Mediation and Litigation with reference to The Wasps…
I. Preamble
The problem of the abusive litigation culture in our country is not recent.
Aristophanes has already, in 422 BC, presented ” The Wasps” in Lenaea, denouncing and ridiculing the Athenian abusive litigation culture. In this particular comedy of Aristophanes, Bdelycleon struggles to “heal” his father, Philocleon, who is a judge, from his addiction to court trials. There, Aristophanes (through Bdelycleon) refers, inter alia, to the difficulty of curing a disease which is deep-rooted in the state.”
And, obviously, he was not wrong. The addiction to turning to courts for every little thing is very much like a disease. A disease that has affected most of us. A disease that has driven all of us (and still does).
It is also well-known that the failure to administer justice is, in any case, a major obstacle to the country’s development.
The recent law no. 4640/2019 aims to cure some of the problems of the judicial system that derive from the accumulation of cases. It even seeks to create a new culture of dispute resolution through mediation.
In “The Wasps”, Bdelycleon eventually succeeded in “healing” his father, Philocleon, who was addicted to court trials.
Will the recent law be able to reduce the consequences of the Greek abusive litigation culture? Perhaps even to reverse the adverse effects of decades-long accumulation of cases on the dusty shelves of the judicial system?
II. Mediation
Mediation is an alternative method of out-of-court settlement of private disputes. It is built around the Mediator, who is a person that has no relation at any of the parties involved. The parties, with the assistance of the Mediator, seek to resolve the private dispute between them, avoiding litigation.
In the context of mediation, the parties negotiate to reach a viable and mutually satisfactory solution to their dispute. If they succeed to do so, they will have avoided the high costs, insecurity, and psychological burden that come with any court dispute. The process of mediation is not (generally) binding. If the parties do not reach an agreement, they are entitled to proceed to the competent court.
Mediation, as a concept, can only be positive.
Speeding up the dispute resolution as well as being cost-effective for the parties (compared to a long litigation) are not the only advantages.
Let us consider, for example, a dispute between two (harmoniously collaborating with each other until recently) businessmen. Choosing mediation can make it possible to rescue professional collaborations and, often, personal relationships (at least in theory). The parties are able to communicate with each other, maintain their dignity and accept a solution they have both agreed on, all of which can contribute to building strong relationships. Even more so: to creating appropriate conditions for future (new) collaborations. On the contrary, after a long, intense, laborious and costly litigation, such a result cannot even theoretically be considered possible.
All these apply when it comes to relationships between entrepreneurs.
Mediation can have even more benefits when it is followed in other kinds of disputes – especially family ones. In these particular disputes the restoration of the relations of the parties has a special value.
Out-of-court settlements of private disputes is therefore an institution that can offer a multitude of advantages. But its application to the Greek reality has proven unsuccessful. And all that despite the (over time) numerous legislative interventions.
III. A (brief) look at the legislative environment and the issues of unconstitutionality.
1. As early as 1996, the Greek legislature pursued (by adding Article 214A to the Code of Civil Procedure) the obligation to seek a private settlement of disputes. This provision has been amended several times. A common ground of all its amendments has been the sanction threatened. The inadmissibility of the relevant lawsuit was hanging over the cases when no attempt for settlement was made (in cases where mediation was mandatory by law). The discussion of the lawsuit only proceeded if the minutes of the failed attempt for a compromise was submitted along with the observations to the Court. Alternatively: a statement that could identify the causes of the failure.
We, the elders, have not served this institution well enough. The minutes of the failed attempt to settle the dispute (or, alternatively, the relevant statement) became yet another document that had to be added to the (generally bulky) case file. A standard process, an additional burden without any meaning and value. The role assigned to it by the legislator remained “on paper”. It was therefore necessary to amend it.
2. Law 3898/2010 sought a different way of out-of-court settlement. The purpose of the law was to incorporate into Greek law the Directive 2008/52 / EC, known as the “Meditation Directive”.
This law did not make mediation compulsory. Until very recently (ie the voting of Law 4640/2019), the compromise resolution was completely optional. If the compromise was reached, which was unlikely, the minutes of the compromise would be drafted free of charge.
