The Digital Transformation of Negotiation Procedures Based on Mediation

The International Youth Legal Forum session discussed dispute resolution procedures based on online mediation.

Moderator Eugenia Vaskova, Director of the Mediation Center, St. Petersburg State University, said: “The mediation procedure itself consists of a large number of components and is rich in techniques. And when we talk about ‘mediation techniques’, we are referring precisely to the application in practice of dispute and conflict management of a set of these techniques outside of formalized procedures. The procedure is founded on voluntariness, and the mediator’s task in the procedure is to employ the full range of techniques that we posses to move the parties from a confrontational position to one is that is cooperative”.

She stressed that the purpose of mediation techniques was not just to restore communication between the parties that may have been lost but to understand that “more often than not, we are looking in one direction and finding some solutions that are acceptable to both sides”.

Alexey Chirkov, Head of the Regulatory Department of the Consumer Rights Protection and Financial Inclusion Service, The Central Bank of the Russian Federation (Bank of Russia) spoke about the ‘potential value’ that the Bank sees in the institution of mediation and its potential application. The speaker noted that the Bank of Russia was actively supporting the processes aimed at introducing mediation techniques.

“The global objective is to ensure the normal development of a financial market that protects the debtor in any situation without compromising the interests of the credit institution, and the specific objectives are to preserve the relationship of trust and maintain the sustainability of both borrower and lender through such negotiation procedures. These are the key things that seem right to us in terms of implementing mediative techniques,” Chirkov said.

Denis Kuznetsov, Director of the Retail Collection and Settlement Division of the Troubled Assets Department, Sberbank, shared his experience of introducing mediation techniques in credit institutions. He emphasized how the bank works with clients at all stages of the process: when signs of a problem have only just begun to appear, before the client is actually in arrears, and then when the client is in arrears, and that the bank has quite a few different tools it can employ, including restructuring. “In the course of this year, approximately 40,000 clients have benefited from restructuring. The process is now fully digitalized, and on average it takes about 7 minutes to complete the restructuring itself,” the speaker said. However, the speaker noted that many borrowers also possessed liabilities in other credit institutions – approximately 35% of Russian borrowers had two or more types of loans from different banks.

“We asked our clients how they would view the idea of a package deal incorporating the debt from the different banks, and more than half of those surveyed said they would be willing to pay for it.... That’s how the first interbank mediation agreement in the Russian market came about with Tinkoff Bank. In doing so, the interests of all parties were satisfied to the maximum extent possible,” the speaker said.

Tatyana Machkova, General Director, Sber Legal, talked about the kind of disputes that can be resolved through mediation agreements. She said that an online service employing modern digital technology like ‘Sber Lawyer’, which is capable of “qualitatively, quickly, and inexpensively” settling disputes, had already been brought to market. Mediation agreements, enforceable voluntarily and on the basis of good faith, regulate: credit obligations, commercial, corporate, and labour disputes, and even extend to family mediation. The speaker also presented the stages of mediation in the service: “Everything starts with an application from one of the parties, then a questionnaire has to be filled out, primary data entered and checked automatically, and then the scoring stage begins. Then the other party is invited, the online payment is made, the legal review is carried out, then mediation takes place, and it ends with a mediation agreement signed and notarized”.

Victor Klimov, Financial Ombudsman for the Rights of Consumers of Financial Services in the Fields of Insurance, Credit Cooperation, Activities of Credit Institutions, Pawnshops and Non-State Pension Funds talked to discussion participants about the current state of the institution of the Financial Ombudsman in Russia as an alternative form of dispute resolution. The speaker described the institution of financial ombudsman as being “simple, quick, and free”. He added that: “It’s quick because the decision comes into legal force in 15 working days, while the average time required to go to court is much longer. It’s free because consumers contacting us receive a free service. It’s simple because you don’t need some special competency, you just need to answer the questions on the form posted on the website and submit the appeal”.

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