Mediation practice: problems and solutions
Can an advocate be a mediator? How can the principle of confidentiality of the agreement reached by mediation be combined with the principle of openness of the trial? Will the increase of litigation costs of a party stimulate resorting to mediation? In what situations this procedure may be beneficial for the parties? Participants of the discussion club organized by the “Venture’s lawyer in Q&A” answered the most topical questions of application of the mediation procedure.
Will the increase of litigation costs (in particular, of the state duty amount, of the execution due, lawyers’ fees) of a party stimulate resorting to mediation?
Vladislav Starzhenetsky, Doctor at Law, Head of International Law and Cooperation Department of the SCA of Russia
The experience of other countries enables us to conclude that the development of mediation was caused by the challenges faced but not coped with by the respective judicial systems. Such challenges included protracted judicial proceedings, large court expenses, formalistic procedure, and complexity of legal regulation. Lawrence Tribe, Professor at the Harvard University, expressed this thought in a single excellent phrase back in 1979: “Too much law, too little justice, too many rules, and too few results”. We have a different situation. Russian courts are accessible, and this is an important advantage in the competition. Therefore, the very way the question is put seems strange. Why artificially complicate the access to courts by knowingly and deliberately worsening the existing situation? Mediation needs other advantages to gain supporters. Such advantages include better quality of dispute settlement, search for flexible solutions and the parties’ satisfaction by the results, continuation of business relations etc. Mediation is capable of independent equal competition with the other dispute settlement procedures, because each of those has its own niche, benefits and drawbacks. I have no doubt that there is need for mediation in Russia. It is only a matter of time.
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How can the principle of confidentiality of the agreement reached by mediation be combined with the principle of openness of the trial?
Irina Reshetnikova, Professor, Doctor at Law, Honored Lawyer of the Russian Federation, Chairperson of the Federal Court of Arbitration of the Urals District
Confidentiality may be considered in two ways: in regard to negotiations and in regard to mediation agreement. As it is known, confidentiality of communications (negotiations) is one of the basic rules of mediation. This rule is nowadays strengthened by the Russian procedural legislation, which prohibits the mediators, unlike attorneys and defendants, to testify in court.
Several countries prohibit the parties to allege circumstances and proof, which they claimed when negotiating the agreement (not necessarily the mediation agreement). Confidentiality of the agreement itself is connected with the basics of amicable agreement, which function in the national procedural system. For example, the number of the so-called “vanishing trials” is steadily growing in the practice of American courts. In other words, the cases brought to court do not result in their settlement, since the contesting parties eliminate the conflict between them on their own, including with the use of mediation. Thus, in 1962, 11,5% of all civil cases in the USA were considered by the first instance federal courts, and in 2002 – only 1,8%. This is explained by the fact that in the USA, as well as in many other countries, it is not accustomed to approve the agreement, which the parties reached, in court. If the agreement executed by the parties is not fulfilled, it is possible to file a claim with the court, just like with any other agreement.
The Russian process has chosen another system, which was probably caused by the courts’ activity: the courts check the legality of the conditions of the amicable agreement reached by the parties, and whether or not the rights and interests of other persons had been violated. However, nothing impedes the parties, who wish to keep the agreement’s conditions confidential, to not resort to court for approval. In this case, it is sufficient if the claimant drops the claim. But the parties should understand the consequences of such actions well. First, after the court accepts the renunciation and stops the proceedings, another filing of a similar case will be impossible. Second, if the agreement reached by the parties is not fulfilled, the parties will be unable to obtain the writ of execution without filing a separate claim (as it happens in the case of approval of an amicable agreement). And the issue of validity of such agreement will inevitably arise during the proceedings.
Speaking from the point of view of the legal theory, the Russian variant of the amicable agreement is a combination of a civil law agreement and of a special form of its approval by the court. The result of this is that, after the writ of execution is issued, the stage of execution proceedings may begin without any additional procedures.
According to the American variant, the parties enter into a civil law agreement without involving the court; therefore a court case procedure is required for its enforcement.
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Should mediators insure their responsibility?
Alexander Evdokimov, Head of Arbitration Court Practice of the Law Firm "YUST", Advocate
Article 17 of the Federal Law No. 193-FZ “On the alternative procedure of settlement of disputes with the participation of a mediator (mediation procedure)” dated 27.07.2010 (hereinafter – the Law No. 193-FZ) says that “mediators and organizations supporting the mediation procedure are liable to the parties for damages caused to the parties as the result of such activity, according to the procedure fixed by civil legislation”.
As we can see, the cited provision actually stipulates a kind of a common law tortuous liability for causing damages to legally protected interests of a party to a dispute. Such edition of the Law No. 193-FZ classifies the following as possible violations of law by mediators, which cause damages: special “professional” faults (for example, disclosure of confidential information by the mediator, who received it during conciliation (Article 5 of the Law No. 193-FZ), or violation by the mediator of the principle of his impartiality and independence from the parties to the dispute (Article 3 of the Law NO. 193-FZ)), as well as any other offences, including criminal ones (for example, fraud).
Obviously, it is too early to mention any significant practice of bringing mediators to liability on the basis of said provision of the Law No. 193-FZ at this stage of the development of the mediation institution in Russia.
However, a finely tuned mechanism of bringing mediators to liability for the damages caused by them during their professional activity is necessary, or it will be impossible to elaborate clear and economically founded rules of insuring of the risk of arising of such liability. The insured risks should be understandable and possible to estimate, and their insurance should become the barest necessity deriving from the very nature of this type of activity, in the first hand – for the members of the professional community of the mediators themselves.
Therefore, answering the question, I’ll say that implementation of compulsory insurance of the mediators’ liability currently seems inappropriate, since there are no social prerequisites for that, in the first hand. Our society has not yet developed the necessity to obligatorily insure the mediators’ liability, which is a consequence of a formed large practice of bringing them to liability. While there is no such practice, implementation of obligatory insurance will create yet another system of compulsory payments to insurance companies, ultimately exacted from the parties to the respective dispute, but will not provide the latter with any real guarantees of compensation for eventual damages caused by the mediator.
However, voluntary insurance of their liability by the mediators themselves should be accepted as useful as it helps to elaborate the conditions of such liability insurance type in practice, and the very fact of an insurance policy owned by the mediator will undoubtedly contribute to the popularity of this alternative means of dispute settlement.
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