by Poly Tsitsoni and businessingreece.gr, published at  EURO2day

http://www.euro2day.gr/specials/opinions/article/1591931/deka-nai-sto-neo-nomo-gia-th-diamesolavhsh.html

Mediation is not private justice, but rather a fast, low-cost procedure, as Poly Tsitsoni explains. Why the new provisions are a turning pointfor the equitable promotion of a complete legal system?

Mediation has been a conversation topic as a way to resolve our differences outside the courtroom. On the one hand, the ardent supporters of this institution argue that an effective and quick resolution is possible thanks to Mediation, while the intense accusers blame this process for altering the pursuance of justice into  a private personal affair that hinders the free access to justice.

Mediation is a procedure quick and flexible, with specific legal rules. During this procedure the parties involved decide to reach a commonly accepted solution regarding their civil and commercial disputes, assisted by a third neutral and impartial party, the mediator.

Our country has already introduced into the Greek legal order the possibility of the citizens to choose to resolve their disputes by applying to the alternative dispute resolution process of mediation since 2010 with the law 3898/2010, which incorporated the European provisions into domestic law. However and until this day the development of this friendly settlement instrument has not been achieved, while the number of mediations procedures that took place is very small.

The improvement of its operation is an important factor in order to strengthen the citizen’s confidence towards mediation, according to the experience gained so far. The recent law 4512/2018 undertakes this task by replacing the former legislation, considering both cross-border legal disputes and domestic ones.

1. Mediation is not private justice

The Mediator does not act as a judge and does not reach a verdict, but rather facilitates the dialogue between the parties in dispute by following a certain process and specialized techniques and helps the parties to move from their opposite, rigid positions to their common interests so as to reach to a solution of their own. The Mediator conducts the procedure either in shared sessions or separate meetings with each one of the parties and their lawyers.

2. Mediation is a voluntary procedure for resolving a dispute

The parties involved in a dispute can apply for a mediation procedure voluntary either prior to bringing an action before the court or during the course of the trial. The parties may also quit the mediation process at any time exempted from any justification and continue their dispute before the courtroom. The law provides that the right to litigation is always protected by requiring the suspension of the limitation period and the deadlines when mediation is being conducted.

3. Mediation is not compulsory

There is a controversial debate regarding the provision of the new law on article 182 title “Mandatory”, where certain civil law disputes are provided to enter under mediation before going to the courts.  On the same article, lawyers are obliged to inform their clients in writing about the possibility to resolve their disputes through the mediation process, prior to bringing their case before the civil courts. This article will be enforceable from 17/10/2019. In case these two conditions are not being met, the discussion of the dispute before the court will be declared inadmissible.

 The disputes that should go through this mandatory first stage concern the categories of cases that the international experience has shown that they can and should be resolved in a friendly matter, such as those regarding real estate, car damages, freelance professional’s remuneration, the majority of family disputes and those regarding alimony or disputes of compensation for medical error. Furthermore, disputes regarding trademarks and patents, where it is significant to protect the secrets of the companies from the compulsory publicity of the court procedure, are also included in this article.

Thus, what is imposed as mandatory is not the dispute resolution through mediation, but the obligation to inform the citizen and acquaint them with this procedure.

The Court of Justice of the European Union decided that it is not against the European Union law the obligation to attempt the resolution of the dispute through mediation at a first stage before going to the court. (Case C‑75/16, Livio Menini,Maria Antonia Rampanelli v Banco Popolare Società Cooperativa, 14 June 2017) 

4. Mediation is a time – saving process

The law provides short time limits for its conduct. The mandatory first attempt of mediation has to take place within a maximum of 30 days. Regarding most cases, the mediation agreement is reached within a day.

5. Mediation is a low-cost procedure

There is no judiciary fee and the mediator’s remuneration is agreed freely by the participants.

In cases that the dispute concerns money claims up to 5.000 euros, the presence of the lawyer is not mandatory, as it is not mandatory concerning the corresponding proceeding before the courts.

In case there is breach of the aforementioned obligation by one of the parties, small fines are foreseen by the law only if the judge decides so ad hoc. Additionally, care is taken regarding the vulnerable groups of the population and their exemption from the mandatory mediation due to their financial weakness is provided.

6. Mediation is effective

The agreement reached by the parties can be submitted to the Court Of First Instance and constitute an enforcement order as a court judgment does by paying a fee of 50 euros.

7. Mediation makes use of contemporary tools

The new law adopts the new technologies by providing the legitimate use of email, videoconferencing, fax or registered letters in favor of a quick and economical conduct of the procedure.

8. Mediation is being carried out by  scientifically qualified operators

The legislator ensures a high level of education for the Mediator by lengthening the time of mandatory education and providing free access not only to the graduates of higher education but also to reputable scientists, holders of postgraduate diplomas with international prestige.

