Mediation Law: Unreal Reality

Yevheniia Makarenko, Lawyer

Source:Yurydychna Gazeta

The national and international experience shows that the introduction of alternative dispute resolution methods along with the justice system is an effective prerequisite for resolving legal disputes. The present-day system of justice in Ukraine is definitely amiss: heavy workload of the courts, lengthy and complex judicial proceedings, high costs of justice, insufficiently developed mechanisms of competition and equality of parties to the process, publicity of court proceedings, which often leads to disclosure of confidential information, etc. Now business representatives and dispute participants tend to choose not only arbitration – as one of the alternative dispute resolution methods – but also mediation, which involves bringing in an intermediary (mediator) to resolve the dispute.

What is mediation and how it works?

The formal definition of mediation is given in Article 1 of the UNCITRAL Model Law on International Commercial Conciliation of 2002, according to which the mediation (conciliation) means a process, whether referred to by the expression conciliation, mediation or an expression of similar import, whereby parties request a third person or persons (the conciliator, mediator) to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship. The mediator does not have the authority to coordinate the actions or to impose upon the parties a solution to the dispute.

Not for nothing there is a lot of discussion about implementation of the mediation institute in Ukraine, since mediation – as a process of pre-trial dispute resolution – has many advantages for the parties as opposed to the litigation.

Firstly, the participants control negotiation process by themselves. The mediation process may take place according to procedure, terms and conditions determined by the parties in the agreement entered into with the mediator. In particular, the parties have the right to make proposals on the mediation procedure, provide the necessary information, declare the need to involve third parties in the mediation, initiate an individual conversation with the mediator, participate in the discussion of proposals put forward, form a range of issues requiring discussion, express their opinions and positions on controversial matters.

Secondly, confidentiality. All information related to the mediation process is confidential and cannot be disclosed without prior consent of the party providing it. The parties and the mediator are neither entitled to refer to such information during the court session, nor to disclose it in any other way.

Thirdly, saving time and money. The parties to mediation process do not need to spend money to cover the legal costs (which may be quite significant), pay for the involvement of specialists (for carrying out examinations, the cost of which sometimes is higher than the amount claimed) and lawyers’ services. The cost of mediation parties is limited to the payment of remuneration to the mediator, the amount of which is determined by the agreement entered into by the parties and the mediator and is fixed in the mediation agreement.

Fourthly, non-typical and flexible solutions. The parties to mediation are not limited in the subject of dispute, nor in the claims stated at the beginning of mediation process. The only limitation in mediation is the parties’ willingness and readiness to discuss certain aspects of the conflict. In mediation there is no need to try to ‘fit’ the conflict resolution options within the initial claims. Thus, it is possible to achieve non-typical solutions, depending on the specific case. The parties may discuss the solutions until they find a way that best suits their interests. This option, if the parties agree, forms the basis of the mediation agreement.

Positive experience of foreign countries

As an example of positive development of mediation we can name several countries where mediation is used by business representatives to resolve disputes together with court proceedings and is legally formalized in specific legal acts.

Speaking of legislative regulation of mediation, for example, in the United States of America, in 1981 California became the first state to institute mediation to resolve child custody disputes. Non-disclosure of confidential information is very important for Americans. In the United States, there are over 250 privacy rules and privileges in different states determining what information may be disclosed during mediation without fear of its further dissemination.
To this end, the Uniform Mediation Act was developed.

As for the European practice of implementation of mediation, the Directive 2008/52/EC of the European Parliament and of the Council on certain aspects of mediation in civil and commercial matters, approved in 2008, provides for the implementation of provisions into the legislation of member states. The aforementioned Directive establishes the basic principles of the conduct and implementation of mediation procedure in the national legislation of the EU member states.

What are the prospects for the development of mediation institute in Ukraine?

After the adoption as the basis of the draft Law No. 3665 by the Verkhovna Rada, the discussions continue on whether the mediation will find its place in the legal field of Ukrainian national legislation. Back in 2013, the draft Law No. 2425-1 On Mediation was registered in the Verkhovna Rada, but in 2014 it was withdrawn.

