Will mediation expedite the process of issuing decisions by public administration?

Legal alert (12/2015)

On 12 May 2015, the Council of Ministers received a Draft Law on Business Activity which puts special emphasis on the interaction between public administration institutions and entrepreneurs in the process of issuing important administrative decisions.

On 12 May 2015, the Council of Ministers received a Draft Law on Business Activity (the “DLBA”) which is said to be an important element of the Ministry of the Economy’s comprehensive policy of improving in the business environment in Poland, serving domestic and international entrepreneurs as a “constitution” to invoke.

The new law puts special emphasis on improving the “dialogue” between public administration and business. It has taken Poland almost 15 years to embrace that idea (on September 5th, 2001, the Committee of Ministers of the Council of Europe adopted Guidelines on alternative methods for resolution of disputes between administrative agencies and private entities). Since the beginning of 2015 it has been a third version of the proposals on how to use mediation in disputes between public administration and business.

The DLBA proposes that a mediation process be initiated before an administrative decision is made, on the initiative of one of the parties, including a public administration agency. It also proposes that a decision made by a public administration agency has to be compliant with the protocol signed by the parties to a dispute if a party and the administrative body of first instance have reached an agreement as a result of mediation. Mediation will also be possible in proceedings before second-instance administrative bodies as well as actions such as reopening of proceedings, or changing or cancelling final decisions.

A mediator would be an individual from a list of mediators drawn up by the local governor (voivode). This will be the third list of mediators in addition to the central list of mediators available on the Ministry of Justice’s website and the list drawn up by the Ministry of Finance. The new addition seems pointless as the only difference among the lists is the name of the publishing institution. Surprisingly, the new law does not impose any special requirements on mediators related to the type of a mediation case, especially considering that DLBA is meant to play a special role in mediation involving professional proxies whose responsibility is to adequately secure parties’ rights, which defies the essential logic of mediation, whereby the mediator’s role is to protect the interest of each party to a mediation process. In a traditional mediation procedure, unlike a courtroom, the parties in a dispute are the main actors. Proxies are merely helpers (albeit playing a very important role, especially in the final stage when the mediation arrangements between the parties are verified and written down) and they often take part in a mediation process only indirectly.

Under the DLBA, a party to a mediation process will be able to exercise legal remedies against mediation arrangements and appeal against them before the Voivodeship Administrative Court. This seems to be in contradiction to the essence of mediation, because a party can reject a portion or all of the agreement reached with a public administration institution. On the other hand the aforesaid proposal enables parties to eliminate possible faults and errors in the arrangements and the resulting verdicts.

As regards institutional effectiveness, the all-important provisions of the DLBA are those regarding mediation fees. Under the existing draft, the cost of mediation is covered by the party initiating the process (applicant) or all parties in a dispute (when an agreement is reached). Another possible solution would be to charge the public administration (which is in line with the new Tax Ordinance that is being drafted).

Furthermore, in keeping with the spirit of a “dialogue” between public administration and business, the DLBA proposes a provision whereby the applicant is notified that it is not eligible for obtaining a decision regarding instigation of proceedings. The idea itself appears interesting from the entrepreneur’s perspective, although we cannot be entirely sure whether and to what extent it will differ from the existing provisions regarding a call for removal of formal defects.

It also seems that the relevant information (and notification on the party’s right to comment on the evidence, materials gathered and demands made) is provided too late which can prolong cases before the first-instance administrative bodies.

It is very important for entrepreneurs to be given more time for completion of requests for a decision. Today, the unreasonable timeframes are the main problem for businesses, especially foreign ones.

Establishment of a more open line of communication between entrepreneurs and public administration, which should play an ancillary (99%) rather than enforcement (1%) role, is all very well. However, to ensure effective regulation in this respect, lawmakers have to be careful not to create defunct laws such as the provisions on mediation in the Act on Proceedings before Administrative Courts.

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