Arbitration - Russia
Mediation is rare in Russia. Contracts sometimes contain escalation clauses which provide for good-faith negotiations between parties before litigation or arbitration. However, mediation as a formal means of dispute resolution is seldom used and is not compulsory. Existing legislation does not hinder mediation; where a contract provides for mediation through formal proceedings, the parties are obliged to comply with the clause.
Draft Law on Mediation
A draft law on mediation has passed its first reading in the Duma (the lower chamber of the Russian Parliament) in March 2007. Draft laws must pass three readings in the Duma before they are approved by the Federation Council and signed into law by the president. Therefore, this law is expected to come into force within the next 12 months. The Federal Law on Conciliation Procedures with the Participation of a Mediator was drafted by a working group at the Chamber of Commerce and Industry of the Russian Federation (CCIRF) in order to give mediation attempts a firmer legal basis. It is partly based on the United Nations Commission on Trade Law Model Law. Legislation in Russia was considered necessary in order to ensure the effective development of mediation, provide certain guarantees and avoid abuses. The CCIRF has traditionally played a key role in improving legislation regulating alternative dispute resolution.
The Arbitrazh Procedural Code allows disputes to be referred to a mediator. Chapter 15 is entitled "Conciliation Procedures and Settlement Agreements". Article 138(2) provides that parties may settle their dispute by entering into a settlement agreement or by using other conciliation procedures. The fact that the law recognizes the existence of various forms of alternative dispute resolution was thought to underscore the need for a law dealing specifically with mediation.
The draft law states that it applies to relations arising from economic or commercial activity, whether foreign or domestic, and to disputes arising from employment, family and other relations, provided that nothing in the nature of the dispute or in other legislation requires otherwise. The principal idea is that the process is based on the parties' voluntary submission to the procedure.
According to the explanatory note to the law, the key to regulating mediation is the confidentiality of the procedure - this ensures its successful functioning and the protection of the participants' rights and interests. In particular, a mediator may not be questioned as a witness in relation to information which becomes known to him or her in the course of mediation. This right is guaranteed by Article 51 of the Constitution, according to which federal laws may provide for exceptions to a party's obligation to give evidence. However, this provision is itself subject to exceptions - for example, in cases relating to terrorism or money laundering. In addition, the law provides that a party has no right in future proceedings (whether before an arbitral body or a court) to rely on, among other things, an admission or a proposal for settlement made by a counterparty during mediation. This encourages parties to engage in open and confidential discussion of disputed issues, rather than engaging in mediation to gain an advantage in future court or arbitral proceedings.
In relation to settlement agreements, the law includes a provision which allows an agreement to be certified by a notary, making it an enforceable document which can be compulsorily executed without recourse to the courts.
The law also contemplates the consequences of parties entering into a settlement agreement after proceedings have commenced. It provides that parties may apply to have their agreement confirmed by a court or arbitral tribunal in accordance with the provisions of the code and the Federal Law on Arbitral Tribunals. An agreement confirmed in this way may also be subject to compulsory execution orders.
The law allows for the initiation of mediation before or instead of recourse to an arbitral tribunal or court - or once proceedings have commenced - whether at the parties' or the court's request. Unless the parties agree otherwise, a mediator has no right to participate as an arbitrator in relation to a dispute which was or is the subject of mediation, or in relation to a different dispute arising from the same agreement or legal relations. Mediators may not hold a government position or exercise a government function.
Mediation at the CCIRF
The law allows parties to refer their dispute to mediation which is administrated by an institution and conducted under its rules; alternatively, the parties may devise their own rules. One of the main institutions which administrates mediation in Russia is the CCIRF, which maintains information about mediation and a panel of mediators. The panel was established under the CCIRF's authority in May 2006; it comprises 30 mediators, all of whom are from the Commonwealth of Independent States. The panel's legal status is expressly outlined in the Procedural Rules for Mediation, which were approved on May 12 2006 by the president of the CCIRF in Order 32.
The rules allow parties to submit an application for mediation to the panel. Among other things, the application must indicate the name of their appointed mediator or contain a formal request for a mediator to be appointed according to their desired criteria. The parties are forbidden from appointing a mediator directly. The panel chairperson makes an appointment if the parties have not reached agreement regarding a mediator; mediators need not be appointed from the panel.
The mediator must consult with the parties before the mediation to determine the nature of the dispute, the likely duration of the mediation and the desired procedure. A mediation agreement specifying the procedure and the method of payment is then concluded. The process presupposes the attendance of the executives of the disputing parties (ie, representatives with decision-making authority), but provides for the attendance of duly authorized representatives in their absence. The mediation process is deemed to have commenced once those present confirm that they have full authority to settle the dispute and reach a settlement agreement. The rules grant the mediator broad discretion in determining how to conduct the proceedings most efficiently, allowing for caucuses and both facilitative and aggressive approaches. The rules also provide that information gained during caucuses must be kept confidential, unless the mediator is expressly authorized by a disclosing party to reveal such information.
The settlement agreement may be drafted with the assistance of the mediator and must contain:
-
the terms on which agreement was reached;
-
a commitment by the parties that they will comply with the agreement voluntarily; and
-
a deadline for compliance.
The settlement agreement must be produced in triplicate and must be signed by all parties.
The proceedings may be suspended at the request of one or more parties or if circumstances arise which prevent the conclusion of a settlement agreement. Proceedings will be terminated if:
-
suspended proceedings are not resumed due to one party's failure to act;
-
it is impossible to resume suspended proceedings or there is no prospect of agreement;
-
the period for reaching settlement has passed and no provision has been made for an extension;
-
certain fees and costs have not been paid; or
-
a settlement agreement has been signed.
The confidentiality obligation extends to all aspects of the proceedings, including the settlement agreement itself, except to the extent required to perform the agreement. The CCIRF is drafting a code of ethics to be followed by mediators when conducting mediations. In short, mediators have a professional duty to abide by the main tenets of mediation as a form of dispute resolution:
Each mediator must confirm his or her willingness to be bound by the code.
Fees and costs are determined according to a schedule approved by the president of the CCIRF as an annex to the rules. It provides for a non-refundable registration fee of Rb9,000 (around $360). In addition, provision is made for the payment of the mediator's fee, which must be at least Rb3,000 an hour and is set by the chairperson of the panel after consultation with the parties. The parties must also pay the CCIRF an administrative fee equal to 40% of the mediator's fee for organizing and conducting the mediation, as well as additional costs to cover expenses (and legal fees if the parties are legally represented).
ILO | 
