Legal Eye: Mediation v arbitration

"Mediation is voluntary"

- article 183 (1) Civil Procedure Code

Civil litigants, both corporate and individual, as of mid-2005 have at their disposal two alternative dispute-resolution mechanisms outside of the courtroom: mediation and arbitration. Arbitration is nothing new to Polish civil law. Mediation, however, is a relatively new concept here, having been incorporated into Poland's Civil Procedure Code less than a year ago. The need for an additional alternative dispute-resolution mechanism is highlighted by recent statistics indicating that Poland ranks last in the EU with respect to the length of time necessary to adjudicate a civil law suit (currently 900 days on average).

Volunteers only

Mediation is, for the most part, voluntary. A party to a dispute may not be forced into mediation against his or her will. A court may order mediation during an initial hearing; however, if either party objects within a one-week period the court may not compel mediation. Arbitration, on the other hand, is mandatory if provided for contractually.

A wide net

In general, mediation may be used to resolve almost all civil-law disputes, with the exception of matters subject to 'simplified court proceedings' or 'writ of payment' proceedings.

For instance, payment terms defined in a notarial deed may not be mediated, as such terms are considered to have been settled at the moment the notarial deed was executed. In this case the plaintiff may utilise simplified court-enforcement proceedings to compel payment without subjecting the matter to mediation, or even protracted court proceedings for that matter. Arbitration, in contrast, may be used to resolve all civil-law disputes, with the notable exception of disputes regarding the payment of alimony.

Agreement needed

A decision issued by a mediator is only enforceable against the losing party if in fact the losing party agrees. If written agreement is not reached, a court will need to adjudicate the matter anew. Moreover, any proposed settlement or admission made by the parties during mediation may not be used against a losing party during regular court proceedings.

A ruling issued in arbitration proceedings, however, is enforceable. In this case an arbitration ruling will be submitted to court for enforcement. For the most part a court is not entitled to second guess the merits of an arbitrator's decision at the moment enforcement of the underlying judgement is sought.

Similar to a regular court verdict, an arbitration ruling may be formally appealed in court. Such an appeal, however, does not necessarily stop enforcement of the arbitrator's decision.

Who judges the judges?

Just about anybody can be a mediator. Judges, however, may not serve as mediators, but a retired judge may. The only requirement is that such a person possess "full legal capacity" and not be deprived of any public rights. For instance, a convicted felon who has been deprived of the right to vote or hold public office for a period of time may not act as a mediator. Once such rights have been reinstated a former felon may act as a mediator.

A foreign national may not serve as a mediator unless such a person has established residency in Poland and obtained the right to vote. In other words, an EU citizen may serve as a mediator in Poland provided he or she has established residency in Poland. A non-EU citizen, including me, may not - despite having been granted permanent residency status.

Paul Fogo is a senior attorney with Miller Canfield W. Babicki & Partners