In 2014, Ukraine signed the Association Agreement with the European Union. According to Article 1 of the Agreement, Ukraine and the EU should enhance the cooperation in the field of justice, freedom and security with the aim of reinforcing the rule of law and respect for human rights and fundamental freedoms. The EU member states agreed that ensuring the rule of law and better access to justice should include access to both judicial and non-judicial dispute resolution methods.
Later, the President of Ukraine by its Decree No. 276/2015 dated 25 May 2015 approved the Strategy for the Reform of the Judiciary System and Other Related Legal Institutions for 2015-2020. In accordance with paragraph 5.4 of the Strategy, the expansion of methods of alternative (out-of-court) dispute resolution (including through the practical implementation of mediation and conciliation) is envisaged.

Today several drafts of the Law On Mediation were registered in the Verkhovna Rada of Ukraine, however, the adoption of the Law is still underway. Now there are two draft laws pending adoption in the Verkhovna Rada, in particular No. 3665 and No. 3665-1, both having a number of drawbacks. The draft Law No. 3665 has already passed the first reading.

It should be noted that the draft Law No. 3665 does not sufficiently regulate the organization of mediators’ professional activities and their professional training. In particular, the conclusion of the Chief Experts Department states that it is necessary to prohibit the participation in mediation of the employees of local governments, judges and other members of the judiciary authorities, officials of the prosecutor’s office, notaries, etc.

As to the draft Law No. 3665, it would be advisable to define more clearly the legal status of mediators and the legal basis for their activities (in particular, whether they are considered to be the entrepreneurs or not, etc.).

For instance, Article 8 of the draft Law should describe in more detail the list of circumstances that make it impossible for the mediator to be neutral, and the consequences of non-compliance by the mediator with a prohibition to participate in the mediation of disputes he/she is personally interested in. Although the draft Law contains provisions on the mediator’s neutrality, yet, based on their content, they are only formal. It is not clear how this neutrality may be verified, and also how, in case the abuse of neutrality by mediator is revealed, to withdraw from the mediation.

According to the draft Law, the mediation may be used in any disputes, including civil, family, labor, economic and administrative disputes, as well as in criminal proceedings and cases involving administrative offense.

An important aspect of the draft Law is that it provides for the responsibility of the mediator. The mediator bears responsibility for the violation of requirements of the law on mediation, rules of professional conduct, any contractual obligations to the parties to mediation. The party to mediation, believing that the unlawful actions or omissions of the mediator inflicted the material or moral damage, may file a complaint to the institution organizing the mediation, to the union of mediators, and also to the court for the protection of its legal rights and interests.

On the one hand, this is a good thing, since such provisions define who is responsible for breaching the mediation procedure. However, for some reason, the draft Law provides for the responsibility of the mediator only, and stays silent as regards the dispute parties. On the other hand, such provisions may result in overregulation of the mediation as such. However, it does not provide for the responsibility of the parties, for example, in case of disclosure of confidential information.

Moreover, the development of a register of mediators is planned after the draft Law is adopted. The register will contain information about the mediator (education, information about his/her training as a mediator, information about training organization, number of training hours and other information which will help the parties to choose a mediator for a particular case). In accordance with the provisions of the law, the dispute parties will be able to independently choose a mediator. This procedure is somewhat similar to the procedure for selecting an arbitrator when referring dispute to arbitration.

Conclusion

Currently the draft Law No. 3665 is revised before the second reading, and the provisions already proposed are to ensure the effective and high-quality development of mediation in Ukraine.

However, one should not forget that mediation is already often used in Ukraine (even without proper specialized law) as a way to reconcile the victim and the offender, to protect the rights of consumers, and to resolve labor and family disputes. An indicator of its effectiveness in Ukraine is the execution by the parties of the agreements reached during mediation. Statistically, only about 20% of the decisions reached are not being executed. Mediation is a voluntary thing. If the parties have agreed to resolve the dispute through mediation, this means that they are ready to keep to the arrangements reached.

After the Law is adopted, the only obstacle to the rapid development of mediation in Ukraine may be a low level of awareness of mediation among the citizens and business representatives, which may give rise to distrust of such procedure. In general, mediation in Ukraine is not as unreal as it may seem, but we have to go the way of formalizing this procedure at the legislative level.