House of Representatives
“The new Code of Commercial Procedure (CCP) is designed for professional representation of the parties to a commercial process by lawyers” ALEXEY KOT, THE MANAGING PARTNER OF ANTIKA LAW FIRM, MEMBER OF THE COUNCIL ON JUDICIAL REFORM UNDER THE PRESIDENT OF UKRAINE
— What changes should be expected in business as a result of new procedural codes? Do you think the litigation process be become easier or more complex?
— This is the first thorough reform of procedural legislation for the period of Ukraine’s independence since 1991. Approaches to regulate the process are meaningfully reviewed. First of all, the range of instruments to defend positions by participants is expanding. At the same time, procedural mechanisms of influence are being created that allow judges not to be extras, but to manage the progress of the case, prevent procedural diversions and cases of abuse of rights. I believe that a good, solid foundation is being created to improve the process of dispute settlement. And this will benefit the business sector.
Ideologically, the new CCP is, like other procedural codes, designed for professionals, primarily for the professional representation of the parties by lawyers. And rightly so, because the professional representation by lawyers is already being implemented in 2018 at the level of courts of appeal, and in 2019 it will be in courts of all levels. Moreover, mentally, our society has finally to come to the fact that you should turn to an attorney for legal assistance (in fact for medical care we used to go to a doctor, and not to a pharmacist from a neighboring pharmacy). And regardless of whether your opponent retains an attorney, you should entrust your case to a qualified attorney.
— It is likely that court costs will grow, but, on the other hand, the principle of full compensation at the expense of the losing party is introduced. Will it be possible to return all funds?
— The law provides for this possibility. The CCP standards suggest that the costs associated with legal assistance should be incurred by the parties, and on the results of case consideration these costs are to be distributed between the parties together with other legal expenses. Generally, the cost of services of an attorney and his/her assistant is determined by an agreement on rendering legal assistance in the amount paid or payable.
In any case, the fee should be commensurate with the complexity of the case, based on the price of the claim or the case value for the party, and also commensurate with the time and effort spent on rendering assistance. At the same time, the burden of proving inadequacy rests with the party requesting the reduction in the amount of compensation. By the way, if claims are partially satisfied, each party will be obliged to compensate the opponent for the attorney’s costs in proportion to satisfied claims.
I hope that in case of proper confirmation of the fee paid, unless it is clearly excessive, the courts will award compensation in full.
— One of the assumptions during the preparation of the codes is the establishment of clear jurisdiction rules for disputes. What will change for business in this respect?
— If you speak the language of the new procedural codes, it is necessary to use the terms like “subject-matter jurisdiction” and “instance jurisdiction”. During the development of the new CCP, the Council on Judicial Reform was not tasked to redistribute cases or to change the jurisdiction of courts. The task was a different one; it was to clearly set up rules and exclude discussion on jurisdiction between the courts. In fact, it must be admitted that disputes about jurisdiction were the most difficult. Now we expect that there will be no questions as to what dispute, tax, land, competition or intellectual property law, you need to appeal, and in what court. But again, the provisions of the codes are based on the presumption of professional representation, and even if in exceptional cases it will not be an attorney, interests must be represented by a person possessing sufficient knowledge in a certain field in order to correctly determine the jurisdiction of the court.
— The number of judicial instances is reduced, is it worth expecting that the adoption of court decisions will take place more quickly?
— In commercial courts, prior to the decision of the court of cassation, cases were considered for an average of six to nine months. This is pretty long even for countries with a more stable legal system. Are the courts of three instances able to work even more quickly? Hardly. It's another issue that not all cases should be considered under the cassational procedure, because revision of a court decision that has come into force (decision of appeal) should have exceptionally good reasons. The foundations of this approach are laid in constitutional changes. We will see how successfully it will be implemented in practice.
As for the revision of cases under the cassational procedure by the new Supreme Court, it is obvious that there will be some difficulties in the transition period, but I think that with proper organization of the process, the court of cassation will not “sink” from the avalanche of cases passed to it for revision.
— Under what circumstances will judicial mediation succeed in commercial disputes? What is the role of the lawyer in this process?
— The parties should have some common ground and willingness to compromise to settle the dispute through negotiations. If you have a dispute about an obvious debt, but the debtor cannot return it, you can negotiate and not do battle in a court. It is not necessary for the parties to be ready for compromise at once; otherwise why did they appeal to the court? But I do not exclude that after a while, having analyzed the arguments of the opponent in court, the party may change its position.
In any case, to use judicial mediation as a tool for dispute settlement is a business decision, and the client must make it. The attorney cannot, and is not, obliged to persuade the client to mediate or, put simply, to discourage him/her from participating in conciliation procedures. But the attorney should probably explain the prospects of both processes to the client, predict the consequences and give the opportunity to consciously choose which path to take.
— According to your forecasts, is it worth waiting for a reduction in the number of unjustified claims and use of courts in unfair competition?
— In our country the addiction to litigation, together with legal nihilism, is so great that I can't even imagine what could change the situation and reduce the number of judicial disputes. It would seem that if you are ready to run to court for no reason, the judge must be your authority. However, as our Ukrainian experience shows, a prophet is without honor in his own country. The confidence index in the decisions adopted by Ukrainian courts leaves, alas, much to be desired.
The introduction of mandatory representation by an attorney in court will undoubtedly reduce the number of artificially invented claims, because an attorney may incur disciplinary responsibility for unreasonable claims. The task of the attorney is to explain to the client that there is no reason to turn to the court; otherwise he/she should part with such a client. I think that there are few attorneys who are prepared to risk their profession for the sake of a fee. Certainly, such responsibility on the part of the attorney should be balanced with appropriate guarantees that should be enshrined in the new law on the legal profession. Furthermore, our community of professionals is currently working on this project.