Moreover, the legislator ensures their certification by the Ministry of Justice with an exam system based on merit and substance.

9. Mediation upgrades the role of the lawyer

Lawyers, as mandatory attendants of the parties during the mediation procedure, become necessary concerning its legal supervision and the drafting of the final agreement by achieving faster results and strengthening the relationship of trust with their clients.

10.  Mediation has a quality control system

The application of mediation is guarded by the establishment of a special supreme official instrument of control and resolution of the emerging issues and compliance with the Code of Conduct, which is strengthened and ensures the impartiality, confidentiality and the independence of the Mediator.

The Central Committee of Mediation is composed, where supreme judiciary officers, Representatives of the Ministry of Justice and reputable members of university and mediation society. For the first time the compulsory participation of the representative of the country’s professional bodies is determined.

The new provisions on the department of the out-of-court settlement of disputes through Mediation are a starting point for the balanced promotion of a complete legal system, which aids a quick, effective, economically correct and updated access to justice, fully harmonized with the European and International aspirations, but also bearing the fingerprint of the Greek practice and legislation.

*Lawyer at the Supreme Court of Greece, Legal Counsel. Accredited Mediator- Coordinator of Private Debt. Member of the Legislative Committee of the Ministry of Justice for the improvement of the provisions on the institution of Mediation.

tsitsoni@businessingreece.gr Read more →

TSITSONI POLYXENI

LAWYER AT THE SUPPRIME COURT OF GREECE
ACCREDITED MEDIATOR BY THE MINISTRY OF JUSTICE

Article Published in International Jurist, 2017

I. A FIRST TIME PRE-PACKED AGREEMENT

Due to the financial difficulties in recent years, a significant number of enterprises in Greece are filing for bankruptcy.

Recently, one of the most developed businesses in the hypermarket field in Greece was faced with financial inability to pay its creditors, amongst which were the four biggest banks in Greece, some of the largest food product supplying companies and the Greek State. Its debts were estimated at around 1.3 billion euro. Potential bankruptcy of this company, in the difficult economic environment in Greece, would cause a chain reaction with adverse consequences, both for a number of companies and the finances of the State. Under this pressure, for the first time in Greek practice, the debtor company and its creditors came to a collective reorganization agreement in order to avoid bankruptcy. A third big company in the hypermarket sector set up a subsidiary company in order to acquire the assets of the debtor company and part of its liabilities including debt. In this way, all kind of creditors, including foreign creditors, managed to announce their claims and continue the commercial collaboration with the new created company. This agreement has been validated by the Court and the procedure is currently in process.

We would also like to point out another procedure which was applied in the specific field of the afore-mentioned case for the first time in Greece. Creditors, among which foreign multinational companies, wished to secure their claims in case of potential bankruptcy. Rather than bring their actions to Court, which would have cost them much more time and money, some of them chose to settle their differences through the Alternative Dispute Resolution method of Mediation. The mediation agreement when deposited to the competent Court has the effect of an Enforcement Order, which enables the effective enforcement of the agreement.

II. NECESSITY FOR NEW LEGISLATION

In order to lessen the heavy economic impact that ensues with every failure, the Greek State has made significant efforts to ameliorate the legal framework on the bankruptcy proceedings. The most recent legislation change was made through L. 4446/2016 (G.G. A’ 240 22.12.2016), which amended the Greek Bankruptcy Code.

According to the Greek bankruptcy law (art. 2 par.1 of the Bankruptcy Code, L.3588/2007, G.G. Α’ 153 10.07.2007), the capacity to become bankrupt is reserved to physical or legal persons acting as traders and also corporate associations seeking to fulfill an economic purpose.

The main focus of the new legislation relies on offering to enterprises in difficulty the option to reorganize and restructure their debts before their default. In this way, the adoption of a reorganization plan, gives the enterprise or a part of it a chance to remain afloat and continuing its operation.

Three proceeding options are available according to Greek legislation in force for the purpose of saving the enterprise from bankruptcy.

III. PRE-BANKRUPTCY PROCEEDINGS

1. Collective pre-bankruptcy reorganization proceedings

(art. 99 et seq. of Greek Bankruptcy Code as added by L. 4013/2011, G.G. Α’ 204/15.9.2011 and amended by L. 4336/2015, G.G. Α’ 94/14.8.2015 and L. 4446/2016).

The Greek Bankruptcy law provides that, prior to filing for bankruptcy, the indebted enterprise may open the “pre-bankruptcy reorganization procedure”. This procedure aims at the approval by the majority of its creditors of the draft of a reorganization plan (collective pre-bankruptcy proceedings). This option is reserved both for enterprises encountering difficulties, as well as those enterprises already in default.

