ARMENIA Law and Practice Contributed by: Mesrop Manukyan, Maria Petrosyan, Grigor Grigoryan and Anahit Sargsyan, MB Legal
ment Service if one side fails to comply with its terms. The courts strongly encourage the use of ADR and often stay litigation for several months to allow parties time to explore these alternatives. 4.4 Timing of ADR ADR can take place at any time, including before a lawsuit is filed, during the preliminary stages of litiga- tion, or even while an appeal is pending. Parties often initiate ADR early to avoid the costs and delays of a full trial. Judges are also authorised to suggest media- tion to the parties during the preliminary hearing if they believe there is a high probability of settlement. Significantly, engaging in a formal mediation process typically suspends the running of limitation periods. This protects the parties’ legal rights, ensuring that they do not lose the ability to file a lawsuit if the ADR process does not result in a settlement. This suspen- sion is a key legal incentive for parties to engage in ADR in good faith. 4.5 Confidentiality Mediation and arbitration in Armenia are protected by a strict rule of confidentiality. Anything said, any admission made or any document prepared specifi- cally for the mediation cannot be used as evidence in subsequent court or arbitration proceedings. Media- tors are prohibited from acting as witnesses in the same case and cannot be compelled to disclose infor- mation from the mediation sessions. There are only very limited exceptions to this confiden- tiality, such as when disclosure is necessary to pre- vent a crime or to protect the best interests of a child. This environment of absolute privacy is designed to allow parties to speak freely and explore settlement options without fear that their statements will be used against them if the negotiations fail. Similarly, arbitral proceedings are confidential and closed by default under the Law on Commercial Arbitration. Unless otherwise agreed by the parties or required by law, no documents, evidence or state- ments made during the arbitration can be shared with third parties or state authorities. Disclosure is permit- ted only when it is necessary for state court proceed- ings related to the recognition, enforcement or setting-
aside of an arbitral award. Furthermore, maintaining the confidentiality of all information regarding the arbi- tration is a core ethical principle for arbitrators. 4.6 Costs The costs associated with mediation in Armenia pri- marily consist of the mediator’s fees and any admin- istrative expenses related to the process. As a general rule, these costs are shared equally between the par- ties unless they agree to a different allocation in writ- ing. In cases of mandatory mediation, the government sets fixed rates for the first two hours to ensure acces- sibility, though parties can mutually agree to higher rates. Furthermore, insolvent individuals who meet specific monthly income and property thresholds are exempt from paying fees for these initial two hours of mandatory mediation. In arbitration, the final award must explicitly state the total amount of arbitral costs and how they are distrib- uted among the parties. Litigants have the freedom to agree on a specific cost-sharing arrangement, but in the absence of such an agreement the tribunal has the authority to determine the allocation. For institutional arbitration, fees are typically determined by the institu- tion’s predefined fee schedules, which often consider the value of the claim and the complexity of the dis- pute. Notably, if a party refuses to participate in court- ordered mediation without a valid reason, they may be penalised by being ordered to pay the entirety of the litigation costs, regardless of the trial’s final outcome. 4.7 Courts and ADR Armenian courts have a positive and supportive atti- tude towards ADR. Judges are legally required to inform litigants about the possibility of mediation and to explain its benefits during the initial stages of a case. The court system views ADR not as a threat to its jurisdiction but as an essential tool for judicial efficiency. Courts also facilitate ADR by staying proceedings and extending procedural deadlines to give mediation a chance to succeed. Furthermore, the streamlined pro- cess for judicially confirming mediated settlements ensures that the outcome of ADR is just as robust and enforceable as a court-issued verdict. This insti-
18 CHAMBERS.COM
Powered by FlippingBook