PhD Ewelina Stobiecka, Coordinator of the International Mediation Centre
2ND CASE UNDER MEDIATION
PARTIES:
– a developer
– an architectural design studio
AMOUNT IN DISPUTE: PLN 1 200 000
SHORT DESCRIPTION OF THE MATTER, INCLUDING THE REACHED SETTLEMENT
The parties concluded an Agreement on the fit–out and design work of a new retail project i.e. shopping centre in a Polish city. The value of the agreement in relation to the whole shopping centre totalled PLN 6 000 000.
Due to the macro–economic situation, the developer had to stop the investment process and terminate the agreements with the contractor. The contractor i.e. the architectural design studio had already generated some costs as a result of the performed design work which was valued at PLN 1 200 000.
The architectural design studio demanded payment for the already performed work, however the developer claimed that the work had not been finished and that the whole investment had to be stopped because of the poor financial situation. The parties were in deadlock.
The agreement between the parties for disputes provided arbitration, which, after the initial calculations, would cause additional costs amounting to approximately USD 60 000. An arbitration clause, included in the agreement, blocked the parties before claiming their rights in a court proceeding. Therefore the parties decided to use out of court dispute resolution methods namely mediation.
As a result of the mediation proceeding, the parties reached a settlement in which they agreed that the developer will pay a substantial portion of the remuneration for the performed work to the architectural design studio and for the architectural design studio to reduce some additional costs and interest related to this claim. The due payments were planned according to a schedule convenient for both parties and assuring that the developer who was in a difficult financial situation could fulfill its liabilities.
The parties decided to confirm the settlement in court therefore they filed a petition for the issuance of a summons to a conciliation hearing which cost just PLN 40. The hearing took place within a few days, during which the parties officially approved the settlement.
This case is also an example of how mediation effectively reduces the costs of a court proceeding. The cost of this arbitration proceeding which was USD 60 000 was reduced to PLN 40 which was paid in relation to the court motion for the court hearing during which the settlement was approved.