On  July 27, 2010 the President of the Russian Federation signed the Federal Law No.193-FZ of the Russian Federation “On the alternative procedure for dispute resolution with the participation of a mediator (mediation procedure)” (the “Law”) and Federal Law No.194-FZ “On introducing amendments to certain legislative acts of the Russian Federation in connection with adoption of Federal Law ‘On the alternative procedure for dispute resolution with the participation of a mediator (mediation procedure)’” (the “Law on Amendments”; collectively the “Laws”).

The Laws come into effect starting from January 01, 2011. At present, the Laws have not been published yet.

The Laws were elaborated for establishing legal conditions enabling development of alternative dispute resolution procedures in Russia with the participation of independent parties - mediators, including profession ones, as well as for reducing the load on the court system of the Russian Federation. The main target of the Laws is to introduce a dispute resolution method which would be comfortable, quick, and flexible, would guarantee enforcement of the decisions made in the course of a mediation procedure and allow saving on court expenditures.

Scope and main terms

The Law is applicable in disputes arising out of civil, labor and family relations.

The mediation does not apply to collective labor disputes, as well as to disputes arising out of civil relations if such disputes affect rights and legitimate interests of third parties not participating in the mediation, or public interests. This is necessary for taking into account, as much as possible, the interests of third parties and the society in whole, as well as for preventing restrictions on citizen rights to protection.

Pursuant to the Law, mediation means a method for resolving disputes with the help of a mediator on the basis of the parties’ voluntary consent for purposes of reaching a mutually acceptable decision.

Mediators are independent individuals engaged by the parties as intermediaries in resolving a dispute for purposes of assisting in finding a decision on the merits of the dispute.

Mediation procedure

Pursuant to the Law, the Parties may enter into a written agreement on applying the mediation proceedings (the “Agreement on Applying Mediation”) both prior to or after occurrence of a dispute (in form of a mediation clause or a separate written agreement respectively).

When a dispute occurs, the mediation may be applied both prior to filing with a court or arbitration tribunal and after commencement of court proceedings, including upon the judge’s proposal. An existing Agreement on Applying Mediation cannot serve as an obstacle for filing a claim with a court or arbitration tribunal.

In the event a dispute is referred to a court or arbitration tribunal, the parties may use the mediation at any time until a decision on the dispute is adopted by a relevant court.

The mediation may be conditionally divided into out-of-court, pre-court and judicial. The mediation may be conducted:

• out of court – when the parties in dispute face difficulties in resolving a dispute but they do not intend to refer it to a court;
• pre-court – on grounds of a mediation clause inserted in the agreement or agreement between the parties on settling disputes through mediation;
• judicially – the parties are entitled, at any stage of court proceedings, to terminate the proceedings and use the mediation, and the court is imposed with an obligation to propose that the parties use the mediation procedure.

The mediation procedure starts from the date the parties enter into an agreement for carrying out the mediation (the “Agreement on Carrying out Mediation”) containing the following information:

• Subject matter of a dispute;
• Mediators or company conducting activities ensuring the mediation to be carried out;
• Procedure for the mediation;
• Conditions on how the parties are to split the expenses tied to the mediation;
• Timeframes for the mediation procedure.

Selection of a mediator(s) is to be performed upon mutual agreement between the parties. A mediator conducts his activities both for or without consideration (expenses are shared between the parties on a pro rata basis, unless otherwise agreed by the parties).

An Agreement for Carrying out Mediation establishes the mediation procedure, which can be done by giving a reference to the rules for mediation approved by a mediator organization.

Amendments introduced to the Civil Code of the Russian Federation by the Law on amendments establish that in the event the parties enter into an Agreement on Applying Mediation, the statute of limitations is suspended until the mediation is completed.

Mediation Agreement

Upon results of the mediation, the disputing parties enter into a mediation agreement in writing. The agreement must contain obligations agreed by the parties and terms and conditions for performance thereof.

The mediation agreement reached by the parties as a result of the mediation procedure conducted after the dispute has been referred to a court or arbitration tribunal may be approved by the court or arbitration tribunal as an amicable settlement agreement.

The mediation agreement with respect to a dispute arising out of civil relations, which has been reached by the parties without referring the dispute to a court, constitutes a civil transaction targeted at establishment, amendment or termination of rights or obligations of the parties. The regulations of the civil legislation on compensation, novation, debt forgiveness, setoff of counter claims of the same kind, and indemnity may be applied to such transaction.

Other provisions

Mediators may conduct their activities both professionally and non-professionally (in such events only persons who reached the age of eighteen, with full legal capacity and with no criminal record may act as mediators).

The Arbitration Procedural Code and the Civil Code of the Russian Federation have been amended so that the mediators cannot be questioned as witnesses about circumstances they have become aware of in the course of performing the relevant obligations.

Self-regulating organizations of mediators may be incorporated for purposes of developing and establishing standards and regulations for the professional activities of mediators, as well as for exercising control.

Additional information

Should you need more detailed information on issues covered in this publication or on our services, please contact Andrey Savin in our Moscow office at asavin@cls.ru or by phone at +7 (495) 970-1090; or Irina Onikienko in our St. Petersburg office at ionikienko@cls.ru or by phone at +7 (812) 346-7990.

This review covers only a portion of issues related to the topic. The purpose of this review is to provide our clients and other interested parties with information on changes in the legislation which may, to a certain extent, affect their business or interests. This review is not a legal opinion and does not substitute required legal consultations or opinions on certain issues.

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