The Mediation Act and what it specifically brings for parties before filing a lawsuit

Mediation is not always mandatory, but in certain matters it becomes procedurally important

The new Mediation Act does not introduce a general obligation to mediate before every lawsuit. Its practical importance is narrower, but very specific: namely, before initiating civil proceedings arising from probate proceedings and before initiating civil proceedings for damages in small-value disputes, the parties are required to attempt to resolve the dispute through mediation. This does not mean that they must conclude a settlement. The Act requires an attempt, that is, participation in the prescribed preliminary step before filing a lawsuit.

When the parties are nevertheless not required to attempt mediation

The exceptions are important because they directly affect the decision whether a lawsuit may be filed immediately. The duty to attempt mediation does not exist in labour disputes and insurance disputes, even though such matters might otherwise fall within the stated categories. The duty also does not exist where a special regulation prescribes a time limit for filing a lawsuit, where the Republic of Croatia is a party to the dispute, where due to violence it is not reasonable to expect an amicable resolution, where a party, even after contacting the National Centre, cannot obtain the address of the opposing party, where the National Centre does not issue an invitation to an informational meeting within the prescribed time limit, or where a party has not been duly invited

What a party must do in order to fulfil the duty

The Act precisely determines when a party is deemed to have fulfilled the duty to attempt mediation. This duty is fulfilled if the party attended the informational meeting and the opposing party refused to attend or failed to attend without justification; if the opposing party was absent for justified reasons; if the party presented its claims and objections at the meeting and listened to the mediator’s explanation; or if the mediation between the parties was unsuccessfully concluded. The National Centre then issues a certificate confirming fulfilment of the duty or, in certain cases, a certificate stating that the duty does not exist. These certificates have the status of a public document. Before invoking this obligation in a specific matter, the transitional rule must also be checked: until the adoption of the ordinance on certificate forms, parties are not yet required to attempt to resolve the dispute through mediation in the stated matters.

Exemption from court fees after unsuccessful mediation

One of the most specific benefits for a party is the exemption from payment of the court fee on the lawsuit. If the lawsuit is filed after unsuccessfully completed mediation, the party filing the lawsuit does not pay the court fee on the lawsuit. This is practically important because mediation, even when it does not end in a settlement, can reduce the initial cost of initiating civil proceedings.

A settlement reached in mediation may be an enforceable instrument

A settlement concluded in mediation binds the parties that concluded it. More importantly, the settlement may have the status of an enforceable instrument if it establishes a specific obligation to perform an act regarding which the parties may settle and if it contains the debtor’s declaration of direct consent to enforcement, that is, an enforceability clause. This means that the settlement need not remain merely a private agreement, but may serve as the basis for direct enforcement after the obligation becomes due. Enforcement may nevertheless be refused if the conclusion of the settlement is not permitted, if the settlement is contrary to public order, or if its content is unenforceable or impossible

What from mediation may be used as evidence

The Act specifically protects the confidentiality of mediation. In subsequent court, arbitral or other proceedings, as a rule, it is not permitted to use the fact that one party proposed or accepted mediation, statements and proposals made in mediation, admissions that are not part of the settlement, documents prepared exclusively for mediation, willingness to accept a proposal, and other proposals from mediation. Exceptions exist where fulfilment of the duty to attempt mediation is being proven, where this is required by law for the protection of public order, or where the evidence is necessary for the implementation or enforcement of the settlement. Also important is the rule that evidence which is otherwise admissible does not become inadmissible merely because it was used in mediation.

Effect on limitation periods, deadlines and costs

Mediation should not place a party in a worse procedural position due to the passage of time. The Act therefore provides that by choosing mediation the parties do not lose the possibility of initiating court, arbitral or other proceedings due to the expiry of a limitation or preclusive period. The limitation period does not run during the duration of the informational meeting and mediation, and if a special regulation prescribes a time limit for filing a lawsuit, that time limit also does not run while the informational meeting and mediation are ongoing. Costs are regulated separately, namely, unless the parties have agreed otherwise, each party bears its own costs, while the costs of mediation and the informational meeting are borne in equal shares, or in accordance with a special law or the rules of the mediation institution. The costs of the informational meeting and of mediation that did not end in a settlement are included in litigation costs. The strictest consequence is the loss of the right to reimbursement of the costs of court proceedings for a party that has not fulfilled the statutory duty to attempt mediation, regardless of the outcome of the dispute.

Cross-border disputes

The Act also applies to cross-border disputes in civil and commercial matters. A cross-border dispute generally exists where one party has its domicile or habitual residence in one Member State of the European Union and the other party does not have it there at the time when the relevant basis for mediation arose. Tax, customs and administrative disputes, as well as disputes concerning state liability for acts or omissions in the exercise of public authority, are not covered by this regime. It is particularly important that a Croatian court may recognise and enforce a written settlement reached through mediation in another Member State if that state, under its own regulations, enables such a settlement to be declared enforceable. For commercial matters, the Commercial Court in Zagreb has jurisdiction, and for other matters, the County Court in Zagreb has jurisdiction.

Conclusion

The Mediation Act most significantly changes the preparation for initiating certain civil proceedings. Before filing a lawsuit, it is necessary to check whether the dispute falls within the group of matters in which a prior attempt at mediation is required, whether any exception exists, whether the duty to attempt mediation has been fulfilled, and whether there is an appropriate certificate from the National Centre. For parties, the exemption from court fees after unsuccessful mediation, the possibility that a settlement may be enforceable, the protection of confidentiality of statements and evidence from mediation, and the suspension of limitation periods and deadlines are particularly important. Although the Act prescribes a mandatory attempt at mediation before certain civil proceedings, under the transitional rule that obligation begins to apply only after the adoption of the prescribed ordinances