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Time is money, but the average waiting time to get an instrument permitting enforcement in Poland was as long as 584 days last year. When conflicting parties used mediator's services, they reached a consensus on financial receivables within 30 days. Moreover, the mediation fee was only 25% of the court fee and these are not all savings.

mediations 1.jpgManaging conflicts, moderating discussions, softening emotions – more and more people are learning mediation craft. Fairness and impartiality, confidentiality, humility and the knowledge of communication techniques are features and skills of a mediator. Mediator's duty is always the same: to bring a lasting resolution to the conflict and reach an agreement which is good for all the parties involved.  

Making mediation common among business people as well as taking some of the strain off the judicial system are also main objectives of a draft law on supporting conciliation methods of solving conflicts prepared by the Ministry of Economy in cooperation with the Ministry of Justice. The document as of 24 July 2015 was accepted by the Polish Parliament. In early August, the Senate supported novelisation of the Civil Procedure Code and some other bills which aim, among others, at reducing costs of litigations and encouraging involved parties to mediation. The changes relating to supporting conciliation methods of settling disputes concern, most of all, provisions of the Civil Procedure Code.    

Proposals for amendments prepared by the Ministry of Economy and the Ministry of Justice aim to contribute to more common and more frequent use of mediation and arbitration, but also to shorten and improve court proceedings and reduce litigation costs, both for citizens and the state. The solutions proposed in the bill are complementary to each other and constitute a set of legal tools which supports taking advantage of conciliation methods of settling disputes in Poland. This document was set up in close cooperation with business people, academic community, judges and mediators. Mediation is by its nature a very flexible method. It creates perfect possibilities for managing conflicts. At the same time, however, it lets us keep control over the conflict situation. It helps to keep proper relations between parties of the conflict, which is particularly important in business relations. Consequently, mediation also creates a big space for lawyers to get involved in these activities, which is vital for their professional experience.  

- Mediation is the simplest way of alternative settling of disputes. I'm deeply convinced that branch of subcontractors also needs specialist knowledge on settling disputes – proves Małgorzata Miszkin-Wojciechowska, a legal advisor, mediator and a head of the Centre for Arbitration and Mediation affiliated to Konfederacja Lewiatan (Polish business organisation representing employers' interests in Poland and the EU).

- It is enough to have a look at the latest statistics. In 2013 courts of law received in total about 15 million of business applications including about 9 million of civil cases, 1.5 million of business cases, 1.4 million of family court cases and 120,000 cases relating to the labour law. Mediation is more and more common, but as statistics show, the proportions are not as they should be, though successful mediations are highly probable.

Between 1 January and 31 March the district court in Warsaw received 227 cases which were sent to mediation and in which the parties agreed to mediation. Agreements were reached in 55% of them, which means that mediations were successful. This proves that when the parties decide to try mediation, a compromise is achieved in over a half of the cases.

mediations 2.jpgWhich branches of economy is business mediation most successful in? The mediation statistics show that business mediation is the most effective in conflicts where long-term relations are important for involved parties. Branches in which business mediation is successful are services, construction, real estate. It also appears that mediation is more and more popular among stone industry entrepreneurs. Why?

- I had a situation that I had to sue a company which fell behind on its payment for stone works. The court proposed mediation and referred us to the mediation office where two parties met in a nice atmosphere and discussed various ways of settling the conflict – says Michał Firlej from Stone Consulting who experienced a situation like this a few months ago.
- Just one, a few hour long meeting was enough to reach a compromise. We didn't have to pay for much of the court fees, either. A conclusion? I really recommend such a way of settling disputes to my stone industry mates. It is not a secret that in our world there are many contracts which are not written down. It is not a surprise because stone industry originates from craft not from industry as such, and, in my opinion, this is the reason why everything is based on personal relations and why we discuss all the matters when the work is already in progress. Another thing is that we are sometimes scapegoats of low business culture in Poland. Many representatives of our stone industry community are still crediting big projects and big players on the construction market are our debtors. But this is another reason why we should appreciate mediation. Taking of evidence – characteristic for all court proceedings – is not so important here. It is easier to show your opinion and hope for empathy of the other party of the dispute in a nice atmosphere when there are no lawyers and experts sitting next to you.
I think that everybody knows that payment delays are more and more common in our branch. The latest report presented by the National Registry of Debts and the Conference of Financial Companies in Poland says that 84% of companies suffered (to a lesser or bigger extent) from payment delays in the second quarter of this year. Payment delays make small companies suffer the most. The debt towards them rose by 7 percent during the year to over 860 million PLN (ca. 215 million euros). Polish companies wait for settling payments on average 4 months with construction and transport companies waiting the longest. What is the situation of stone market for debtors and creditors?   

- Unfortunately, in our branch even before concluding the transaction, one of the parties already knows that he is going to pull the supplier's or subcontractor's leg. You can see this especially at tenders when the bid with the lowest price (often calculated below the costs) wins – says Rafał Zahorski from Magemar Polska company which specialises in marine transport of stone.
- So far mediation in stone industry is just legitimisation of pathologies and giving ground to a customer who knew from the very beginning he was going to cheat us. Our business development level is not high enough and the state does not protect companies against this glaring unfairness. I am a fan of mediation, but it is possible only when two parties of the conflict want it.  

