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GREECE: An Introduction to Dispute Resolution

Contributors:
Ioannis Kaptanis
Manolis Kasotakis
Athina Xinopoulou
Koutalidis Law Firm Logo
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The most notable development affecting the area of dispute resolution in Greece for the last year is, of course, the outbreak of the COVID-19 pandemic. The pandemic exploded at a timepoint when Greece had just recovered from the long-lasting consequences of the previous debt crisis and the economy was expected to “flourish”, with the tourism revenues as spearhead. However, all projections were overturned under the standstill caused by the health crisis. The pandemic has severely affected the operation of most business sectors, in particular tourism, the travel sector, entertainment, catering and most sectors of retail business. The irregular and unprecedented situation forced the government to intervene by introducing two kinds of measures: restrictions in the direction of social distancing and mitigation provisions supporting the sectors more heavily affected. State intervention as well as the pandemic itself have affected the performance of contracts in almost all fields of business, generating a special category of disputes.

More specifically, although the legislature has introduced exceptional provisions for certain types of contracts - mostly leases, employment contracts, and seasonal services contracts - a storm of claims is expected to arise. After all, most of the parties who have been suddenly found entangled in non-profitable agreements had themselves outstanding obligations to perform. Therefore, parties in contracts which were not subject of the exceptional provisions are expected to request from the courts either their release from the obligation to perform or the adjustment of the contract. The same is expected to happen as regards cases where the exceptional provisions do not cover sufficiently (so as to satisfy the general provisions of the law) the losses that were suffered. In cases where special provisions have been put in place, the courts will have to examine whether the remedies granted by such provisions are sufficient or whether (and to what extent) recourse to the general provisions of law is appropriate. The courts will also have to re-examine, in light of the pandemic, the notions of force majeure, inability to perform, overturn of the underlying basis of the contract or disturbance of the contractual equilibrium. The aforementioned impediments of performance are expected to be raised mostly by parties to contracts which were concluded before the outbreak of the pandemic; however, Greek case law and theory do not exclude per se the invocation of said objections even for obligations undertaken during the crisis. In view of the above, a whole new category of disputes reflecting the effect of the pandemic on contracts of all kinds is expected to be brought before the courts.

A similar situation will probably be formed in relation to arbitral proceedings as well. Although arbitration clauses are included in more sophisticated contracts, which most of the time include express provisions on force majeure events and on material adverse change of circumstances, the occurrence as well as the extent of the consequences caused by COVID-19 will probably raise issues of interpretation of such clauses. Therefore, the triggering of arbitration clauses and a relevant increase in arbitral proceedings are also to be expected.

Apart from the issues arising on a substantive law level, the pandemic has severely affected the operation of justice on an institutional level as well. From a procedural point of view, the necessary social distancing has led to the introduction of measures for the postponement of the operation of the ordinary courts for non-urgent cases. The operation of the courts has been suspended from March until June 2020 and then again from November 2020 until now (April 2021), with limited exceptions. However, since every cloud has a silver lining, the situation formed by the pandemic and in particular the necessary restrictions in physical presence have accelerated in some aspects the digitalization of the judicial system. The most significant step in that direction was the introduction of the new Article 122A of the Code of Civil Procedure, giving the litigant parties the option to carry out the service of documents by electronic means, subject to meeting certain procedural requirements. In the same direction, legal practitioners have been “forced” to become more familiar with the - long available but not very popular - electronic submission of judicial documents addressed to the courts, while the courts have developed a service providing electronic copies of their decisions, as well as of the judicial documents submitted by the litigant parties. The Minister of Justice has also announced for the current year the digitalization of the hearing dockets, the introduction of remote witness testimonies through teleconference, as well as the adoption of provisions regarding the so-called e-divorce, i.e. the issuance of a divorce upon agreement of the spouses without their physical appearance before the court. However, the road to a more extended and efficient digitalization of the court proceedings remains long and hard, taking for example into account that unlike other countries, no initiative was taken for the introduction of remote hearings, possibly due to the lack of the necessary infrastructure.

On the other hand, arbitration proceedings were proved to be, as expected, much more flexible and ready to adjust to the conditions formed by the pandemic and the physical presence restrictions; arbitral tribunals continued to operate on a “business as usual” mode taking advantage of the technological instruments available, facilitating the conduct of remote hearings with the participation of tribunal members and counsels seated in their own offices around the world.

The disruption of the normal operation of the courts due to the moratorium period as well as the delays in court proceedings that are expected to occur due to the increased workload once their ordinary operation is restored may lead the parties to re-examine the alternative path of mediation. Although civil and commercial disputes may in principle be subject to mediation, provided that the parties have the power to dispose of the subject matter of the dispute in accordance with the provisions of substantive law, such alternative has not yet been very popular. The legislature has attempted to reinforce such opportunity with Law 4640/2019 providing that, prior to filing a lawsuit, the legal counsel representing their client before the court must inform the latter in writing of either the possibility of recourse to mediation for those cases for which mediation is optional, or alternatively, of the obligation to appeal to the mandatory initial session for those cases where mediation is obligatory, for example in family disputes or in cases where the object of the dispute exceeds the amount of EUR30,000. It remains to be seen whether the situation in justice which will be formed after the pandemic will turn mediation into an equivalent or at least into an appreciable alternative to the ordinary court proceedings.