Mediation and Pre-trial dispute settlement

Contents:

• Agreement on middleman involvement and conditions of mediation procedure
• Advantages and features of middleman’s involvement

Russian legal system provides two main ways of dispute settlement. The main and most frequently used method is a trial settlement of conflicts. However, for a variety of reasons, the second method – pre-trial dispute settlement, is gaining increasing popularity. Its essence is in avoiding of lengthy litigation and related financial, opportunity and other costs. Pre-trial settlement can be divided into three methods:

• Mediation (use of a middlemen)
• Arbitral court
• Claim order of dispute resolution

Any commercial company sooner or later faces a situation when its interests conflict with the interests of a counterparty, partner or government agency. Then the parties are forced to resort to mediation, an arbitration court or a claim procedure to resolve the existing contradiction.

The claim procedure is a mandatory procedure before going to court. Practice shows that often the debtor will fulfill its obligation to the counterparty after receiving the claim. Thus, the creditor shows the seriousness of his intentions to go to court, and these are additional costs for the debtor: payment for the services of lawyers, including the opposing party, reimbursement of state fees, expenses for experts, translators, notaries, etc.

Usually, the parties reflect in the contract an obligation in the event of a conflict to send to the opponent a written claim containing a demand for fulfillment of obligations, refund of funds. The direction of the claim involves the interruption of the limitation period.

In some cases, the contract does not specify the deadline for the fulfillment of obligations, and then to determine the start date of the delay in the fulfillment of obligations, it is necessary to send a claim (paragraph 2 of Article 314 of the Civil Code of the Russian Federation). For its execution, the debtor is given 7 days from the date of receipt, unless another period is provided for in the contract.

Mediation is a pre–trial procedure when a mediator is involved to reconcile and resolve a dispute. The law prescribes to appoint individuals as mediators. They do not take sides, do not provide consulting or legal assistance. The main law regulating this issue in the Russian Federation is the Federal Law “On Alternative Dispute Settlement Procedure with the Participation of an Intermediary (Mediation procedure”).

In other words, mediation is negotiations with the participation of a third party mediator, the essence of which is to resolve the existing contradiction, eliminate claims and settle disputes. The main purpose of such negotiations is to achieve consensus and, consequently, pre-trial settlement of disputes.

The main rule of mediation is applied at the pre-trial stage of dispute settlement.

Agreement on middleman involvement and conditions of mediation procedure

An important condition for the involvement of a mediator is the consent of all parties to the conflict. The possibility of dispute settlement through mediation is made out in a separate document, which is referenced by the main agreement. The consent is confirmed by a special agreement, which indicates the cause of the conflict, the data of an independent expert who will settle the dispute, the procedure, the timing and the participation of the disputants in the costs.

An independent specialist or several mediators are being sought in advance, candidates should not raise questions from any of the parties to the agreement. The settlement of the conflict must be carried out within the period established by the agreement, or a period not exceeding 60 days. In exceptional cases, the period may be extended, but not more than 180 days.

Dispute resolution with the participation of a third party is carried out in compliance with the principles of confidentiality, equality and impartiality on the part of the expert.

The middleman’s work is terminated if the parties enter a mediation contract or a contract on termination of the procedure without reaching agreement. Another reason for middleman’s work termination is his statement, notifying the parties to the dispute about procedure’s the inappropriateness. Also, a statement on work termination may be sent to middleman by one of the conflicting party or by both parties. Another possible reason for third party’s work termination of is the expiration of the term.

Advantages and features of middleman’s involvement

Pre-trial dispute resolution has a number of advantages. First of all, this is a less burdensome process than filing a lawsuit. The parties to the conflict save a lot of time and financial resources related to the collection of documents, payment of state fees and expenses for legal representation in court.

The involvement of an independent mediator is more profitable from a financial point of view, since its services are paid in equal shares by both parties. Another important advantage is the fact that mediation provides a solution to the dispute on the most favorable and favorable terms for both parties.

Mediation and pre-trial settlement of disputes is a fairly common methodology for resolving conflict in the modern world. VALEN lawyers will analyze your situation, help you to review documents on a controversial issue, conduct a comprehensive analysis of the conflict situation based on documents and information submitted by the client, and develop an optimal strategy for resolving the situation. We will draw up a claim to other party or a statement of defense to a claim, prepare a legal position and take part in negotiations with contractor.

Our company specializes in the settlement and resolution of economic, corporate, tax and other disputes, we help organizations and individual entrepreneurs to successfully resolve conflicts with contractors and customers in a trial and pre-trial order.