• Ivanna Dorichenko

    FCIArb, LLM. Called to the bar of England & Wales (2014). Partner, Head of Trade & Commodities practice, Integrites London

  • Dr. Julian Ries

    Attorney-at-Law (Germany),
    Commercial Mediator. International Managing Partner, Head of Integrites office in Munich

INTEGRITES

Address: 1 Dobrovolchykh Batalioniv Street, Kyiv, 01015, Ukraine
Tel.: +380 44 391 3853
Fax: +380 44 391 3854
E-mail: info@integrites.com
Web-site: www.integrites.com

INTEGRITES has a solid network of operating offices in the CIS (Kyiv, Moscow, Almaty, Astana, Karaganda, Aktau, Atyrau) supported by an international office network in London, Munich, Amsterdam and Guangzhou. The firm offers its clients complex legal advice in the CIS region. In 2016 The Lawyer recognized our work in the CIS with the award “Law Firm of the Year: Russia, Ukraine and the CIS.”

We provide legal services for our world-known clients:  Rabobank International, EBRD, VTB Bank, ProCredit Bank, Mitsubishi Group, Concern Toyota, Agrogeneration S.A.,  Credit Agricole, Nestle, COFCO Agri, LTk Capital, Dragon Capital, ADM, Louis Dreyfus Company, Soufflet Group, Сredit Agricole, Burisma, Aspen Pharmacare Holdings Ltd., Shell, DuPont, Bank of China, DHL, China Development Bank etc.

Main industries: Agribusiness, Capital Markets, Construction and Land, Energy and Natural Resources, Information Technologies, Medicine and Healthcare, Telecommunications.

Main Practices: Antitrust and Competition, Banking and Finance, Bankruptcy, Corporate, M&A, Criminal Law and White-Collar Crime, Intellectual Property, International Arbitration, International Trade and Trade Remedies, Labor and Employment, Litigation, Real Estate, Retail, Tax.

Our firm is also represented by international offices:

United Kingdom

1 King Street,

EC2V 8AU, London, UK

Tel.:  +44 203 713 1750

Russia

Naberezhnaya Tower

Block C, Moskva-City

10, Presnenskaya
Naberezhnaya

Moscow, 123317, Russia

Tel.: +7 495 660 50 70

Kazakhstan

SUCCESS Business Center,

1/1, Zhandossov St.,

Almaty, 050008,

Republic of Kazakhstan

Tel.:   +7 727 352 80 83/84

Germany

Maximilianstrasse 13,

80539, Munich, Germany

Tel.: +49 892 030 061 50

China

R&F Ying Sheng Plaza,

MaChang Road 16,

Tianhe district,

Guangzhou city,

Guangdong, China.

Tel.: +86 185 0204 0880

Netherlands

Herengracht 282

1016 BX Amsterdam

The Netherlands

Tel.: +31 20-5219367

Mediation in Ukraine

Mediation is getting off the ground. Particularly in Ukraine, with the court system still problematic and businesses becoming ever more sensitive for legal fees, there are good reasons to avoid court disputes wherever possible. The large majority of conflicts in daily business life never come to court, since most conflicts are settled by negotiation between the parties. Only where the parties fail to reach an agreement by negotiation is court settlement an option. Mediation, at its core, is also negotiation, but with two particularities: a third, neutral person moderates the negotiation and the negotiation follows a certain proven course of negotiation. By moderating, the mediator makes the parties discuss their real interests in the matter, rather than their claims, rights and other legal positions. So mediation is basically a tool to bring the parties back on track for negotiation. Experience shows that once the parties are back at the negotiating table the chances of reaching an amicable agreement are very high, in 8 to 9 out of 10 conflicts parties do find agreement. Needless to say, that an amicable agreement serves the parties’ interests better than any court decision, is quicker to reach and is more cost-efficient.

So far mediation in Ukraine has developed well without a special law on mediation. Nevertheless, currently there is a Draft Law On Mediation in its second reading in the Ukrainian Parliament. As mediation is basically negotiation there is little need to have the procedure formalized by a law. There is only a certain set of questions where it is helpful to have clear provisions.

