A recent Court of Appeal decision has given rise to concern regarding the extent to which litigation privilege is available to protect an organisation’s internal deliberations on its settlement options in a dispute.
In WH Holding Ltd v E20 Stadium LLP  EWCA Civ 2652 (outlined here) the Court found that litigation privilege applies only to documents created for the dominant purpose of obtaining advice or information/evidence in relation to litigation, and not the conduct of litigation more broadly. As a result, the privilege did not apply to emails between a company’s Board members which had been prepared to discuss a commercial proposal for the settlement of a dispute.
The decision causes real practical difficulties for commercial parties, exposing an awkward gap in the protection afforded to documents prepared for the purpose of settling a dispute.
Maura McIntosh has published a post on Practical Law’s Dispute Resolution blog which considers the decision and its implications. Click here to read the post.
Hong Kong has published its long-awaited Code of Practice for third party funders and announced that amendments to the Arbitration Ordinance, which permit funding of Hong Kong arbitrations, will come fully into force on 1 February 2019. However, proposed amendments to the Mediation Ordinance (Cap. 620) regarding non-Hong Kong mediations, costs and disclosure of mediation communications have been deferred for further consultation.
The Department of Justice has announced that commencement of these New Mediation Ordinance provisions will be deferred to a future date following further deliberation at the Steering Committee on Mediation. The DoJ will continue to engage the mediation community and relevant shareholders, so that the New Mediation Ordinance provisions may be brought into operation as soon as practicable with the necessary code of practice to complement it. Continue reading
The Civil Justice Council’s ADR working group has released its final report on ADR and Civil Justice, following consultation on its interim report released last year. The broad mandate of the review was “to maintain the search for the right relationship between civil justice and ADR” and to promote debate over possible reforms.
The report includes various recommendations aimed at improving the awareness of ADR (both in the general public and in the professions/judiciary) and the availability of ADR (both in terms of funding/logistics and regulation of the professionals involved).
However the recommendations likely to be of most interest to users of the civil justice system in the short term are those that relate to Court/Government encouragement of ADR. In this regard:
- The report does not support blanket compulsion of ADR in the sense of requiring proof of ADR activity as an administrative precondition to any particular step in the litigation.
- It also rejects the introduction of mandatory Mediation Information and Advice Meetings (as used in the family courts) as a precondition to pursuing civil claims.
We are soon to have a new international regime for the enforcement of mediated settlement agreements.
The UN Convention on International Settlement Agreements Resulting from Mediation, which will be known as the Singapore Convention, was approved in June 2018 by UNCITRAL (the United Nations Commission on International Trade Law). It is expected to be open for signature from 1 August 2019 and will come into force upon ratification by at least three contracting States.
The Convention will oblige contracting States (except in specified limited circumstances) to recognise international settlement agreements resulting from mediation in commercial disputes, either to enforce the agreement or allow it to be invoked as a defence to a claim (that is, either as a sword or a shield).
It is hoped that the Singapore Convention will achieve for mediation what the New York Convention has for international arbitration, encouraging a greater global acceptance of mediation as a credible and reliable dispute resolution mechanism in international commerce.
For more detail on the Convention, and commentary on how likely it is to achieve that aim, see the article by Jan O’Neill (Professional Support Lawyer, London) recently published on the Practical Law Dispute Resolution Blog, here.
Further to our earlier post, the Singapore Convention has now been published. It will be signed in Singapore on 1 August 2019 and will come into effect six months after at least three states have ratified it.
The drafters’ goal is for the Singapore Convention to be for mediation what the New York Convention is for arbitration. That the Convention is potentially significant in terms of enforcement is clear. But it is also important in terms of elevating the status of international commercial mediation and lending greater credibility to the process. Much will depend on uptake, but with the New York Convention as a blueprint, the goal is to secure numerous signatory states at the outset.
The Convention will aid enforcement of mediated settlement agreements relating to international commercial disputes, being those where:
- at least two parties to the settlement agreement operate in different contracting states; or
- the state where the substantial part of the settlement agreement is to be performed is different to where the parties to the settlement conduct business; or
- the state where the settlement agreement is most closely connected is different to where the parties to the settlement conduct business.
The Convention carves out consumer, personal, household, family, inheritance and employment disputes from its jurisdiction.
There are various procedural requirements for the underlying settlement agreement to qualify for enforcement under the Convention. There are also grounds for refusing to grant relief listed in the Convention. These include the incapacity of the parties, invalidity of the settlement agreement, serious breach of mediator standards, mediator bias and public policy.
The Centre for Effective Dispute Resolution (CEDR) has released the results of its Mediation Audit 2018, based on a survey of practising mediators in the UK. (The results of parallel surveys of lawyer attitudes to mediation, and of US practitioners’ views, are to be published separately).
The audit is the eighth biennial survey CEDR has conducted in the last 16 years (in conjunction with the Civil Mediation Council). The 2018 audit received 336 responses from UK mediators.
While it is important to bear in mind the empirical limitations of such reviews based on survey responses from a sample of market participants, the audit does indicate a number of interesting trends in civil and commercial mediation in the UK. CEDR’s key findings from the responses include: Continue reading
On 26 June, at the 51st session of UNCITRAL, final drafts for a Convention on the Enforcement of Mediation Settlements and corresponding Model Law were approved. This paves the way for adoption by UNCITRAL’s Commission later this year. It is understood that the Convention will be called the Singapore Mediation Convention and will be signed at a ceremony in Singapore in 2019. The Convention must then be ratified by at least three member states to come into force.
