Sioufas & Associates Law Firm | Konstantinos Konstantellos | Panagiota Kathareiou | Ioanna Sofrona
This article is an extract from Lexology Panoramic Next: Dispute Resolution 2024. Click here for the full guide.
1. What are the most popular dispute resolution methods for clients in your jurisdiction? Is there a clear preference for a particular method in commercial disputes? What is the balance between litigation and arbitration? What are the advantages and disadvantages of the most popular dispute resolution methods?
The methods of dispute resolution provided for by the Greek framework are state judicial proceedings, mediation and arbitration, while the possibility of requesting a judge’s conciliatory intervention is also envisaged by law, but it is rarely sought in practice. Recourse to the state courts remains the most popular dispute resolution method for litigants of civil and commercial disputes, yet the traditional judicial mechanisms largely turn out to be lengthy and expensive. Indeed, the unreasonable duration of court proceedings before Greek courts has led to repeated condemnations of the Greek state by the European Commission for breaching the right ‘to a fair trial’ of article 6 ECHR. The need for a less burdensome judicial system, which would be also aligned with European legislation in force regarding alternative dispute resolution, led to the introduction of (voluntary) mediation process in national law in 2010 as regards civil and commercial disputes. In 2019 a mandatory mediation session was even provided for by law, before the court hearing, for certain conflicts where the subject matter proved complicated. Still, the response remains limited. However, parties engaged in strictly regulated activities such as employers and suppliers of consumer goods are highly inclined to opt for conflict resolution due to the cost-effective, speedy and, mostly, confidential nature of the mediation process.
Mediation may also constitute the prelude to arbitration proceedings, which are commonly applied to resolve commercial disputes but are also employed for sports, labour and consumer disputes. In 1999, Greece incorporated the UNCITRAL Model Law on International Commercial Arbitration, while its amendments were recently introduced in the domestic framework under Law No 5016/2023. Arbitration proceedings meet all the criteria of a ‘due and fair process’ for the parties involved, while the formulation of the arbitration agreement leaves the choice of the applicable law, of the place of arbitration and the arbitrators’ selection process to the parties. Ultimately, it is the very nature of arbitration proceedings as a privately designed and tailored dispute–resolution platform that makes it so attractive for the settlement of cross-border disputes over civil and commercial matters (and for disputes over public procurements.)
2. Are there any recent trends in the formulation of applicable law clauses and dispute resolution clauses in your jurisdiction? What is contributing to those trends? How is the legal profession in your jurisdiction keeping up with these trends and clients’ preferences? What effect has Brexit had on choice of law and jurisdiction clauses?
In domestic disputes it is traditionally agreed that Greek law is the applicable law and the courts of general jurisdiction, or, less frequently, Greek arbitration courts, are competent. Recent legislation has attempted to direct parties more towards dispute resolution through mediation but the prevailing trend remains to resolve disputes through the courts.
As far as international disputes are concerned, Greek trends generally follow international trends, while the respective clauses agreed between Greek companies and their international counterparties regarding applicable law and dispute resolution vary, on a case-by-case basis and depending on each foreign counterparty and its country of origin, without any uniform dominant trend being discernible.
The international contractual relations of Greek companies are handled by their specialised in-house lawyers, who are familiar with the particularities and needs of their company and, consequently, there are no substantial developments for the legal profession as regards the need to adapt to new trends in international dispute resolution.
As to the influence of Brexit, international transactions between the parties of the two countries usually provide for the application of English law and jurisdiction of English courts, of general jurisdiction or arbitration and, therefore, Brexit did not change much in this respect, except possibly leading to an increase in arbitration clauses due to the legal complications arising from Brexit. In the rest of the cases, where the application of Greek law before Greek courts has been agreed, Brexit has not had a material influence, as the Greek Code of Civil Procedure is compatible with Regulation Brussels Ia, so that even after Brexit, the Greek courts continue to apply, essentially, the same rules of submitting disputes to their jurisdiction, while as regards the applicable law, EU Regulation Rome I continues to apply.
