New Legal Regime for Mediation in Russia

A set of rules aimed at regulating mediation in the Russian Federation is due to enter into force on 1 January 2011. It includes Federal Law On Alternative Procedure of Dispute Settlement with Participation of Mediator (Mediation Procedure) and a separate set of amendments to the Russian procedural laws designed to incorporate mediation into the already existing procedures.

It is hoped that this law would help both to protect legitimate rights of the parties to mediation by providing for statutory obligations of mediators and bodies providing mediation services and to ensure that the traditional benefits of mediation (confidentially, mandatory recourse to mediation before litigation may be commenced if so agreed) would be respected.

The law follows the general model of 2002 UNCITRAL Model Law. At the same time introduces certain important modifications and contains more detailed regulation of certain subjects.

Disputes covered by the Law

The law provides that it applies both to international and internal disputes. Unlike UNCTITRAL Model law it applies not only to commercial, but to all private disputes including family and employment ones. As worded, the provisions of the Law do not preclude mediation of other types of disputes, but simply exclude them from the purview of the regulation.

The Mediation Law does expressly provide that disputes affecting third party rights or “public interests” as well as collective labor disputes may not be subject to mediation.  The “public interests” exception is not defined by law and it remains to be seen how it would be applied in practice. However, it does open the door for abuse aimed at avoiding mediation or undermining the settlement agreements reached by mediation.

Mediation as Precondition to Recourse to Litigation/Arbitration

The Law expressly provides that the courts and arbitral tribunals should honor agreements of the parties to subject recourse to litigation/arbitration to prior recourse to mediation. However following the UNCITRAL Model Law, an exception is provided for the cases where one of the parties considers that recourse to courts is necessary to protect its rights.

If the parties agreed to submit a dispute to mediation after it has already been brought before a court or an arbitral tribunal, any party may file a motion for rescheduling of the hearings. If such motion is filed, the applicable rules (as amended) provide that a court may reschedule the hearings for up to 60 days and the arbitral tribunal must suspend “arbitral proceedings” for the duration of mediation proceedings agreed between the parties.

Confidentiality of Mediation

Mediation is deemed confidential. The law prohibits reliance on any offers, statements or admissions made by any party during mediation in any future proceedings irrespective of whether such proceedings are related to the dispute subject to mediation. Those rules may be modified by agreement between the parties.

Unlike the UNCITRAL Model Law, the Mediation Law prohibits the mediator to communicate any information received from one of the parties to the other party without consent of the former. In comparison, UNCITRAL Model Law imposes the same restriction only where the information is communicated to the mediator on condition of confidentiality.

Mandatory Nature of Many Provisions of the Law

Mediation Law does not contain a general provision permitting parties to modify the rules prescribed for the conduct of mediation proceedings. While many provisions expressly permit modification by agreement between the parties, there are a fair number of clearly mandatory provisions. Hence any party which would like to take advantage of the benefits provided by the Mediation Law would be well advised to closely review the Mediation Law before entering into an agreement to mediate disputes and during the course of mediation.

Mandatory Deadline for Completion of Mediation

According to Mediation Law the mediation should be completed within a period agreed between the parties, with the parties and mediator being encouraged by the law to complete mediation within 60 days. Any extension of the period for mediation requires consent of both parties and mediator. Furthermore, any pre-litigation mediation should be completed within 180 days of commencement.

The Law provides that mediation proceedings are deemed terminated upon expiry of the term provided for their completion. Such termination results in the resumption of statute of limitation period (suspended for the duration of mediation).

Enforcement of Settlement (Mediated) Agreement

A separate article of Mediation Law deals with agreements resulting from mediation. It provides that an agreement reached before commencement of litigation/arbitration should be performed on the basis of principles of voluntariness and good faith. However, an agreement reached as a result of mediation of a private (civil law) dispute would be deemed an enforceable private transaction. Combination of those provisions leads to uncertainty whether an agreement reached as a result of mediation in any other (family or labor) dispute would be enforceable. If mediated agreement has been reached after commencement of litigation/arbitration the Law provides that it may be approved by the court/tribunal as a settlement agreement.

The Law also provides a list of conditions which it appears must be included in the settlement (mediated) agreement. They include: (i) subject matter of the dispute; (ii) information about the mediation procedure and mediator; (iii) agreed obligations of the parties as well as conditions of and terms for their performance. While consequences of failure to stipulate those conditions are not expressly stated, it may be argued that in such case the settlement (mediated) agreement would be deemed not concluded and thus unenforceable.

Suspension of Limitation Period

Limitation period is suspended for the duration of mediation. There is some uncertainty as to when such suspension begins. The applicable provision refers to execution between the parties of an agreement on conduct of mediation, which is in turn defined as an agreement between the parties from the date of which mediation commences to be applied to a given dispute. Quite when this moment occurs is hard to determine but it appears safe to assume that it would not be later then the actual date of commencement of mediation.

Who May Act as Mediator?

In general Mediation Law permits any person to mediate disputes (provided such person is 18 years or older, has full legal capacity and does not have criminal record). However, a separate category of “professional mediators” is introduced. Such mediators must be 25 years or older, have a graduate degree and pass an educational course in mediation, the program for which is to be approved by the Russian Government.  Only professional mediators may advertise their services and mediate disputes which have already been submitted to court or arbitral tribunal.

The Law envisages creation of self-governing organizations of mediators and mediation services providers for the development of mediation standards and oversight of conduct of members of such organizations. Membership in those organizations would not be compulsory.

Sergey Usoskin

About the Author:

Sergey Usoskin is an advocate (member of the Russian bar) and a senior associate at Ivanyan&Partners. He has experience advising clients on and representing them in commercial and investment arbitration matters as well as before the Russian court (including the Supreme Commercial Court). He is a graduate of St Petersburg State University, Faculty of Law and University College London Faculty of Laws.

1 Comment on "New Legal Regime for Mediation in Russia"

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  1. In the october newsletter of the Association for international Arbitration the russian Mediation Law has been examined from the prespective of the Uncitral Model Law on international Commercial Conciliation and the European Legislation on Mediation

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