Russia's mediation move should help western firms

20 August 2003
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21 August 2003 | David Arminas

A mediation process being set up in Russia to bypass costly and often corrupt courts should improve supply chain relationships for western companies.

The agreement by three leading Russian business organisations, and endorsed by the American Chamber of Commerce in Russia, will set up a group of more than 60 mediators, including businessmen, lawyers and politicians.

A leader of one local business organisation, the Russian Union of Industrialists and Entrepreneurs, has said business leaders believe the courts are open to bribes where the side with more money buys justice.

Andrew Berkeley, a barrister with experience in dealing with corporate disputes in Russia, said that "business to business relationships should improve.

"Mediation is now common in the US and increasingly used in the UK and internationally to settle disputes," said Berkeley, who is also a consultant to the International Chamber of Commerce of the UK.

"Mediation rulings are not enforceable by law. However, there is a growing understanding in Russian companies that it is in their own business interest to be seen to comply with such rulings if they want to do more business with western companies."

The system allows the parties in a dispute to each choose one mediator and then choose a third mediator by mutual consent to act as chairman.

Jeremy Pope, executive director of global anti-corruption pressure group Transparency International, welcomed the move.

"Companies working with businesses in Russia should see it as a positive step," he said.

"In one sense, it is a vote of no confidence in the Russian judiciary and a vote of confidence in mediation. If the courts want the business back, let them win it back on quality of decisions and time taken to decide on cases."

David Hawkins, vice-president of projects and business development with Metso Minerals, which has dealings in Russia, believed the move is a way for Russian companies to be more western in their processes.

"By adopting mediation as a bona fide process for settling disputes, it makes them more recognisable as a proper commercial business to western companies," he said.


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