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Managing Partner, Attorney-at-Law, Legitimus Law Firm
Attorney at law, Legitimus Law Firm
Commercial Dispute Resolution Involving Judges
World practice has long found a way for an amicable dispute resolution alternative to legal proceedings. Thus, most countries of the world widely use such a method of legal disputes resolution as mediation. Formal definition of this concept is given in Article 1 of 2002 Model Law of the United Nations Commission on International Trade Law, according to which mediation is a process whereby parties request a third person or persons 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.
Unlike legal proceedings, mediation provides a flexible approach to commercial dispute resolution, taking into account all aspects of a disputable situation, regardless of their legal significance and effect. Therefore, mediation is used not only in its classical meaning, but also as an integral part of litigation proceedings in world practice.
For example, in Australia, within the framework of judicial mediation, conciliation procedures are conducted by private intermediaries, independently selected by parties from specially prepared lists drawn up in courts. In Austria, similar lists are drawn by the Ministry of Justice and in the Netherlands by the Netherlands Mediation Institute.
However, in Canada, judicial mediation is conducted directly by a judge considering the case (appraisal court mediation). It lies in the fact that parties come to a judge, who clarifies the circumstances of the case in the light of the court practice to them, following which the parties assess their chances of success and reach a certain consensus. Thus, without starting legal proceedings in a case, the parties resolve their dispute amicably. Subsequently, time and money are saved, ensuring positive result to parties.
Unfortunately, alternative ways of dispute resolution are not quite widespread in Ukraine. Most amounts of existing conflicts are solved exactly in courts. Therefore, introduction of judicial mediation in Ukraine at legislative level could become a revolutionary event that would change the consciousness of citizens and encourage them to resolve disputes if not in an extrajudicial manner, then at least at the stage of a preliminary case hearing with the help of a judge.
Thus, on 15 December, 2017, Law No. 2147-VIII On Amendments to the Commercial Procedural Code of Ukraine, the Civil Procedural Code of Ukraine, the Code of Administrative Legal Proceedings of Ukraine and Other Legislative Acts came into force. One of its innovations was the introduction of a completely new institution for the protection of rights, namely, dispute settlement involving a judge (judicial mediation).
It is worth noting that legislators chose precisely the Canadian model for dispute resolution involving a judge, namely, a model of appraisal judicial mediation.
The general procedure for dispute settlement in all procedural codes is similar and is as follows. During a preliminary case hearing, a judge finds out whether the parties wish to settle the dispute involving a judge. At the consent of the parties, proceedings in the case are stopped, subject to a respective ruling.
The dispute resolution procedure will take place in the form of joint and closed hearings, without recording a judicial procedure and without use of technical means.
At joint hearings, a judge should discover the grounds and subject of a claim, grounds for objections, clarifies facts to be proven to parties, proposes to make suggestions on an amicable settlement of the dispute, and may also propose mutually beneficial ways for existing dispute resolution.
In their turn, closed hearings are held only at the initiative of a judge and with the participation of each party separately. During such hearings, a judge has the right to draw the party’s attention to judicial practice in similar disputes and to suggest possible ways of amicable dispute settlement.
However, it is important to remember that during hearings (both joint and closed), a judge has no right to provide legal advice and recommendations to the parties, to give an assessment of any evidence in the case.
If the parties are unable to reach agreement on amicable dispute settlement, the case is referred to another judge in accordance with automatic distribution. Also, the dispute settlement procedure may end under other established grounds, namely: at the initiative of one of the parties, upon the initiative of a judge (if the latter considers that one of the parties or all parties are slowing dispute settlement), following the end of the thirty day period provided for settlement.
It is worth remembering that the dispute settlement procedure involving a judge is not necessarily execution and approval of an amicable agreement. It is achievement of some compromise, which may also result in the dismissal of a case without a hearing on merits due to reconciliation, waiver of a claim or recognition of filed claims by a defendant.
At the same time, a positive novel is the introduction of a standard on reimbursement of 50% of the court fee by the state budget in case of amicable agreement execution, waiving of a claim or recognition of a claim by the defendant, which will actually encourage parties to reach an amicable dispute settlement. Thus, in the event of a successful procedure of amicable dispute settlement, the parties bear smaller financial expenses.
Subsequently, the introduction of the institute of dispute settlement involving a judge will contribute not only to unburdening the judicial system, but also to faster dispute resolution with minimal expenses to the parties.
What Should We Expect?
Since this institute is new to our judicial system, practical implementation of such a mechanism will most likely encounter some difficulties. For example, not all judges have the necessary skills and abilities to effectively implement the amicable dispute settlement procedure. However, an obligation with regard to special training is not regulated by the introduced amendments.
It would seem that the process of dispute settlement is coordinated not by a regular mediator but by the judge, who has a legal education and understands all the subtle and legal aspects of a dispute, and is, therefore, capable of communicate to parties procedural prospects of a case, referring to already established judicial practice in similar disputes. At the same time, it should not be forgotten that the psychological aspect of relationships between parties remains important for the mediation procedure.
Furthermore, the format for conducting hearings during judicial mediation bears certain risks. Thus, holding closed hearings is a rather controversial innovation. Introduction of such hearings may have both positive and negative effects. If, at joint hearings a judge complies with procedural requirements and does not go beyond the limits set above all things, since both parties are present, such restrictions may easily be violated during closed hearings.
At the same time, it will be difficult to prove any violation as there will be no recording of hearings.
In addition to violation of the procedure on the judge’s side, violations may also be committed by other parties to the proceedings. Thus, in the course of closed hearings, an unscrupulous party may try to manipulate a judge or influence the latter in another way to persuade another party to accept one or other decision. The possible outcome of judicial proceeding described by a judge may directly affect adoption by one of the parties of the option of amicable dispute settlement required by the other party.
With the introduction of judicial mediation, demand for the services of lawyers is on the rise. From now on, it is not enough for a lawyer to know the law well; the latter should also have a high level of psychological training. Modern lawyers should be able to move from their usual strategy of competition to ability to apply a strategy of compromise.
That is, main task of a lawyer becomes not to prove grounding of the position to another party or convincing a judge (mediator) in the rightness of his position, but competent development of a strategy that will allow provision of the desired result to the client through negotiation and “reasonable” giving up.
As a result, skillful use of psychological techniques in judicial mediation by a lawyer will enhance the position of his/her clients, which, in its turn, will help in achieving goals set.
Summarizing the aforementioned, it can be concluded that judicial mediation may become a very important and popular tool for commercial disputes resolution, which will help not only to unload the judicial system and to make it more effective, but also to create an effective mechanism for reconciliation of the parties.
Of course, dispute settlement involving a judge is not an ideal alternative to resolving all conflicts. After all, in each case parties will be reluctant to resolve the dispute in this way. This is explained, in particular, by the fact that at a stage of bringing the matter before the court, parties have already used all possible means for amicable dispute settlement and could not reach a consensus. However, this mechanism should be effective in situations where the parties did not even try to resolve the conflict in an extrajudicial manner, or when parties were guided by emotions rather than a cold calculation.
In any case, implementation of alternative dispute resolution procedure involving a judge into the procedural law of Ukraine is a promising innovation, which, if properly applied and used, should help parties resolving existing disputes with minimal financial expense and within a reasonable time.