Ukraine
In your jurisdiction, are there any formal ADR procedures available for resolving commercial disputes other than litigating (or arbitrating) to a final hearing?
Ukraine provides formal ADR procedures for settling commercial disputes without resorting to court or arbitration for a final hearing. Key ADR procedures include mediation and hybrid ADR procedures.
Mediation is a voluntary process involving a neutral third party (mediator) assisting disputing parties in reaching a mutually agreeable solution. The legal framework for mediation is outlined in the Law of Ukraine “On Mediation” (№ 1875-IX from 16.11.2021). ADR procedures in Ukraine are voluntary, requiring mutual agreement from both parties. Refusal to participate incurs no legal consequences.
Ukraine also recognizes hybrid ADR approaches, such as Arbitration-Mediation-Arbitration. This method involves the integrated use of arbitration and mediation at various stages of dispute resolution: 1) if a dispute remains partially settled or unresolved in mediation, arbitration proceedings can be reinstated and continued; 2) in the event of successful mediation, arbitration proceedings may resume for issuing an arbitral award based on agreed terms, or upon the parties’ request, arbitration may be terminated. Notable features include the prohibition of the same individual acting as both mediator and arbitrator for the same dispute between parties. Additionally, arbitrators do not have access to mediation materials.
Another ADR approach involves sequential mediation followed by arbitration, known as Mediation-Arbitration. If mediation proves successful, parties may seek an arbitral decision based on agreed terms. Parties may agree in writing for the same individual to serve as both mediator and arbitrator, with adherence to respective mediation and arbitration rules.
Does engaging in ADR have any effect on potential or existing litigation or arbitration?
Engaging in ADR doesn’t pause the statute of limitations clock or trigger an immediate halt to ongoing legal proceedings or arbitration. However, parties can opt to pause proceedings by mutual agreement, often centered around conducting mediation. If parties successfully reach a settlement, withdraw the claim, or if the defendant acknowledges the claim post-mediation, a refund of 60% of the court fee paid upon filing the claim is applicable.
Is ADR compulsory and if so are there any consequences if a party fails to engage in ADR? If it is not compulsory are there any plans for this to change?
No, ADR is not compulsory in Ukraine. ADR procedures in Ukraine are voluntary and the parties involved in a commercial dispute must agree to participate in mediation, negotiations, or arbitration. There are no legal consequences for refusing to participate in ADR.
The Ukrainian government encourages the use of ADR through various initiatives but doesn’t mandate it. Whilst there are no current plans to make ADR mandatory, there’s an ongoing discussion about its growing importance. Future legislative changes could include: 1) the courts encouraging ADR: Judges might recommend ADR during initial court proceedings 2) streamlined procedures: The legal framework for ADR could be simplified; 3) increased awareness: Government initiatives could raise awareness about the benefits of ADR.
Can the parties agree, in advance of any potential dispute, to engage in ADR?
Yes. The parties can agree in advance that they will or may try one or more ADR methods to resolve any dispute that may arise, and many commercial contracts will include dispute resolution clauses, involving one or more of these methods. This has the advantage of putting ADR automatically “on the agenda” in the event of a dispute and providing a mechanism for reaching a quick solution.
When does ADR generally take place?
ADR can take place any time from pre-issue to appeal but the optimum timing in any dispute will depend on the particular circumstances, including whether the issues in dispute are sufficiently clear.
Is ADR subject to without prejudice privilege and/or confidential? If not, is there any other means to protect confidential information?
In Ukraine, ADR procedures, including mediation, are typically confidential and protected by without prejudice privilege. When parties opt for mediation, they are usually required to sign a mediation agreement prior to the commencement of mediation. This agreement obliges them to maintain confidentiality regarding the matters discussed during mediation sessions. Furthermore, according to the Civil Procedure Code of Ukraine, a mediator cannot be compelled to testify as a witness. This provision enhances the confidentiality and integrity of the mediation process by safeguarding the mediator’s impartiality and preventing their involvement in subsequent legal proceedings as a witness.
Does the output from ADR create precedents?
In general, Ukraine has no precedent law since Ukraine’s legal system belongs to the Romano-Germanic legal family. The agreement reached through ADR is usually recorded in a written agreement that is binding on the parties. As a rule, it is not binding on third parties.
Who bears the costs of ADR?
Typically, the parties share the cost of ADR, albeit it is open to the parties to agree something different as part of the settlement terms.
Is your jurisdiction subject to any specific rules for cross border ADR?
Ukraine’s legal framework regarding ADR lacks specific regulations exclusively tailored to cross-border ADR. However, several general principles and international agreements are applicable.
Voluntariness: participation in ADR requires mutual consent from all parties involved in the dispute, irrespective of their geographical location.
Party Autonomy: parties retain the right to select the specific ADR mechanism (such as mediation, negotiation, etc) and determine the governing law applicable to the ADR process.
Confidentiality: similar to domestic ADR, confidentiality principles generally extend to cross-border ADR proceedings.
Ukraine has signed The United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention). However, Ukrainian legislation must be enacted to bring this convention into effect. Upon implementation, the Singapore Mediation Convention will streamline enforcement procedures.
Are there any particularly unusual features of ADR in your jurisdiction that you are aware are different to other jurisdictions?
In Ukraine, individuals eligible to serve as mediators must have completed basic mediation training either domestically or internationally. However, certain criteria disqualify individuals from becoming mediators, including having a criminal record, limited civil capacity, or being incapacitated. Parties engaging in mediation, as well as state and local government authorities, enterprises, institutions, organizations, and public associations, reserve the right to impose additional requirements on the mediators they select. These requirements may include specific training, age, education, practical experience, and other qualifications deemed necessary for the mediation process. Moreover, associations of mediators and mediation service providers have the authority to establish further prerequisites for inclusion in their mediator registers. These requirements may also encompass specialized training, age, education, practical experience, and related criteria.
Basic mediator training in Ukraine consists of a program comprising a minimum of 90 hours, with at least 45 hours dedicated to practical training. This comprehensive program covers theoretical instruction as well as hands-on skill development. In addition to basic training, mediators may undergo specialized training tailored to specific areas of mediation practice, as outlined in training programs developed by educational institutions and other entities. Upon successful completion of basic and/or specialized training and demonstration of acquired competencies, individuals receive a corresponding certificate. This certificate, confirming completion of training, is accompanied by a detailed list of training components and acquired competencies, providing validation of the mediator’s qualifications.
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