3. Law 3898/2010 was repealed eight years later. Law 4512/2018 made it compulsory to subject certain categories of cases to mediation. The sanction, in the event of failure to seek mediation, was the inadmissibility of a hearing before the competent Court for failure to seek mediation.
The provision rendering mediation mandatory was suspended (after pressure – apparently by us lawyers) for nine months after the law was published.
4. Nevertheless the decision of the Administrative Plenary of the Supreme Court, No. 34/2018 is noteworthy. The Supreme Court, by a majority (21 against 17 members of the Plenary), considered the compulsory mediation of Law 4512/2018 to be unconstitutional.
It should be noted here that the right to effective judicial protection is enshrined in a number of important provisions. Indicatively, Article 20 § 1 of the Constitution, Articles 6 and 13 of the European Convention on Human Rights (ECHR) and Article 47 of the Charter of Fundamental Rights (ICC). The Plenary of the Supreme Court therefore considered that the provisions on compulsory mediation affect the core of this right (ie the effective judicial protection).
5. Despite the rule for unconstitutionality, compulsory mediation was reinstated with the law published a few days ago, namely on November 30, 2019, Law 4640/2019. The new law repeals the previous law, whose provisions were deemed unconstitutional. But the changes it brings are insignificant and clearly of questionable constitutionality. And this is based on what the Administrative Plenary of the Supreme Court has already assessed.
IV. Law 4640/2019: The (unsuccessful) attempt to deal with the unconstitutionality and the mistakes of the past
1. The unconstitutionality of a costly compulsory mediation process
The very recent mediation law does not appear to have surpassed the obstacles where the previous one failed.
The Administrative Plenary of the Supreme Court held, inter alia, that: (a) the obligation of mediation introduced by Law 4512/2018 is, at a first level, compatible with EU law and (b) as a consequence, it did, however, have significant costs for the parties. It therefore held that as a condition of subsequent recourse to the Court, mediation should be essentially without cost to the parties. Alternatively: the costs incurred by the parties should be minimal.
This particular rule of the administrative PSC seems to be justified. Expensive compulsory mediation may force the financially weaker indirectly to accept the proposed compromise. This is because, regardless of the (possibly not) agreement on its content, and having exhausted itself at the first stage of mediation, it will not be able to cope with the financial burden of a long legal dispute. In other words, (compulsory) participation in a costly mediation procedure may deprive any of the parties of their constitutionally guaranteed right to appeal to a natural judge.
2. The obligation to seek mediation
The mandatory nature of mediation was, however, also chosen by the new Law for specific cases. In this context, Article 6 of the Law provides that the mandatory initial mediation session shall include:
(a) Family differences. [Exceptionally, mediation is not subject (until 15.1.2020) to family disputes involving divorce, annulment, recognition of the existence or non-existence of marriage, infringement of paternity, maternity etc. (§§1 & 2 of Article 592 CCP)].
(b) Disputes adjudicated (from 15.3.2020 onwards) in the ordinary course of law and fall under the material jurisdiction of: (i) the Single-Member Court of First Instance if the value of the subject-matter of the case exceeds thirty thousand (30,000) EUR and (ii) the Multimember Court of First Instance in every case.
(c) Disputes for which a mediation clause provides for a written agreement between the parties.
3. The Mediator’s remuneration
The initial first mediation session is not without cost for the parties. The parties are charged with the remuneration of the Mediator, which they (can freely) agree upon (Art. 18 par. 1). In addition, the one who expedites the whole procedure also bears the costs of the mediator’s written notification to the parties in advance (as to the date and venue of the first hearing). These costs are counted in the ordinary judicial costs, if a trial follows (Article 7 (2)).
4. The remuneration of lawyers
Each party is liable for the fees of their lawyer at the stage of mediation. This is because the representation by lawyers is mandatory in this case as well. As acknowledged in the above-mentioned (above, paragraph 1) opinion of PSM, advocate support per se is not incompatible with EU law. Even more so since the Mediator is not required to be a lawyer. In this context, the presence of lawyers seems necessary for the parties. However, it sure is an additional expence (and not an insignificant one) the parties have to bear.
