Mediation and Pre-trial dispute settlement

Mar, 04 2020

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

Each company while carrying out its business activities, at some stage has to face a situation where it’s interests conflict with the interests of contractor, partner or provider. In this case the parties have to use mediation or a claim order of dispute resolution for resolving a prevailing contradiction. Pre-trial form of settlement is one of the most used forms of dispute resolution in civil proceedings. It is provided both by actual legislation and civil contract.

As a rule, the terms of the contract prescribe the obligation of the party to send a written claim to the other party, containing the requirement for proper performance of obligations, a refund, etc. In addition, the direction of the claim entails the resumption or interruption of the limitation period in case if the debtor recognizes the debt or non-fulfillment of contractual obligations in response to the claim.

In some cases, the contract does not specify a deadline for fulfillment of obligations, and in order to determine the start date of the delay in fulfilling the obligation, it is necessary to send a claim (par. 2 Art. 314 of the Civil Code of the Russian Federation), in fulfillment of which the debtor is obliged to fulfill the obligation within seven days after its receipt. Moreover, the delivery of such claim does not exempt the party to the contract from the need to comply with the requirements of Art. 4 of the APC of the Russian Federation on the need of taking measures in resolving the conflict.

Mediation is a pre-trial procedure, when a middleman is involved for dispute resolution. According to the law, middleman should be appointed from among individuals. They don’t take sides of parties, don’t provide counselling and legal services. The main law regulating this sphere in Russian Federation is a Federal law «On the Alternative Dispute Resolution with the Participation of an Intermediary (Mediation Procedure) ».

Mediation, in other words, is a negotiation process involving a third party – middleman, which’s essence is in resolving a prevailing contradiction, eliminating of claim and dispute settlement. The main target of such a negotiation is reaching a consensus and pre-trial dispute resolution.

As a rule, conditions of mediation – pre-trial procedure’s using are provided for by the contract.

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 resolution through mediation is formalized in a separate document to which the main contract refers. 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, procedure, deadlines and the participation of the disputants in the costs.

An independent specialist or several middlemen are looked for in advance, the candidates should not raise any questions from any of the parties to the agreement. Conflict settlement should 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 no more than up to 180 days.

Dispute resolution with the participation of a third party is carried out in compliance with the principles of confidentiality, equality and impartiality by an 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 several advantages. First of all, this is a less burdensome method than filing a lawsuit to the court. Parties to a conflict save a lot of time and financial resources related to collection of documents, payment of state fees and the costs of legal representation in court.

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. In some cases, attracting an expert does not require any cash costs. Another important advantage is the fact that mediation provides a solution to the dispute on the most favorable conditions 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.

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