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A new approach to mediation and its impact on judicial proceedings

An amendment to the Civil Procedure Code entered into force on 1 January 2016, raising the importance of mediation and significantly changing Poland’s mediation regulations. This will also affect the course of judicial proceedings commenced from that date forward.

The changes, resulting from entry into force of the Act of 10 September 2015 Amending Certain Acts to Encourage Amicable Methods of Dispute Resolution (Journal of Laws Dz.U. 2015 item 1595), affect the overall shape of civil proceedings in a way that is quite important, particularly from the point of view of a plaintiff preparing to file a statement of claim.

Before, mediation was a tool not often resorted to in Poland, and thus, as stated in the justification for the bill, it was “intended to improve the existing legal regulations and bring them into line with current needs, taking into consideration the nearly 10 years the current regulations have been in force, so that they become the basis for common use of mediation and other methods of non-judicial resolution of disputes as an effective method of governing conflicts in civil cases, particularly between businesses.” The drafters wanted disputes before the state courts to end more often in settlements, particularly settlements reached through mediation, and the new rules seek to achieve this.

The changes primarily involve the mediation regulations (Art. 1831 and following of the Civil Procedure Code), but not only.

For example, Art. 10 of the code, which states the general rule for settlement of disputes, previously read: “In cases where conclusion of a settlement is permissible, the court should seek at any stage of the proceedings to resolve them by settlement. In such cases the parties may also conclude a settlement before a mediator.”

Now, Art. 10 has been revised to say, “In cases where conclusion of a settlement is permissible, the court shall seek at any stage of the proceedings to resolve them by settlement, in particular by encouraging the parties to use mediation.”

On its face, this may seem like a trivial change, but in practice it may be of great importance, as potentially every case could start by being directed to mediation. It is hard to deny the rationale for the new wording of Art. 10 stated in the justification for the bill: “The role of judges and courts in spreading a culture of amicable resolution of disputes in the society can hardly be overestimated, considering their authority and their possible impact. It is highly desirable for the courts to more broadly inform the parties of the possibilities and advantages of mediation. Information provided to the parties will lead to an increasing number of mediation proceedings. Based on the experience of countries where mediation is more frequently used, at the beginning stage of the growth of mediation it is specifically the courts and judges who have most effectively promoted mediation by sharing information about it and by directing the parties to mediation.” However, the specific form of the regulations that would bring this about may be more problematic.

An important change is that the parties can now be directed to mediation at any stage in the case, and not—as before—only until the closing of the first session scheduled for the hearing, and after that only upon mutual request of the parties (see Civil Procedure Code Art. 1838 §1).

An interesting new feature of the code is the possibility of scheduling an informational meeting—essentially informal, as this is a procedure not previously known in Poland, although the drafters point in this respect to Art. 5(1) of the Mediation Directive (2008/52/EC). This type of meeting may be conducted by a judge, judicial referee, judicial clerk, judge’s assistant, or permanent mediator (Civil Procedure Code Art. 1838 §4). The decision on whether to direct the parties to mediation immediately after filing of the statement of claim is to be made at the stage prior to the first session scheduled for the hearing. In this respect, it is also now possible to summon the parties to appear in person at a closed session of the court, if the presiding judge finds a need to hear the parties (Art. 1838 §5). The parties should then appear, or face the risk of being charged with the cost of appearance by the other party (Art. 1838 §6).

All of this may indeed lead to a real increase in the number of settlements, but it could also prolong the proceedings by the time it takes to conduct unsuccessful mediation. The period for mediation is now to be scheduled for up to three months (previously one month). This period may be extended at the mutual request of the parties or for valid cause (Art. 18310 §1). When the judicial proceedings are prolonged by mediation, the overlengthiness of the proceedings cannot be attributed to the court, as the new Art. 18310 §1 of the code provides that “the duration of mediation shall not be included in the duration of the judicial proceeding.” Ultimately, to avoid this effect, the parties might often refuse from the very start of the case to agree to mediation (which remains voluntary, Art. 1831 §1)—and thus the result could be the opposite of what was intended.

Significantly, the changes in mediation procedure cause a modification in the formal requirements for the statement of claim. Art. 187 §1(3) has been added to the code, requiring that a statement of claim filed on or after 1 January 2016 also contain “information on whether the parties have attempted mediation or other non-judicial method of dispute resolution, and if not, an explanation of why such attempts were not undertaken.” This is connected with the hope presented in the justification for the bill that this will solidify a belief in the need to attempt amicable resolution of the dispute before bringing the case to court. Whether, for example, correspondence in which the parties indicate methods of resolving the dispute and warn against immediate filing of a claim with the court could be regarded as an attempt at amicable resolution of the case remains an open question.

As the justification for the bill also states, “Lack of information on efforts at amicable resolution of the dispute at the pre-judicial state will not entail the sanction of rejection of the statement of claim. Because lack of information about resort to amicable methods of resolving the dispute does not prevent the case from being processed further, the presiding judge will not summon the plaintiff to cure formal defects in the statement of claim or apply the sanction of rejection of the statement of claim, pursuant to Civil Procedure Code Art. 130 §1.” Nonetheless, inclusion of this information seems helpful even if there is no sanction for not doing so. Given that this requirement was included in Art. 187, which sets forth formal requirements for the statement of claim, a literal reading of Art. 130 §1 (although this does not appear to be the proper approach) may lead to the conclusion that a lack of information about attempts at amicable resolution of the dispute will prevent processing of the case, because this information will determine whether the court directs the case to mediation or schedules an informational meeting or a session referred to in Art. 1838 §§4–5 (and if the case cannot be processed further for this reason, this is grounds for summoning the plaintiff to cure formal defects in the statement of claim under penalty of rejection of the pleading).

The amendments also affect the rules for imposition of costs of the judicial proceeding. Under the amended Art. 103 §2 of the code, regardless of the result in the case the court may order a party or intervenor to reimburse costs resulting from careless or obviously improper behaviour, and particularly costs arising from an obviously unjustified refusal to undergo mediation. How this notion is interpreted will be seen in practice, but the justification for the bill presents two interesting examples: “It must be stressed that the proposed change in no respect results in an obligation to enter mediation or reach a settlement. A party has the right to refuse mediation without stating the reasons (pursuant to Civil Procedure Code Art. 1838 §3), to withdraw from mediation at any stage, and to refuse to conclude a settlement. This will not generate consequences in the form of being charged with additional costs of the proceeding. … From the perspective of the overall shape of the proceeding, which will be known to the court ruling on costs, the attitude of the party which won the case in its entirety and did not submit to mediation because it was convinced that it was right, cannot be regarded as obviously improper. Costs caused by a disloyal attitude may be charged for example to a party that lost the case in part and previously rejected, obviously without justification, the reasonable proposal by the other party to undergo mediation. In that situation, the party should expect to face negative consequences for unjustified refusal of mediation.”

Obviously, these changes have just entered into force and are only now beginning to be applied by the courts. It will be a year or more before it can be assessed whether the changes are achieving the results expected by lawmakers (and businesses) in the form of faster resolution of cases using instruments such as mediation.

Dr Maciej Kiełbowski, Litigation Practice, Wardyński & Partners