Ukraine: Mediation: Confidential, Cost-Efficient And Quick Mitigation Of A Conflict

Last Updated: 28 May 2019
Article by Serhiy Yaroshenko
Most Read Contributor in Ukraine, July 2019

As reported by "Zakon i Business", the Verkhovna Rada (the Parliament) failed to adopt the law "On Mediation", which draft had been considered for more than 3 years. Thus, an attempt to institutionalize this procedure in Ukraine based on success experience of mature jurisdictions has failed. Does this mean that mediation has now become illegal?

Out-of-court compromise

Clients sometimes note that the best lawyers are those who can resolve a dispute to the satisfaction of the parties via a pre-trial procedure. Well, this can hardly be argued. Despite the thrill of the court proceedings, which is often viewed by the lawyers as an opportunity to "solve a puzzle" and to demonstrate all their professional skills, the client is more interested in the result itself. It means – no headache and minimum cost. Mediation is intended to meet these metrics. Though currently the Ukrainian legislation almost does not regulate this institution, mediation becomes more popular.

Being an alternative instrument of a dispute resolution, mediation provides for a voluntary involvement of a neutral intermediary – a mediator – who helps parties to a dispute or a conflict to reach a compromise. The key advantage is that there is no need to initiate court proceedings, and that all the disputes are resolved privately and amicably. This allows not only to mitigate a conflict and to maintain good relations in a more quick and efficient way but also to be secured against disclosure of information on a dispute. If the dispute were considered in a state court, it would be automatically entered into respective public register. By contrast, mediation should ensure confidentiality.

Given that a mediator, as a rule, promotes an effective negotiation process it also adds to the pros of mediation. He/she brings up relevant questions, identifies the actual interests of the parties to the dispute, assesses factual circumstances existing at the time of the dispute in their favor or, on the contrary, looks for common grounds and proposes solutions. The mediator’s task is to find a balance between the mutual demands of the parties and their interests and to show where, why and how they can reach an agreement.

At first glance, the process may seem much simpler than a court settlement. However, a mediator has to make considerably more effort to successfully perform his/her functions than, for example, a judge at a public court, whose decisions, if they come into force, are binding upon the parties. An effective mediator is an example of the symbiosis of in-depth knowledge in jurisprudence, law, and psychology. In fact, the pool of such specialists is quite limited. Therefore, the demand for their services has been increasing regularly.

European regulation

Experience of the European Union in the field of mediation may be particularly interesting and useful for Ukraine due to several reasons. Firstly, EU countries are predominantly civil (continental) law countries like is Ukraine. Secondly, commercial and other business conduct practices to certain extent resemble those used in Ukraine due to its territorial proximity and historical cooperation with the EU.

At the supranational level, the main instrument is the Directive 2008/52/EC of the European Parliament and of the Council dated 21/05/2008 on certain aspects of mediation in civil and commercial matters. The Directive applies to cross-border disputes in civil and commercial cases. It covers disputes where at least one party is a resident or is registered in EU state other than the place of residence or registration of another party as of the date of the agreement on initiation of mediation procedure or as of the date of the court order obliging the parties to resolve the dispute through mediation.

To promote mediation in the EU states, the Directive, among other things:

  • authorizes judges to suggest the parties to the dispute to resolve it through mediation in the first place, if they consider it relevant given the circumstances of a particular case;
  • guarantees the parties a possibility to initiate court proceedings after the mediation, since it “freezes” the limitation period for the time necessary for mediation;
  • stipulates that agreements entered by and between the parties following mediation shall be subject to execution by filing a petition and obtaining the corresponding court order or a notary writ;
  • guarantees confidentiality – a mediator cannot be obliged to testify in court on the matters discussed during the mediation – in any future dispute between the parties;
  • obliges each EU Member State to promote the training of mediation professionals and to ensure high standards and quality of mediation.

Experience of Poland and France

In various EU countries, the institution of mediation is regulated at the national level and has certain differencies. Predominantly, differences refer to the category of cases subject to mediation and ways of their resolution.

In Poland, the institution of mediation is envisaged, in particular, by the Code of Civil and Criminal Proceedings, "Law on Court Proceedings in Juvenile Cases", the "Law on Court Fees in Civil Cases", as well as by the secondary legislation. The latter ones describe the mediation procedure in detail.

The mediation is conducted on the basis of either an agreement (out-of-court proceeding) or a court decision on the resolution of a dispute through mediation (upon the court initiative). If the parties fail to choose a mediator, the latter is appointed by the court from the list of persons having approproate qualifications. Criminal cases and juvenile cases where the court appoints a mediator at its own discretion are an exception to the general rule.

Also, there are certain peculiarities related to fulfillment of agreements entered into as a result of mediation. In civil cases, such an agreement is certified by a protocol and is transferred to the court for approval and obtaining of an enforcement order. As a rule, the court refuses to approve such agreement in whole or in part, if it not compliant with the effective legislation or principles of morality, intends to circumvent the law, misleads or contradicts the legitimate interests of an employee.

In family matters, mediation covers, in particular, issues of reconciliation, scope of parental authorities, property and housing issues, and in case of a divorce – issues of passport issuance, choice of education options for a child, managing his/her property.

At the same time, in criminal cases and cases involving minors, an agreement reached as a result of mediation does not replace the court decision and is not mandatory for the latter. However, the court should respect the content of the agreement when delivering a judgment.

In France, any case can be transferred to mediation, provided it does not impair the public order in the area of social and economic activity. The Law No. 2011-1540 dated 16/11/2011, which implemented the Directive provisions into the French legislation, is the main document that regulates mediation. This Law expanded the scope of the Directive provisions in order to cover mediation not only in cross-border disputes but also in domestic ones. The only exception – disputes related to employment or to the public authorities.

State of affairs in Ukraine and recommendations

The latest judicial practice shows that the popularity of mediation in Ukraine has been increasing. Positive attitude to mediation can be noticed not only on the part of individuals or private companies but also on part of the judicial corps. At the same time, this instrument is mentioned in the current legislation, in particular, in the Civil Code and the Law "On Free Legal Aid"; though its regulation is not significant, it still indicates the possibility of using mediation considering requirements of the effective law.

In cases, involving clients engaged in foreign economic activities, we can observe mediation clauses. As a rule, they are simple, do not provide for a detailed procedure and, which is most important, they do not exclude but rather supplement other instruments – arbitration and court proceeding. Therefore, if you are willing to try mediation, it is advisable to describe its procedure in detail in a contract and specif mediator(s), issues to be referred thereto for consideration and always keep in mind that mediation does not exclude the option of court proceedings. On the contrary, lack of a mediation clause in a contract does not deprive the parties of the possibility to apply this instrument in the first place in order to resolve a dispute.

No doubt that the need for special legislation related to mediation has long been overdue. It could help to ensure high quality of services, to limit the number of unqualified specialists, to define cases that may be resolved through mediation, as well as to elaborate respective procedures and agreements concluded as a result of mediation. In this case, alternative dispute resolution might be able to develop even more effectively, which could impact favorably on the Ukrainian justice system.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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