Disputes, being an inherent part of doing business,
are time consuming, costly, and can potentially harm
the reputation of the business involved.
Unfortunately, the Polish administration of justice is
still a far cry from satisfactory effectiveness in
dealing with such issues, as demonstrated by Poland
being ranked as low as 97th among 142 countries in
The Global Competitiveness Report 2011-2012 of
the World Economic Forum. For that reason,
Alternative Dispute Resolution (ADR) is an
alternative worth noting.
The two principal dispute resolution methods,
alternative to litigation before a common court of
law, are mediation and arbitration, both of which
being regulated under the provisions of the Code of
Civil Procedure.
The main difference between mediation and
arbitration is the way of finding solution to the
problem. While during mediation, the parties attempt
to find a consensus with the involvement of a
mediator who, however, has no executive authority
and does not settle the dispute. The mediator’s task is to enable the parties to reach agreement and
negotiate a settlement. On the other hand, under
arbitration, the parties refer the dispute for resolution
to an arbitration tribunal where an independent
arbitrator resolves the case finding one of the parties
to be in the right.
The first of the above methods, mediation, can be
undertaken in every case when a settlement is
possible. Consequently, all disputes where a sole
trader, partnership or company is a party, relating
e.g. to payment of amounts due, claims of
partners/shareholders, or determination of damages,
can be resolved by mediation. The key features of
mediation include voluntary participation in the
process and the ability to withdraw at any time. The
decision to seek mediation rests solely and
exclusively on the parties involved and it is only up
to them how fast a satisfactory arrangement is
worked out.
The process of mediation requires the presence of a
neutral mediator who acts to facilitate negotiating a
settlement. It is significant that the mediator is bound
by the confidentiality obligation unless the mediator
is released from by the parties. Consequently, a
business party to mediation should not fear
disclosure of information that is significant from its
point of view. It should also be noted that mediation
is far less formalised than court litigation. The
parties are free to agree convenient venue and time
for mediation which without any doubt affects the
duration of the process and by the same token
significantly reduces its costs compared to the
standard proceedings. Moreover, arriving at a
common solution in the process of transparent talks
conducted in a pleasant atmosphere helps not only
resolve the conflict but is also conducive to further
collaboration between the parties to the dispute.
The strengths of mediation hold as true for
arbitration, including as a rule a swifter resolution of
the dispute, guaranteed confidentiality of commercial
data, ability to align the proceedings with the
specific needs of the parties, or lower costs than in
the case of proceedings before a common court of
law. Yet, it must be borne in mind that there are
specific charges associated with entering into
arbitration. The rates would depend on the object of
the dispute and on the specific court of arbitration
hearing the case. And so, according to the table of
fees and charges of the Court of Arbitration at the
Polish Chamber of Commerce (Sąd Arbitrażowy
przy Krajowej Izbie Gospodarczej), arbitration may prove more costly if the matter involves a small
amount of money. Similarly, in the case of a multi-
million dispute, the fee applied may prove much
higher than stipulated under the Act on Court Costs
in Civil Cases, under which the prorated court charge
is capped at PLN 100,000. Nonetheless, in the
majority of cases arbitration will still be attractive, as
the standard court proceedings, in addition to their
costs, include also costs of expert opinions,
attorneys’ fees, etc, which often represent the
principal financial burden the amount of which
cannot be foreseen ahead of time.
It happens that despite the presence of the grounds
making it highly likely for a party to prevail in
litigation, such party after all decides to go for one of
the ADR alternatives. This is the effect of cool
calculation as reliance on ADR helps save time,
money, and energy that can well be used for some
other constructive purposes.
Summing up, the Alternative Dispute Resolution
techniques offer enough advantages to deserve being
considered in each case. As an indication of how
effective ADR is, one should note the US case
Department of Transportation v. City of Atlanta
(President Parkway), which took nine years of
litigation and even got as far as the Supreme Court.
Once mediators entered the stage, 9 meetings was all
that was needed, to resolve the dispute. This case
clearly demonstrates the utility and purpose of ADR
application.
MILLER, CANFIELD,
W. BABICKI, A. CHEŁCHOWSKI I WSPÓLNICY SP.K.
ul. Batorego 28-32
81-366 Gdynia
Tel. +48 58 782-0050
Fax +48 58 782-0060
gdynia@pl.millercanfield.com
ul. Nowogrodzka 11
00-513 Warszawa
Tel. +48 22 447-4300
Fax +48 22 447-4301
warszawa@pl.millercanfield.com
ul. Skarbowców 23a
53-125 Wrocław
Tel. +48 71 780-3100
Fax +48 71 780-3101
wroclaw@pl.millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield. It is intended to provide only a summary
of certain recent legal developments of selected areas of law. For this reason the information contained in this publication should not form the
basis of any decision as to a particular course of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in
individual cases. The services of a competent professional adviser should be obtained in each instance so that the applicability of the relevant
legislation or other legal development to the particular facts can be verified.