3. How competitive is the legal market in commercial contentious matters in your jurisdiction? Have there been recent changes affecting disputes lawyers in your jurisdiction? How is the trend towards ‘niche’ or specialist litigation firms reflected in your jurisdiction?
The Greek legal market is extremely competitive, especially in Athens. In 2024 Greece has a ratio of 385 active lawyers per 100,000 inhabitants (approximately 40,000 active lawyers in total), with about half of them based in Athens.
Most lawyers in Greece who deal with civil and commercial litigation are freelancers or operate with small law firms and practice general law, without specialisation, except for employment litigation, where, as a rule, specialised firms or individual lawyers tend to operate.
There are not many large law firms that can handle the large volume of legal cases that bigger commercial firms have, and there are even fewer large niche law firms that, because of their small number, receive a large share of the niche legal market.
Recent changes in procedural law and the structure of the Greek courts have created the need for larger legal formations that can handle the increased organisational needs that these changes have caused. At the same time, the continuing integration of EU legislation into domestic legislation, which now requires more specialised legal knowledge and continuous education, has created the need for more specialised law firms.
In conclusion, it would be safe to say that the model of the Greek legal market is rapidly transforming, from the traditional model of the individual lawyer – freelancer, to the partnership of lawyers, in larger, more organised and more specialised law firm formations.
4. What have been the most significant (by value or impact) recent court cases and litigation topics in your jurisdiction?
A landmark decision of the Supreme Court in its plenary session was No 1/2023, published on 16/02/2023. The said decision resolved an issue that had arisen with the NPLs servicers related to the legitimation of their capacity to act under their own name but on behalf of the international funds that had previously invested enormous sums of capital to purchase NPLs from credit institutions.
The issuance of the decision ended a process of a significant number of objections raised against the funds by the debtors, questioning the servicers’ capacity to represent the funds in courts and carry out procedural acts, including auctions of the collateral assets securing the sold debts, meanwhile, the auctions had been frozen.
Another crucial decision of the last three-year period time is Supreme Court’s 2017/2022 decision regarding the benefit of extraterritoriality not being in force in the case where the alleged beneficiary acts as fiscus and not by virtue of its political authority (imperium). More specifically, the court judged that no benefit of extraterritoriality applies in case where the alleged beneficiary requests compensation during a real estate property’s expropriation.
5. What are clients’ attitudes towards litigation in your national courts? How do clients perceive the cost, duration and the certainty of the legal process? How does this compare with attitudes to arbitral proceedings in your jurisdiction?
An independent but slow-witted justice does not fulfil its mission, because it does not resolve the disputes that come before it in timely fashion, and this is an obstacle to social stability and economic development. Thus, the judicial system and the speed with which it responds to the volume of litigation it receives is now one of the main factors in the development of the judicial system, which the citizen considers.
In terms of costs, Greek lawyers’ fees are not prohibitive compared to other EU countries.
As regards the duration of proceedings, the average duration of most first instances cases is around two and a half years and on appeal between two and three years.
Mediation, which offers new possibilities for dispute resolution, essentially contributing to relieving the courts of the burden of cases and resulting in faster administration of justice, has been well received.
6. Discuss any notable recent or upcoming reforms or initiatives affecting court proceedings in your jurisdiction (including any changes as a result of the covid-19 pandemic).