The criteria of reliability and stability of companies are financial liquidity, level of indebtedness and level of registered overdue payments. In November 2014 over 5,200 construction companies owed their counterparties over 292 million zlotys (more than 75 million euros) in total. Compared to the same period in 2013, the debt increased by nearly 25%. Well, in Poland just 30% of invoices are paid on time. Nearly 11% of invoices are more than 90 days overdue including those which are more than 121 days overdue. Estimated, average value of overdue payments per company is nearly 70,000 zlotys (ca. 17,000 euros), whereas more than a half of SMEs (54%) have overdue payments worth more than 50,000 zlotys (12,000 euros).

After five years of recession construction branch is recovering, but moods are still moderate. We should not be surprised because most companies which have problems with enforcing payments say that, according to them, their counterparties should pay on time because they have enough money (61% of companies think so).  

- The worst thing is that even public procurements do not guarantee that money will be paid on time. I remember talking to councillors from Legnica two and a half years ago. We were talking about stone works which we valued at 400,000 zlotys (ca. 100,000 euros). They agreed. There was only one condition in the agreement. We had to start our work immediately. I quit this, but I know that other subcontractors swallowed this bait. They are still getting their money in instalments – says Mateusz Ciemny, a stonemason from Głogów.

- Since that time I've been avoiding big projects. It is much easier to get along with a private investor. Stone is a natural product so I can't guarantee its repeatability (and I can't demand it, either). I can't just go to a wholesale and say: “A green stone, please”. We should learn how to value costs of our work. This is a craft and the fact that we can use CNC machines these days doesn't matter. We need to value ourselves highly and ignore the temptation to lower the price because it spoils the market, demotivates stonemasons and lowers the value of our craft.  

mediations 3.jpgAre agreements with stonemasons the worst possible for construction companies? One thing is certain: you need to have a sharp eye for business. Those who suffered from bankruptcies of contractor companies during Euro 2012 know about it very well. What is worse,  bankruptcy risk of construction companies is still at a very high level – in spite of their recovery and higher profitability in the last quarters, the number of bankruptcies is still very high. We need to add that nearly 60% of developers' debts are liabilities towards construction companies.     

- I'm really annoyed that when I do big contracts I need to issue a delivery note and sign an agreement in which the ordering party has a right to do everything and I have just duties and penalties (in order not to be associated with dictatorship, they are called contractual penalties). A medieval scribe seems a good person to analyse such tricky provisions – says Jacek Kiszkiel, a stonemason from Strzegom.  

- Once I had to return my trucks with stone for building express roads to my company. The ordering party always paid on time, but one day my employee told me that this company had just gone bankrupt. I had to do my best not to lose 300,000 zlotys (ca. 75,000 euros).

What is worse, nobody draws any conclusions from the failure of road and railway program. Agreements are still favourable only to ordering parties. The market is dominated by ordering parties who impose prices and conditions, set up rules which contribute to the market imbalance. The relation between ordering party and contractor is not based on cooperation and understanding but on supervision and stringent agreements controlled by lawyers hired by big companies.

- I learnt a lesson and now I'm doing business only with the companies run by presidents I know in person  (or at least I know a member of the board of this company). I'm not interested in other enquiries – reveals Wiesław A. Kisielewski, a stonemason from Białystok.

- I can see the following dependance. The shorter the time for getting familiar with agreement provisions, the bigger the risk that we met a cheat (there are more and more of them!). If a trusted (so far) customer moves his company nearer the capital city, there is a bigger chance that he will be tempted to cheat someone. We may hope that mediations will change the low business culture in Poland. So far subcontractors are treated like workers who should be happy that they found a work to do. What about payments? Issue the invoice, we'll see what we can do… - the same old song and dance given by big players.

Luckily, according to the National Registry of Debts, there are more and more Polish companies which have no problem with getting their money back from foreign counterparties. The study showed that in Poland not only big companies are focused on export. According to the survey carried out on 7,000 micro and small entrepreneurs by Pekao Bank, 33% of small companies engage in export whilst in 2013 it was 24%. An increase was also recorded among micro companies (the number of exporters rose in 2014 to 12 per cent, compared to 7 per cent in the previous year).  

And now a curiosity. Mediation appears to be successful when used by parties that have completely nothing in common: starting from different country they come from through different skin colour, religion and finally business culture...

- In the RSA, for example, where our family stone pits operate, a mediator is treated like a silent partner. There, possibly because of mixture of various cultures, business is much more open to new things. Polish stone industry is rather closed and does not seem good for mediators. Well, 90% of all stonemasons in Poland are people in their 50s who are not keen on any changes. Mistrust prevails, I'm afraid – concludes Jacek Kiszkiel.   

Rafał Dobrowolski


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