GPC Moscow – from the ‘Inside’ to the insight

The Global Pound Conference in Moscow covering development and practice of arbitration and mediation both in Russia and worldwide took place on June 21, 2017.

According to the survey the attendees were mostly non-adjudicative procedures providers. It surely influenced the general ambience both in the hall of the Moscow State Linguistic University as well as during the coffee breaks — active listening at its best.

Best fit for the parties

During the first session, when discussing the expectations of the parties and the conditions that make them choose specific settlement procedure, the participants de facto compared international arbitration to the adjudicative procedures.

Robert Schulze[1] stated the enforceability of international arbitration resolutions within the territory of another state makes it prevailing over the national judicial system when it comes to multinational disputes. Nina Vilkova[2]  added the statistics: in 80–90 % of cases the parties to international arbitration carry out its resolutions voluntarily, due to high qualification of arbitrators and specifics of the procedure.

Getting back to the expectations of the parties, Ivan Marisin[3]  stated the prior obligation of an expert consultant to assess the possibility to settle the client’s dispute out of court avoiding the litigation. Julia Zagonek[4] spoke in support of her colleague adding that a key driver to dispute resolution is the client’s will, i.e. whether the client wishes to maintain relations with the opponent or not.

According to the voting results of the session, before starting a process in commercial civil dispute resolution the parties mainly focus on its financial outcome. The factor that mostly affects choosing the type of dispute resolution process is its efficiency. The higher probability of getting the desired result by applying the ADR has the most influence on the parties making the choice. Last but not least — the parties to commercial disputes expect the providers to decide on the process while they themselves decide on the outcome.

Non-adjudicative procedures: first-hand results

In the course of the second session the participants assessed their own, providers’ performance in the context of the identified needs of the parties.

The participants voted on priority of the procedure’s financial and psychological effect upon the parties. The outcome of a commercial or a civil dispute primarily depends on whether the parties are able to reach a consensus and find any common interests.  As for results of a non-adjudicative process, Russian experts prioritized costs and expenses reduction. Improving or restoring relationships and retaining control over the outcome were the second and the third choices respectively.

One of the revelations of the event was the audience recognition of the non-adjudicative providers to bear the most responsibility for clarification of available dispute resolution mechanisms and possible aftereffects thereof to the parties (whilst elsewhere such was the task and goal of external and in-house lawyers).

Mediation in Russia: what to improve and how   

Within the third session possible improvements of the current dispute resolution procedures were subject to discussion.

The audience stated uncertainty to be the main obstacle for the parties in terms of resolving disputes. As Natalia Semilyutina specified[5], there is no understanding of the interaction between the adjudicative and non-adjudicative procedures, its course and outcome. Natalia Gaydenko-Sher[6] assumed this uncertainty is due to both gaps in Russian procedural law  and the general attitude that mediation clause is just another provision in a contract that (like any other one) may require court ordered enforcement.  According to Alexander Komarov[7]  the results of non-adjudicative procedure in Russia are currently deemed to be documents of private law for which the reconciled parties have to report to the government agencies (including tax authorities) at their own risk – and they often have to prove that this act of reconciliation is not aimed at concealing illegal actions.

The experts agreed that dispute resolution development in Russia lays in combining adjudicative and non-adjudicative processes, which requires applicable law amendments to ensure such liaising and its efficiency. Mr. Komarov added that any dispute settlement begins at the stage of drafting the arbitration and mediation clause in the contract. Applying to the court should be legally recognized as the measure of last resort in dispute settlement when all the pre-judicial and extrajudicial measures proved to be inefficient.

The final session covered specific actions to improve accessibility to dispute resolution.

According to the participants adjudicative providers have the greatest responsibility for promoting access to justice in any forms, inclusive of ADR. The educational activities for the students and the business community are the most efficient way to improve general understanding of the possible ways to settle the dispute. The audience stated the lawmakers should focus on introducing a binding element into the adjudicative and non-adjudicative procedures and/or on assigning the latter a status of a compulsory pre-judicial dispute settlement procedure. Creating systems of preliminary case assessment/assessment at the early stage of conflict involving independent third-party consultants who will not further take part in resolving the conflict was the second popular choice when considering access to justice promotion by state.

Though everyone agreed that mediation in Russia gets less media coverage, making it de facto inaccessible due to lack of information, the speakers suggested not seeking solution in making it compulsory.

Thus, Irina Lukyanova[8] deemed the amendments of the  Russian mediation law to be preliminary, particularly, projects introducing more severe liability of mediator, ruling out the options for non-professional mediation as well as making mediation a mandatory procedure.  Supporting the latter Natalia Pavlova[9] brought out the Italian experience statistics, where mediation regained its popularity within the suspension period of the law making it compulsory. As an alternative she proposed to recognize as mandatory the directions to non-adjudicative procedures issued by the courts or other competent authorities (e.g. entrepreneurs’ ombudsmen) on case-by-case basis. According to Mrs. Pavlova there are examples of court decisions assigning a preliminary session on cases where judges directly ask the parties to provide evidence they addressed the mediator prior to the court.  Speaking of the enforcement of the mediation agreement, Mrs. Pavlova reminded her colleagues that the mediator’s task is to promote a solution to which the parties adhere to voluntarily.

Olga Allahverdova[10]  stated all the necessary conditions for mediation to develop are present in Russia in her opinion.  “A limited application of methods of non-adjudicative settlement is a stereotype of thinking of both mediator himself/herself and his/her potential customers. In other words, it doesn’t normally occur to us that instead of escalating a conflict we can have a direct dialogue with our counterpart. People and their word perception are to blame.” The experts speaking of mediation should explain the nature of conflict itself, the ways to prevent its escalation, involving highly competent professionals jointly adhering to the “do no harm” principle.

An inspirational event providing first-hand information from best Russian experts, the Moscow Global Pound Conference not only revealed the most actual issues standing in development of non-adjudicative procedures in Russia and possible solutions thereof.

It gave hope.

 

[1] Partner at Law firm «Schultze, Brutyan and Partners» LLC and Chairman of Association of European Business Arbitration Court,

[2]Professor at the Russian Academy for Foreign Trade, arbitrator at ICAC by the Chamber of Commerce and Industry of the Russian Federation,

[3] Chairman of Global Practice of International Arbitration and Disputes Resolution at Baker Botts

[4] Partner at White & Case

[5] Head of Civil Law Section of Foreign Countries at the Institute of Legislation and Comparative Law under the Government of the Russian Federation

[6] Arbitrator at ICAC by the Chamber of Commerce and Industry of the Russian Federation

[7] Arbitrator at ICAC by the Chamber of Commerce and Industry of the Russian Federation, Head of Department of Private International Law at the Russian Academy for Foreign Trade of the Ministry of Economic Development and trade of the Russian Federation

[8] Senior research associate at the Institute of State and Law of the Russian Academy of Sciences, head of adjective law department at the Russian Academy for Foreign Trade of the Ministry of Economic Development

[9] Deputy of head of Center for Alternative Disputes Settlement and Mediation at Saint Petersburg Chamber of Commerce and Industry

[10] League of Mediators of Saint Petersburg, Independent Intermediaries Board of the Chamber of Commerce and Industry of the Russian Federation, Associate Professor at the Department of Theory and Practice of Welfare Activities at Saint Petersburg University



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