The poor performance of state institutions in the digital era, including the Greek judicial system as a whole, necessitated extensive interventions for the modernisation of the interaction model between the state and its citizens. The Strategy for Digital Justice was inaugurated in 2020 and, at the time, the reforms that it brought about aimed to minimise undue bureaucracy while successfully addressing social-distancing issues created by the covid-19 pandemic. The first step in the digitisation of judicial proceedings involved the development of the Integrated Management System of Judicial Cases for Civil and Criminal Justice, which enables access to case-related information while safeguarding sensitive personal data in accordance with GDPR. The major innovations of the new system include the digital filing of applications before courts, the digital collection of court-generated certificates for individuals and legal entities (such as the solvency certificate, the criminal record certificate, the certificate for non- publication of a will and the certificate of non-waiver of inheritance), the digitisation of court decisions, the remote follow-up of the stage of pending civil and criminal cases and the digitisation of Real Estate Cadastres’ databases. Future interventions provide for the interconnection of the integrated system with operational systems of other public sector bodies, including tax authorities. The Digital Strategy aims to establish a network to provide videoconferencing services in courts and prisons in the country, covering the needs of civil and criminal procedure, investigative proceedings and requests for judicial assistance.
Additionally, recently enacted Law No. 5108/2024 aims to address the fragmentation of judicial services and to combat undue delays in the issuance of court decisions. According to its provisions, the national Magistrates’ Courts will be abolished and the first instance jurisdiction will be consolidated and exclusively entrusted to the already existing (Single – Member) First Instance Courts of the country. The implementation of Law No. 5108/2024 is in its initial stage. It remains to be seen whether it will achieve its objective of a more rational and efficient architecture of the Greek judicial system.
7. What have been the most significant (by value or impact) recent trends in arbitral proceedings in your jurisdiction?
With the exception of the enactment of the recent Law 5016/2023 on International Commercial Arbitration, which established the new framework for the conduct of international arbitrations in Greece, Greek legislation and jurisprudence in recent years present stability with no substantial new trends in arbitration.
The last significant issue that was addressed and resolved by Greek jurisprudence through a series of decisions of the Supreme Court from 2015 to 2022, was the question whether for the annulment of an arbitral award by the Greek courts, provided for in the Greek Code of Civil Procedure and the Greek Law on International Commercial Arbitration in case of a conflict of the arbitral award to ‘public order’ (Greek or international, depending on the applicable legislation), the concept of ‘conflict to public order’ should be interpreted broadly, encompassing all cases in which the decision is contrary to mandatory provisions, even if they are intended to protect private interests, or more narrowly, covering only cases where the decision contravenes mandatory provisions laid down for the protection of the public interest. The Supreme Court ruled in favour of the second view, which has since become consolidated, now interpreting the new provisions of Law 5016/2023 on International Commercial Arbitration.
8. What are the most significant recent developments in arbitration in your jurisdiction?
The most significant development in arbitration proceedings in Greece resulted from the enactment of the recent Law 5016/2023 on International Commercial Arbitration, which modernised the previously applicable framework by introducing the amendments brought by the 2006 UNCITRAL Model Law on International Commercial Arbitration and additional innovations, setting the necessary standards of a modern arbitration forum.
The aim of the new law is to attract international arbitrations in Greece, as major companies in sectors such as construction, energy, industry and shipping, as well as multinational companies in general, have established arbitration to resolve their disputes.
Obviously, the new regulations will not leave the Greek commercial and legal market unaffected, as they provide incentives for Greek companies to resort to international arbitration to resolve their international disputes, something that has not been particularly common so far.
9. How popular is ADR (eg, mediation, expert negotiation) as an alternative to litigation and arbitration in your jurisdiction? What are the current ADR trends? Do particular commercial sectors prefer or avoid ADR? Why?
Traditionally in Greece ADR has not been widespread or popular, although in recent years there has been a relative shift away from the tendency to resolve all disputes in court.
In particular, the institution of mediation until recently, although provided for in various forms, was practically non-existent, with very few cases being subject to mediation and even fewer being resolved through it.
