On 15 July 2020, the Ukrainian Parliament passed on the first reading Draft Law No. 3504 “On Mediation” (the “Draft Law”), which introduces a new dispute settlement mechanism (mediation) at the legislative level. The Draft Law allows mediation to be conducted in the form of voluntary out-of-court dispute settlement, in which the parties negotiate in the presence of a mediator.

It was necessary to adopt the legislative framework for mediation for two reasons: (1) to create an effective mediation system; and (2) to take steps toward implementing the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention on Mediation), signed by Ukraine in August 2019, by defining the mediation process and its scope, and the status of mediators).

In addition, the purpose of adopting the Draft Law is to create a legal basis for the successful development of mediation in Ukraine in accordance with world best practice.

The Draft Law introduces the rights and obligations of a mediator and parties to mediation, determines the legal status of the mediator, sets the requirements for the mediation agreement and the settlement agreement based on the results of the mediation, the legal basis for implementing and conducting mediation, as follows:

• mediation may be used in any disputes, including civil, family, labour, commercial, administrative, as well as in criminal proceedings during the conclusion of reconciliation agreements between a victim and a suspect (defendant), and other social spheres;
• individuals and legal entities will be able to apply for mediation at any stage of a dispute (before court, arbitration court or international commercial arbitration proceedings commence, as well as during ongoing proceedings and enforcement);
• mediation will be conducted upon parties’ consent and follow the principles of voluntariness, confidentiality, independence and neutrality, impartiality of the mediator, self-determination and equality of parties;
• eligibility criteria for obtaining the status of a mediator are a degree and basic training in the field of mediation in Ukraine or abroad;
• associations of mediators, organizations offering mediation services, public authorities and local governments that involve mediators or whose services they use will be able to maintain registers of mediators;
• etc.

The Draft Law also proposes 60% of the paid court fees are reimbursed in the case of a successful mediation in a dispute that is the subject of court proceedings.

We believe that the eventual adoption of the Draft Law will increase the alternative ways of resolving disputes, allow parties to resolve the dispute out of court, and, in particular, reduce their litigation costs and decrease the workload of Ukrainian courts.

To enter into law, the Draft Law must be approved by the Ukrainian Parliament on its second reading, signed by the President of Ukraine and published.

If you have any questions on the above, please feel free to contact our experts.

Legislation:

Draft Law “On Mediation” No. 3504 dated 19 May 2020 (in Ukrainian).