Problem solvers

Despite being on the statute books for just six months, mediation is rapidly gaining popularity among businesses as a method for resolving disputes. With the court system taking an average of 1,000 days to resolve contractual disputes, mediation is proving quicker, cheaper and simpler, and the Polish mediation market is now being targeted by Western investors.

ADR Group, one of Britain's largest private companies offering alternative dispute-resolution services, officially announced its entrance onto the Polish market last week. The company, which specializes in providing mediation services and training courses, plans to organize professional training for mediators as well as train those already in the business. ADR is currently looking for a partner among training companies in Poland. The managing director of ADR Group, Michael Lind, hopes to start running the company's first programs within the next few months, and if not "certainly before the end of the year."

It's understandable that he'd like to get right down to business. "There is huge potential in the Polish mediation market," says Lind. "People want to have an alternative to court cases," he adds, and the European Commission agrees. It's behind a number of initiatives to raise the profile of mediation and encourage justice ministries in each member state to endorse their use.

While mediation has long been used by businesses in the West to resolve disagreements, it has only recently been made available to businesses in Poland. Last December an amendment to the Code of Civil Procedures introduced the instrument of mediation to civil cases, allowing entrepreneurs to use it in business disputes, which previously could only be solved in courts.

Expert assistance

Mediation is a method for parties in a dispute to find an agreement using the assistance of an expert. The disputing parties meet with the mediator and present their cases. The mediator then discusses the matter and the proposals for the solution with each party, as well as with all the parties together. When an agreement is reached, it is then submitted to the court and becomes legally binding.

According to the amended regulations, entrepreneurs can resolve their problems through mediation before they decide to face the judge, or even once litigation has begun. Mediation is always voluntary, but one party may include stipulations requiring mediation in an agreement with another party. "It is important to include [this stipulation] in the agreements, because after the problem arises it is hard to convince the other party to take up mediation," explained Maciej Cegłowski, the secretary of the Polish Confederation of Private Employers (PKPP) Lewiatan's Mediation Center and Arbitration Court.

Even if a judge refers a case to mediation, it can only proceed if all parties agree to it. The same applies to choosing the mediator - he or she must be accepted by all sides in the dispute.

Who can mediate?

The Code of Civil Procedure stipulates that anyone enjoying public rights and legal capacity can be a mediator. "Ninety-nine percent of the adult population meets the Code of Civil Procedure's criteria set for mediators," points out Violetta Huryn, a legal adviser at CMS Cameron McKenna and a mediator at the Mediation Center of the Warsaw Regional Chamber of Legal Advisors. She adds that in practice the courts carefully choose those who are to perform mediation services, and some kind of legal knowledge, as well as professional training, is often required.

Most mediators have a background in law. "We have to remember that a mediator is someone who will help create an agreement that will then be delivered to the court to accept," Huryn says. Lind points out that the legal background is not essential, as many of ADR's mediators are leaders of business, managing directors or even engineers, but he admits it's helpful. PKPP's Cegłowski says mediators from Lewiatan's center are required to have specialized training certification in mediation from well-known foreign institutions.

Aiding communication

Not only must the parties come to an accord on the mediator and the mediation itself, but the solution to the dispute must also be agreed upon by both sides. "[Mediation] provides a solution on which the parties agree, not one that reflects the legal status and obligations of the parties," says the Lord Chief Justice of England and Wales, Lord Nicholas Addison Phillips.

"The point of mediation is to help the sides with communication. The role of the mediator is to create conditions for the sides to find a solution, rather than enforce a solution at all costs," Huryn explains.

Despite the fact that it was only introduced just over six months ago, mediation has already gained noticeable popularity. "The initial experience is positive," Deputy Justice Minister Beata Kempa says. According to the Ministry of Justice, in December 2005, when mediation was introduced, 42 cases were sent for mediation. In January the number rose to 89, in February it reached 114 and in March 201 new cases were sent to mediators.

Rapid results

Mediation usually results in a much swifter solution to a dispute. The regulations state mediation should last up to 30 days. "A solution in mediation can be reached in a week, after one 45-minute session," said Cegłowski. However, Huryn points out that taken in full the whole process isn't quite so quick. "The correspondence between court, mediator and the parties lasts longer," she says, adding that depending on how often the sides manage to meet, it can last between one and three months.

The complexity of the case may also influence the duration. Nevertheless, three months is nothing compared to the time a company could spend in litigation. According to the World Bank's Doing Business 2005 report, it takes a court in Poland on average 1,000 days to make a decision regarding contractual disputes. "Managers can spend time doing business rather than testifying in courts," says Huryn.

Managers can also save money with mediation. A party that resolves a court case through mediation may be refunded up to 75 percent of the court entrance fee, not to mention the fact that the losing side in a court case is required to pay the costs of the trial which, as statistics show, could last for years. In comparison, the mediation itself isn't that expensive, especially if it is referred to a mediator by the court. In this case, Ministry of Justice regulations require a mediation fee of between just zł.30 and zł.1,000 for the whole process. As Huryn explains, in the case of mediation without a court's referral, the fees are either individually negotiable or set by the mediation center based on the value of the object of dispute or the estimated court costs.

The disputing parties are not the only ones who save money. Taxpayers' wallets ultimately take less of a hit as well. "In many cases, the losing side in the court case does not abide by the court's decision. The bailiff has to enforce the decision," explains Deputy Justice Minister Kempa.

 

No burned bridges

Lord Phillips points to another advantage of mediation - one that can't be measured in figures. "Those in dispute remain in control of their affairs," he says. As he put it, parties can reach their own solution to the dispute and are not dependent on the "lottery of the courtroom."

"Mediation allows the disputing parties to adjust the solution to the individual needs and expectations of both sides," says Kempa.

Perhaps the most important advantage for businesses is that by avoiding a court case, which could only tend to emphasize the disagreement, dispute resolution via mediation helps companies avoid burning their bridges and preserves valuable business contacts. "Mediation is not about who is right and who is wrong - it is about what will solve the problem and help the parties protect their businesses," Huryn said.

"It resolves differences in a way which preserves the relationship," Lord Phillips concludes. "Those who were doing business once are likely to do it again in the future."