This changed to some extent in 2019, when Law 4640/2019 was passed, which, on the one hand, made the mediation process more practical and, on the other hand, made it mandatory to attempt to resolve certain disputes through mediation, namely family disputes and disputes with a value of more than €30,000. Although this law, on the one hand, has caused more bureaucratic procedures, which to some extent complicate the process of judicial resolution of the dispute, on the other hand, it has led the opposing parties to a process of dialogue through the mediation procedure provided for, which now in many cases leads to the resolution of disputes in a conciliatory manner. Nevertheless, dispute resolution through mediation remains the exception, while in cases where attempted mediation is not mandatory by law, submission to voluntary mediation is extremely rare.
The other ADR procedure applied in Greece, but again to a limited extent, is arbitration. Due to the structure of the Greek economy, which is largely based on small and medium-sized enterprises that usually cannot afford the increased costs required for arbitration, contract clauses for recourse to arbitration are not common and are mainly found in contracts between the few largest Greek companies or in international contracts with foreign counterparties. The commercial sectors that usually provide for arbitration as a method of dispute resolution are companies in the construction sector and companies engaged in international trade.
As regards the other forms of ADR, except for certain procedures based on Community legislation (eg, ADR for consumer disputes), none are practically applied in Greece.
In conclusion, while ADR procedures have gained ground in Greece against litigation compared to the past, they remain an exception and this is unlikely to be reversed in the short term.
10. What is the position in relation to litigation funding in your jurisdiction? Is funding available? Have there been any significant developments in this area in your jurisdiction?
In the Greek legal order, the institution of third-party funding remains unknown and it is not yet confirmed whether there is a question of compatibility.
However, if a comparison is attempted, the trail contractor appears remarkably close to the specific mechanism.
If we look for a common element between third-party funding and trial contracting, it is that both funding mechanisms cover court or arbitration costs of different persons, in relation to the party in dispute claim. Moreover, in both cases, the positive outcome of the litigation is a precondition for the claim to be asserted by the funder against the funded party. Concerning disputes, the contractor agreement is concluded exclusively between the lawyer and the client and expresses the relationship of trust and confidence between the two persons. Third-party funding is concluded between a third-party funder, which may be a company, and the party making the claim who will to be awarded. However, the most significant difference appears to be the different mission of their respective scopes. Litigation contracting is a form of statutory attorney’s fees for providing their services. This is not the case with third-party funding, however, which seems more akin to a form of investment, in which the funder aims to profit, offsetting the risks.
The Inside Track
What is the most interesting dispute you have worked on recently and why?
We represented a debt servicing company active in the servicing management of loans and credits receivables in two cases of major importance.
In the first case, our scope of work was the client’s representation before the Romanian Courts for the collection of claims against a significant debtor. Following an investigation, we located the client’s debtor property in Romania and imposed a seizure of its assets following EU law. The case proved challenging due to the high amount of the claim (€25 million) and the application of EU, Greek and Romanian law. In the second case, we represented the client before the Athens Court of Appeals for the defence of an appeal by the debtors/owners of a hotel complex seeking the annulment of four loan agreements alleging a client’s abusive behaviour. The court decision rejected the lawsuit and enabled the client to satisfy its claim for €20 million, considering the specific aspects of the debtors’ operational structure.
What do you consider to have been the most significant legal development or change in your jurisdiction of the past 10 years?
The recent amendments of the Code of Civil Procedure target the acceleration and the simplification of the relevant process (eg, the restriction of the orality principle and the optimum use of the affidavits as evidence in the judicial procedure) herald a significant change in the procedural scene in Greece. Furthermore, the enforcement procedure has been recently subject to structural amendments, such as the abolition and/or the restriction of certain legal remedies’ exercise resulting in process delays and the restriction of both the Greek state and the social security fund’s ranking privilege in the distribution of the auction’s proceeds.
What key changes do you foresee in relation to dispute resolution in the near future arising out of technological changes?
Artificial Intelligence will play a crucial role in the acceleration of justice‘s execution, particularly in cases that are receptive to further automation, such as the payment orders’ issuance or the non-contentious procedures (eg, succession certificate’s issuance).
This article was originally published on Lexology and you can access the original version here
