties, and shareholder rights. The specific impact of ESG on class action matters in Armenia depends on the evolution of ESG principles within the legal and corporate landscape and their influence on the types of disputes that arise.