The Future of Alternative Types of Dispute Resolution in Ukraine

In economically developed countries, the dispute resolution in court almost always means that the appearer rely on a breach of further business relations with his opponent. The explanation for this state of affairs is quite simple: if the parties have a genuine and mutual desire to establish the true cause of the dispute, to maintain the business relationship and, as a consequence, to solve the conflict peacefully, they always find a way to solve the dispute, no matter in what form it will be a settled. If the party is driven by a desire to punish the opponent, to prove his superiority or even intimidate a partner, then all available instruments are used, including all the possible ways to manipulate the justice system in order to achieve the desired results, including factors such as the availability of financial resources for litigation. It is clear that in this case nobody is really interested in the truth, and the losing party will always consider themselves offended, even if it was objectively wrong in the dispute. Yes, there are cases when the parties reach an agreement in the course of litigation or legal proceedings do not have adverse effect on the business relations of the parties, but such cases are rare and most of them are exceptions of the general rule.
There is other practice in Ukraine: parties love suits. And there are several reasons, but the main part of such reasons is not associated with high confidence in justice but rather the opposite:
1. Ukrainian courts are corrupted, so the chance to win directly depend on corrupt contacts and opportunities to give a bribe. The presence of corrupt relations in the court is even a reason for entrepreneur to be proud, a sign of high social status.
2. The big problem is the actual enforcement of a final judicial decision. It means that the losing party can ignore the execution of court decisions or perform them incompletely, without bearing any significant risks.
Thus, there is a high request for legal tools that allow you to solve disputes in real business, which operates in Ukraine. We cannot say that business today is ready to take advantage of such tools and to pay for them, but the question is increasingly heard in the business environment. And so it is worth considering what methods of dispute resolution can be applied in Ukraine.
There is such a thing in the world of legal practice as an alternative means of dispute resolution, the purpose of which is the final resolution of disputes in a manner that satisfies all parties of the dispute. The most common alternative dispute resolution is considered to be negotiations, mediation and conciliation.
The negotiations, as a way to solve the dispute, do not require further explanation and are often used in business practice in Ukraine. However, there are some characteristics inherent in Ukraine. Usually only top managers of enterprises take part in negotiation, and the lawyers then according to the words of a top manager, try to write out an agreement on paper. Moreover, if a lawyer is present during the negotiations, in 99% of cases, this will be a full-time company lawyer, as there is no established practice to invite a third party for negotiations. This practice of inviting office-lawyers is doubtful, as it is the same person who causes the dispute / conflict, and therefore is often interested to conceal their professional failures.
New to the business practice of Ukraine and more promising methods are mediation and conciliation. Let’s consider each method of alternative dispute resolution separately.
Generally speaking, mediation is a method of dispute resolution involving a third neutral, impartial, not interested in the conflict party – a mediator who assists the parties in working out a specific agreement on the dispute, and the parties fully control the process of making a decision on settlement of dispute and conditions of its resolution. Typically, a mediator in the dispute is a neutral person who has no or little expertise in the field in which there is a conflict. The mediator has no right to impose his point of view, but he must find out the real cause of the conflict and the true intentions of the parties. This is achieved through individual discussions with each party of the dispute for the purpose of an unbiased search of some areas of potential agreement, the parameters within which the parties can find a common language, followed by further drawing parties’ attention to this part / parameters.
Conciliation is a way to solve disputes, in essence similar to mediation, with the difference in powers of a third party (conciliator). Conciliator often acts as a person who has expertise in the area of conflict and can provide personal recommendations to the parties on possible ways of its resolution, and conciliator may also come to a conclusion about the correctness of the parties.
As a mediator, and conciliator can conduct negotiations without the immediate meeting of the parties at the table, which is often used in the case of very strong emotions in the conflict and the reluctance of one or both parties to meet face to face but with the presence of readiness to solve the problem without trial . This variant of dispute resolution allows the parties less afraid of losing their face the risk of being subjected to the pressure of the second party and becoming a victim of its manipulation (thus reduces the risk of “explosion” of the process due to an emotionally charged situation), or if, for technical or other reasons of presence of the parties is difficult.
General advantages of mediation and consolidation are relative cheapness, simplicity, privacy and the lack of a mediator / conciliator right to take a decision without the consent of all parties of the dispute, which would provoke discontent of the losing party and the subsequent escalation of the conflict. At the same time the mediation and conciliation resolve the conflict forever. There are no losers in alternative methods of resolution, because both sides believe that the solution is acceptable for both parties. In court there is a losing party which is always dissatisfied.
Although mediation and conciliation can be an effective way to solve disputes, these methods of dispute resolution are not legally incorporated into law practice in Ukraine (although such attempts were made). In particular, a few bill drafts were worked out, but none of them, unfortunately, has been approved. Despite this situation, a number of Ukrainian law firms provide services in the field of mediation. Also in the framework of the European Union and the Council of Europe programs “Transparency and efficiency of the judicial system of Ukraine” from 2008 a pilot project on mediation in the resolution of administrative disputes in the court was launched in several administrative courts, particularly in disputes with the State Fiscal Service and Customs Service. However, the actual results of these pilot projects are far from desired.
Summing up, we can say that although many lawyers in Ukraine skeptically talk about the institutions of mediation and conciliation, such legal instruments may be used in disputes where one party has a foreign element (investor, co-founder, business partner). It is the willingness of foreign partners to settle disputes by peaceful means that could push Ukrainian business to greater use of legal instruments. The benefits of the use of alternative dispute resolution methods are obvious: low costs, confidentiality, efficiency, and what is more important, these methods of dispute resolution allow to keep the constructive business relationships and to continue joint business.

Author: Kydalov Igor

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