This reorganization plan agreement is concluded between the debtor and its creditors representing at least 60% of the total claims, including 40% of the privileged or mortgaged claims and is then deposited in Court for its validation (pre-pack agreements in common law States). Following Court validation, the reorganization plan has the effect of a judicial decision and is applied erga omnes. In the time period between deposition and validation, all enforced execution procedures against the debtor are suspended. The Court may also allow preventive measures to be taken, in order to protect the debtor’s property.

In previous legislation, the enterprise could also follow the same procedure after filing a request to the Court so for it to order the opening of the reorganization proceedings and the conclusion of a reorganization plan agreement within a specific time limit of maximum one year, as well as the appointment of a mediator for their coordination. During this period, the enforced execution measures against the business were suspended. Under the new provisions, the above possibility is abolished. Consequently, the procedure is accelerated. The debtor may file a request for preventive measures for protecting its assets only after the submission of the pre-packed plan to the Court; from now on, all parties must act quickly and effectively in order to rescue the enterprise and especially the debtor in order to avoid aggressive acts on the part of its creditors for their satisfaction of their claims.

2. Collective pre-bankruptcy reorganization proceedings on creditors’ initiative

(art. 100 par. 1 of Greek Bankruptcy Code as amended by L. 4446/2016).

Following the new legislation provisions, a reorganization plan may be drafted, even without the participation of the debtor, by the same percentage of creditors including 40% of the privileged or mortgaged claims as above and deposited in Court. This option is reserved to creditors only if the debtor is already in default.

Τhis provision constitutes a novelty for the Greek legal system. The same benefits as above can result, concerning the rapidity and effectiveness of the procedure.

3. Special Liquidation

(art. 68 et seq. of L. 4307/2014, G.G. A’ 246 15.11.2016).

An undertaking in difficulty can be placed under a status of special winding-up or liquidation. This special liquidation is ordered by the Court upon request of the debtor or its creditors representing the 40% of total claims.

A Liquidator is appointed and charged with the task of recording all assets of the undertaking and of inviting potential buyers to propose their offers to buy the total of the assets of the undertaking, which can then continue its operation. The relevant procedure is then validated by the Court.

The above option remains unchanged under the new regulations.

IV. The Final Phase: Bankruptcy

(Articles 1 et seq. of Greek Bankruptcy Code)

If none of the above solutions bears fruit, the bankruptcy procedure follows, which is ordered by Court upon request of the debtor in default or its’ creditors or the Public Prosecutor (Art. 4 and 5).

The Court then appoints a professional in charge of the bankruptcy, the “Trustee in bankruptcy” (art. 7 and 63), who takes over the property management of the bankrupted entity in order to liquidate it; he/she invites the creditors to announce their claims in a time bound limit (art. 89 et seq.) in order to draft the Table of Creditors for the liquidation proceeds. The creditors, who did not make their announcement within the time limit, can file an opposition to the competent Court demanding the verification of their claim (art. 92).

After the finalization of the Table of Creditors, the Creditors are compensated from the liquidation proceeds in proportion to their verified claim and their eventual privilege (art.153 et seq.).

Under the new provision, the above-mentioned opposition must be filed in a short six month time limit. By contrast to this, the previous regulations in effect permitted longer time periods for the procedures, up to the end of the liquidation, resulting in the delay for years on end of eventual creditors’ satisfaction.

V. THE NEW PROFESSION OF INSOLVENCY ADMINISTRATOR

The L.4336/2015 (G.G. A’94 14.08.2015) defined by the Presidential Decree 133/2016 (G.G. A’ 242, 29.12.2016) introduced to the Greek legal system the professional status of the Insolvency Administrator.

Specifically, professionals acting as Mediators, appointed by the interested parties to help in Pre-Bankruptcy Reorganization Proceedings, Special Liquidators or Trustees in Bankruptcy should meet certain requirements in order to obtain the license of Insolvency Administrator. This license is granted by the Insolvency Committee appointed by the Ministry of Justice. The capacity of acting as an Insolvency Administrator is reserved to lawyers, auditors and tax accountants.

VI. CONCLUSIONS

In summary, we consider that the new legislation drastically improves Insolvency law in Greece, through its modernization and harmonization with that of other European systems. Foreign creditors and suppliers of foreign can recover their claims with greater flexibility and in a shorter period of time. The possibility for creditors to request the reorganization of an undertaking, even without the debtor’s consent and the priority given to the extra-judicial proceedings through the limitation of court involvement, as well as the shortening of time limits for the faster conclusion of bankruptcy as a final step, can all be considered as cost and time-saving means for the satisfaction of creditors. Additionally, the new regulated profession of Insolvency Administrator ensures the quality and effectiveness of the proceedings.

RÉFORME LÉGISLATIVES ET RÉGLEMENTAIRES