Approval of the drafts represents the culmination of several years’ work by UNCITRAL Working Group II. Its aim has been to implement an international regime for the enforcement of mediated settlements broadly akin to the 1958 New York Convention for the enforcement of arbitral awards. This will increase the attraction of mediation for international parties, with all its well-known cost efficiencies and other potential benefits.
The initiative stems from a concern that the use of mediation to resolve international disputes has been impeded by the fact that, unless a settlement reached via mediation is in the context of a pending arbitration and can be converted into an arbitral award, parties can only enforce it in the same way as any other contract. In an international context, this can involve potentially difficult (and usually lengthy) processes to obtain a court judgment and then enforce it in a foreign jurisdiction.
Whilst problems of enforcement of mediated settlements have been sparse in practice (certainly compared to court judgments or arbitral awards), the Convention will no doubt add credibility to mediation as an international dispute resolution process. It will also make mediation particularly well suited to cross-border disputes. At the Global Pound Conference series, delegates in Asia, Africa, the Middle East and Latin America all revealed a desire for legislation or conventions to promote the recognition and enforcement of settlements. This may reflect the varied and complex legal and political frameworks in these regions. Many of those surveyed manage businesses and disputes across several borders, where legal regimes can vary from stable, tested and familiar to those that are only a decade old. The call for regulation and certainty is even more critical as the pace of development intensifies through new trade treaties and investment, and massive initiatives such as the Belt and Road. The Convention and Model Law look set to respond well to this demand and may hail an inflection point for the use of mediation in these developing regions.
Materials approved on 26 June have not yet been made available on the relevant UNCITRAL webpage. However they will in due course be posted on this page, which currently contains the most recent drafts (from February 2018) together with other details of the initiative.
Following our report on the Global Pound Conference series, which brought together over 4000 stakeholders at 28 conferences worldwide, our analysis of the Asia Pacific results reveals different demands in Asia and Oceania.
Six Asia Pacific cities hosted conferences to assess how dispute resolution can be improved: Singapore; Hong Kong; Chandigarh, India; Bangkok, Thailand; Sydney, Australia and Auckland, New Zealand. Each conference addressed the demand side (commercial party perspectives on dispute resolution); the supply side (what advisers and providers are delivering to commercial parties); the key obstacles and challenges; and what needs to be addressed to effect change.
Region-wide, the data highlights that commercial parties want to use mediation and other ADR processes more, either alone or as an adjunct to adversarial proceedings. However, the data shows that the market is not responding adequately. As a result, mediation remains under-utilised, and actual use lags behind positive attitudes to it. Unless parties and their advisors actively take a different course (for example through inserting escalation clauses in contracts, actively proposing mediation at the point of dispute, or by following mandatory mediation protocols), there is likely to remain a perpetuation of the “same old processes” – litigation and arbitration.
Read more analysis of the Asia Pacific results on our Asia Disputes Notes blog here.
The Herbert Smith Freehills employment team has published an article examining the role of ADR within employment disputes, including considering the findings outlined in the recently released Global Pound Conference Report in the context of employment disputes in the key jurisdictions of Australia, France, Germany, Spain and the UK.
The briefing discusses the availability – and pros and cons – of various ADR methods for employment issues in those jurisdictions. As we have previously reported, one of our London partners, Peter Frost, has co-chaired (with Paul Goulding QC of Blackstone Chambers) various reports on this issue by the Employment Lawyers Association’s Arbitration and ADR Group, and the article also reflects on those findings.
Click here to read the article.
The Global Pound Conference series – a unique and ambitious initiative to inform how civil and commercial disputes are resolved in the 21st century – brought together over 4000 dispute resolution stakeholders, at 28 conferences spanning 24 countries worldwide.
Herbert Smith Freehills, global founding sponsor of the series, has teamed up with PwC and IMI (International Mediation Institute) to identify key insights that emerge from the extensive voting data collected during the series. With a focus on the needs of corporate users of dispute resolution, this ground-breaking report challenges the traditional and fundamental notions of what clients want and how lawyers should represent them in a dispute. We identify four key global themes along with four notable regional differences.
Global themes emerging from the voting data reveal:
Parties expect greater collaboration from advisors in dispute resolution. Around two thirds of in-house counsel said they need to see more collaboration from their lawyers. This applies when lawyers are interacting with both clients and opponents. This questions traditional notions of how lawyers should represent clients. Is the zealous advocate, fighting their client’s corner tenaciously at all costs, still appropriate?
Global interest in the use of pre-dispute protocols and mixed-mode dispute resolution. With the data pointing towards a more collaborative and efficient approach, unsurprisingly delegates felt that disputing parties should be encouraged to consider processes like mediation before they commence formal proceedings. The data also showed a growing desire by parties to use mediation in parallel with litigation and arbitration.
Some uncomfortable home truths for lawyers. In-house counsel were judged to be change enablers. As such, they shoulder a significant responsibility to encourage their organisations (and, if necessary, their external lawyers) to consider dispute resolution options more carefully, including using processes like mediation. In contrast, 70% of global delegates said external lawyers were the primary obstacles to change in commercial dispute resolution.
These insights show the potential of the GPC series to inform further studies and discussions across the world. Download your copy of our report here to learn more.
To discuss the content of this report and its impact on your organisation’s approach to dispute resolution, please contact the authors.