The legislator’s choices regarding the structure of the mediation process obviously does not contradict with the Constitution and EU law. But it sure seems to directly affect the right of the parties to access the judicial system.
In the aforementioned (unfortunate) choices, the legislator continues to insist on the new law on mediation: The parties are required to appear together with their lawyer. Consumer and minor disputes are exempted. Parties in such cases have the right to represent themselves (Article 5 § 1). The remuneration of legal representatives at the mandatory initial meeting is freely agreed upon (Article 7 § 5).
The lowest possible cost of compulsory mediation was reduced compared to that provided by the previous law. It remains, however, significant, especially in the modern Greek reality.
Consequently, it may, for some parties, be a deterrent to seek protection by turning to an actual judge. As, for example, in the event that a party with limited financial means cannot financially support a subsequent trial. The unintended compromise for them will probably be the only way. On the other hand, it is obvious that the more economically powerful are favored.
5. Monetary Penalties
Another calculable cost, which is imposed because of the obligatory nature of the mediation (together with the inadmissibility), are the fines for the party refusing to engage in the whole process. The administrative PSM also took into account the specific costs for its judgment on the unconstitutionality of the provision for compulsory mediation.
However, the new law also threatens financial penalties, even higher than its predecessors did. The court is entitled (Article 7 § 6) to impose on the party who did not attend the compulsory initial hearing, despite being summoned, a fine between €100 and €500.
In addition, the party who has not participated in the mediation procedure or failed to pay the amount due to the mediator shall be ordered (Articles 176 et seq. CCP) to pay the full amount paid by the expediting party. This amount is to be regarded as a judicial expense, irrespective of the outcome of the proceedings (Article 18 § 2). That is, a party who acts according to law and is trying to exercise their rights will have to bear an additional cost. This costs will, of course, be reimbursed to them at the end of the trial, a trial which will in the meantime be delayed because of the (mandatory) mediation.
6. Compulsory written notice of the possibility of resolving the dispute via mediation
The new law requires lawyers to inform their clients in writing of the possibility of mediation. This information must be given in all cases that may lead the parties before a court. Not only in those for which it is mandatory to seek mediation. The relevant document (entailing that piece of information) must be signed by the party and their attorney. Also, it must be filed with the observations or until the discussion of the lawsuit. Otherwise, the discussion of the application is declared inadmissible (Article 3 § 2).
It is true that this document brings back old memories (above III.1). The production of the document to certify the attempted settlement of the dispute was also mandatory on the grounds of inadmissibility (Article 214A of the CCP in its pre-existing form). The relevant process was, back then, cost-free. The (previous) legislator abolished the inadmissibility of the lawsuit (as early as 2011) in the event that this document was not produced.
The new law, however, seems to reinstate past practices. Hopefully, they will not fail once again.
V. In conclusion
The goals of Law 4640/2019 are multiple. Among them: to speed up the proceedings and to turn around of abusive litigation culture.
It is true that it is introducing improvements compared to similar laws of the past. But the successful management of the problems it tries to solve is doubtful -with the most significant example of them being the resolution of (the given) problems of unconstitutionality.
In addition: It is noteworthy that the law itself (Article 44) has reservations regarding its effectiveness. After March 15, 2022, the Ministry of Justice will evaluate the results of the mediation and mandatory first hearing.
The strategy followed and choices made by Bdelycleon when trying to deal with his father’s, Philocleon’s, obsession with trials proved to be successful. Philocleon healed for good.
The Greek legislator’s choices to enforce the mediation process and to alleviate the consequences of the abusive litigation culture have not been, until this day at least, successful.
We do hope, however, that the legislator’s expectations will be met. The eventual success of Law 4640/2019 (and consequently a reduction of the number of trials) will contribute to the country’s development.
The supporters of the unconstitutionality of the law have already taken battle positions. The difficulties of implementing the new law are a given. But given are the (already loud) complaints of those affected. Unfortunately, all this does not seem to support the new law’s longevity …
We shall see…
Stavros Koumentakis
Senior Partner
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (December 15th, 2019).
