Aleš Zalar: “We can offer dispute resolution tailored to the needs of the parties”

JUVE Patent: You recently launched the public consultation process on the mediation rules, the consultation for arbitration is soon to follow. How much progress has been made in setting up the PMAC?

Aleš Zalar: The whole regulatory framework for the PMAC needs to be adopted by the UPC’s Administrative Committee. Recently, the PMAC’s Expert Committee adopted regulations on selection criteria and code of conduct for mediators and arbitrators. We will now submit these four documents to the Administrative Committee by 11 June so that they could hopefully be adopted at the next meeting on 2 July in Luxembourg.

When the Administrative Committee adopts these, the next step in the process would be that the PMAC starts a public call for applications. Already we are seeing a lot of interest to serve as neutrals, so we expect many applications. This will take some time as each applicant must undergo a review – not just by me as director, but also by the whole Expert Committee.

According to what criteria are the mediators and arbitrators selected?

We expect the PMAC to have a list of accredited mediators and arbitrators, whose nationalities are preferably from all 18 UPC member states. Furthermore, we would like to include individuals from all other jurisdictions we are targeting, and these are all over the world: the US, China, Japan, Korea, South America, and India.

“The PMAC would be ready to start in early 2026”

All will have to comply with the requirements laid down in the regulation on selection criteria. Our plan is to complete this process by the end of this year. Then the PMAC would be ready to start operating in early 2026.

Could you tell us about the PMAC’s case management system?

Currently it is under construction. The PMAC benefits from the fact that the UPC is building a new case management system. Even though both systems will operate independently, the PMAC system can be constructed based on the new UPC system. We can take advantage of the experiences made and adapt the design to the PMAC environment. For this we will cooperate with the IT teams of the UPC and the EPO. We expect to have our CMS finalised and ready for testing in early autumn.

What will be the scope of the PMAC’s arbitral awards and mediated settlements?

PMAC is a dispute resolution provider like others, with no territorial limits in its scope of competence. We expect our awards or mediated settlements will be relevant for parties all over the world. Approximately 50% of disputants or litigants turning to PMAC will be companies based outside the EU.

“The PMAC could also deal with trademark and trade secret disputes, or even determination of damages”

The PMAC will be a global player competent for disputes related to European patents or patents with a unitary effect. It could therefore also deal with national patents or other IP disputes such as trademarks and trade secrets, Community designs or even more classic economic issues such as the determination of damages. This is why, in recruiting the mediators and arbitrators, we are also looking for experts in classic business and finance, as well as economic and technical issues relevant in these kinds of disputes.

In which industries could arbitration or mediation be appealing?

I believe big players in the tech or biopharmaceutical industry who have multijurisdictional disputes concerning European patents will test the PMAC first. Very likely they will start with mediation as this is non-binding and they can withdraw without any ill effect. If they are satisfied with the quality of the mediation and mediated settlements, I hope that they will also submit disputes to arbitration as well.

“Parties could turn directly to the PMAC for the determination of FRAND terms and rates”

So far, all experts I have spoken to agree that the PMAC could be particularly attractive for SEP and FRAND disputes. These might be via referral from the UPC or parties could turn directly to the PMAC and ask for the determination of FRAND terms and rates. We have strived to design the procedural rules in such a way that parties can at least consider whether they might benefit from proceedings at the PMAC.

One example is confidentiality – one of the most important features of arbitration and mediation. We envisage further additional provisions concerning confidentiality for FRAND disputes. In these cases you often not only have plaintiff and defendant, but also third-party issues due to licensing agreements, which raise the question as to what extent something should or should not be revealed.

In disputes over damages, for example, parties might see an advantage in the confidentiality of arbitration. At the PMAC they can also choose an arbitrator who might have greater experience in a special technical field than a judge at the UPC or a national court.

There are already many well-established global arbitration and mediation centres that deal with patent and licensing issues. How will the PMAC compete?

Of course, PMAC is a start-up and we will have to gain the reputation and the trust and confidence in our services. However, we do have some advantages. On the one hand it is part of the overall UPC system and on the other hand, PMAC is also a classic independent dispute resolution provider like the ICC, the DIS or SIAC. Thus, we combine both approaches: court-related and private dispute resolution. We expect most cases in the first years of operation will be referred by the UPC and this is a competitive advantage for the PMAC.

“PMAC will be part of the UPC system but also an independent dispute resolution provider”

The advantage for disputants around the globe is our system of enforcement of the mediated settlements and arbitral awards. The PMAC will offer parties the choice of enforcement regime. They could ask the UPC to convert the mediated settlement or consent award into a court ruling and enforce it like any other UPC court decision. This can be a big advantage when targeting EU member states. But the parties can also choose to have the arbitral award recognised and enforced based on the New York Convention, for example.

Parties can also select the seat of arbitration, which determines the court’s jurisdiction, and this can be anywhere in the world. Unless otherwise agreed by the parties the seat shall be determined by the arbitral tribunal. A case at the PMAC does not necessarily mean that the seat of arbitration is either in Ljubljana or Lisbon, the institutional seats of the PMAC or within the territory of any other UPC member state. Due to the importance of this issue we’ll invite stakeholders to present their opinions in a public consultation process.

In many countries, judges actively encourage parties to consider alternative dispute resolution. Will this be the case at the UPC?

The UPC rules of procedure already include some mechanisms which promote the use of ADR, such as the case management powers of judges or reimbursement of court fees. In addition, the PMAC offers many incentives to make the process quick, cost-effective and user-friendly. For example, we offer expert advice to the UPC litigants on the available alternatives to litigation. We provide this initial advice free of charge in an online session.

“Parties can ask a neutral expert to assess the case and evaluate their chances of prevailing”

We also offer an early neutral evaluation process. This is particularly attractive for parties who already have pending litigation in court or who are considering whether to sue. They ask a neutral expert to assess the case and give an evaluation of their chances at prevailing. This kind of evaluation process is not very common in continental Europe but well developed in the US.

What other ADR processes will be available at PMAC?

We offer a wide range of ADR processes, such as facilitative mediation, an early neutral evaluation and non-binding arbitration as an advisory process, as well as adjudicative processes and hybrid or mix-mode processes. We can also assist disputants in designing and drafting appropriate dispute resolution clauses or agreements when a dispute has already arisen.

Arbitration is usually an adjudicative process, which ends with a final binding and enforceable award. However, you could have also non-binding arbitration, in which you receive the award, but it has the status of a recommendation only.

Both online and in-person proceedings are possible, but we offer a fee reduction if parties opt for video proceedings. SMEs generally pay significantly reduced fees at the PMAC to make alternative dispute resolution more accessible.

“I like to compare the PMAC to a restaurant offering a menu of dispute resolution processes”

The process offers great flexibility for the parties and is designed according to their needs. They can select an arbitrator or mediator from the compiled list or chose a neutral expert who is not on the PMAC list but meets the basic criteria from the regulation on selection of neutrals. They can decide on the seat of arbitration, the place of hearings – in person or online – and they have a wide range of ADR processes to choose from.

I like to compare the PMAC to a restaurant, which offers a menu of dispute resolution processes. In a restaurant, guests often ask the waiter if they can have a meal prepared according to their specific needs or preferences. With our so-called multi-door dispute resolution policy, the PMAC can offer this kind of specific advice and propose dispute resolution tailored to the needs of the parties.