Immunity of Witness

In the absence of any specific provisions on immunity, the parties and the mediator are bound solely by confidentiality clauses in the agreement on mediation, possibly accompanied by penalty provisions. Just like any customary confidentiality clauses, these clauses would also have escape provisions to permit disclosure if that is prescribed by law and / or a court order. The Draft Law now suggests that the mediator cannot be summoned as a witness regarding circumstances which he learned about during the mediation process, unless the witness is necessary to protect the interests of a child, to avoid physical or psychological damage to a person or if disclosure of the content of a mediation settlement is necessary to enforce that settlement.

Whether and How Parties Can Get an Enforceable Title

In the best case the mediation ends with an amicable agreement. As this agreement is usually entered into by the parties, because they deem it more favourable than a court decision, the chances are high that the parties fulfil their obligations without enforcement. However, if the circumstances or the financial situation of a party change again there may well be the need to appeal to enforcement services. Also, particularly in debt restructuring matters, it may be necessary for the creditor to get more commitment than just a written agreement. The Draft Law is silent as to a certain enforcement procedure, but refer to the general provisions to protect its right in the courts. This is not too much, but the parties are free to negotiate notarised debt recognition clauses. Such debt recognition clauses give the creditor the right to apply for a notary’s execution clause in case the debtor does not pay in time. Thus, lengthy court disputes after the conclusion of mediation settlements can be avoided.

Neutrality of the Mediator

It is one of the basic principles of the mediation procedure that the negotiation is moderated by a third, neutral person. Particularly where lawyers act as mediators there is reason to prevent the mediator’s and the lawyer’s activity for one party getting mixed. The Draft Law establishes that the mediator must not be involved in the legal advisory of the same matter for one party before mediation and must not take up such advice or representation after unsuccessful mediation either. Other laws, for example the German law on Mediation, apply a wider scope: according to the German rules even persons practicing in the same firm or joint office must not advise or represent a party of mediation. As the success of any mediation largely depends on an open dialogue between the parties and even more between the party and the mediator, it seems to be appropriate to apply strict conflict rules. Should the Ukrainian Draft Law not be amended in this aspect, it is advisable to include respective restrictions in the agreement between the mediator and the parties.

Other subjects may be of less importance for regulation by the legislator, in particular licensing requirements. Who can act as mediator? Is a license mandatory, or shall the market decide which mediator and which qualification succeeds? The Ukrainian Draft Law establishes certain minimum standards for the training of a mediator. The mediator shall have received training of a minimum of 90 academic hours, of which 45 academic hours shall be dedicated to practical exercises. Furthermore, the mediator shall be at least
25 years old and shall hold a higher education (masters), or a professional technical education. Other requirements, such as the minimum number of mediation cases, supervision etc., are not established. Also, foreign certificates shall be recognised if the foreign training corresponds to minimum Ukrainian standards.

And there is a third set of questions, on whether to make mediation mandatory for certain conflicts. In the current Draft Law no mandatory mediation sessions are established, neither for family law matters, estate matters, lease matters or labour law matters, although experience shows that mediation can be of great help in conflicts where the parties one way or another will stay in contact. This is an unfortunate omission as the state courts are overloaded and mediation could be an efficient way to reduce the work load. Even worse, the Draft Law suggests that a mediation clause shall not prevent the parties applying to a court. This provision is rather strange and should be amended during the further readings, as this is outright ignorance of the parties’ intention. If the parties agree to first try mediation there is no reason to make this agreement non-binding by law. This would put mediation procedures in an even worse situation than today and would also unfavourably compare Ukrainian practice with that of many international jurisdictions which either have systems providing for an automatic referral of disputes to mediation before the case can proceed to trial, or give wide discretion to courts to adjourn proceedings and order mandatory mediation where necessary. Even further, in certain countries known for the strength of their legal systems, such as England, mediation for certain type of cases (predominantly familial) is akin to mandatory as courts will refuse applications which do not indicate that the mediation requirement has been complied with. In addition, while courts in England are against the idea of “forcing” parties to mediation, mediation is nonetheless “strongly encouraged”, and there are likely to be cost consequences if parties refuse to try mediation (read — save court time and cost) for no good reason before trial. It is, therefore, suggested that it would be quite beneficial for the Ukrainian legal system and, specifically, for the development of mediation in the country, if Ukrainian legislators were to look at prominent international mediation practice and reflect it in the Draft Law prior to its adoption.