The EU Parliament has adopted a Resolution on the implementation of the EU Mediation Directive (2008/52/EC), containing recommendations aimed at increasing the use of mediation in civil and commercial disputes throughout the EU.
The Resolution follows a 2016 report by the EU Commission which concluded that, overall, the Mediation Directive had added value, particularly by prompting significant legislative changes in several Member States. No revision of the Directive itself was recommended. However, the report noted continuing difficulties with the functioning of many of the national mediation systems in practice. These were attributed principally to the lack of a “mediation culture” in many Member States, insufficient knowledge of how to deal with cross-border cases, the low level of awareness of mediation, the functioning of quality control mechanisms for mediators and a reluctance by courts to propose mediation.
In response, Parliament has made the following recommendations:
- EU Member States should step up their efforts to encourage the use of mediation in civil and commercial disputes, such as through information campaigns, improved cooperation between legal professionals and an exchange of best practices.
- The Commission should assess the need to develop EU-wide quality standards for the provision of mediation services.
- The Commission should assess the need for member states to establish national registers of mediated proceedings. (subject to data protection rules).
- The Commission should undertake a detailed study on the obstacles to the free circulation of foreign mediation agreements across the EU, and on options to promote the use of mediation.
- The Commission should find solutions to extend the scope of mediation to other civil or administrative matters.
We will report on any steps to implement these recommendations in due course.
The Global Pound Conference (GPC) series concluded on 6 July, with the final conference held at the Guildhall in London. This landmark project (of which Herbert Smith Freehills is the lead sponsor) has seen more than 3,000 corporate and disputes professionals come together in conferences spanning 29 cities across the globe throughout 2016-17, with many more following and discussing the series online and at other events.
Through interactive electronic voting at the individual conferences on a set of core questions, the series has gathered data aimed at improving systems for the resolution of commercial disputes in the 21st century – spanning court processes, arbitration and ADR. We believe this is a unique set of data that has never been collected before. Amongst other things, it will provide a unique insight into what organisations are currently doing to avoid conflict and save money through innovative uses of the key dispute resolution processes.
However, given that many people were unable to attend a local GPC event, GPC has now opened an online voting system, to allow a wider audience to provide input on the core questions. If you were unable to vote and would like to do so, please click here to vote now. The online voting system will be open until 31 July 2017 and should take no more than 15 minutes to complete.
We encourage you to add your voices about how to shape the future of commercial dispute resolution and improve access to justice in the 21st century.
On 13 July, Hong Kong’s Legislative Council passed a law (the Apology Law) intended to facilitate the resolution of civil disputes in the territory. The Apology Law, which is expected to be gazetted and come into force shortly, reforms the legal consequences of making any sort of apology (written, oral or by conduct). An apology will not constitute an admission of fault or liability (even if it includes such an admission), nor may it be admissible in evidence to the detriment of the apology maker. This is the case unless the maker of the apology wishes it to be admitted or it falls to be admitted in the usual way through discovery, oral evidence or any equivalent tribunal processes.
Hong Kong is the first jurisdiction in Asia to enact apology legislation and its Apology Law is the broadest enacted to date worldwide. The driver behind it is that apologies may in some circumstances 'unlock' disputes and lead to settlement without recourse to formal legal action. Since parties (and their lawyers and insurers) may be reluctant to do anything that may be construed as an admission of liability, apologies have to date been sparse. The Apology Law seeks to incentivise disputing parties to make apologies, whether in the direct aftermath of an accident or dispute, or further down the line, should the dispute escalate.
The law has far-reaching consequences for anyone involved in contentious civil disputes, whether before the courts or tribunals in Hong Kong. The Apology Law has the scope substantially to change the way insurance, evidence and settlement are approached in civil proceedings and regulatory and disciplinary matters. The scope for ‘tactical’ apologies by counterparties should be borne in mind as set out below.
The Court of Justice of the European Union (CJEU) has concluded that national legislation imposing mandatory mediation as a pre-condition to litigation is not precluded by the EU ADR legislative framework, provided that the parties are not prevented from exercising their rights of access to the judicial system.
However, to the extent that such a pre-condition required consumers to be assisted by a lawyer in the mediation process, or penalised them for withdrawing from the mediation without good grounds, it would be contrary to the Consumer ADR Directive (2013/11/EU): Menini and another v Banco Popolare Società Cooperativa (Case C-75/16) (14 June 2017).
Hong Kong's status as a leading international dispute resolution hub is well-known. It enjoys a strong, independent judiciary as well as world class international arbitration services. Mediation and other forms of ADR are heavily supported by a myriad of institutions. Although not a compulsory requirement, mediation in the context of civil litigation tends to be interpreted by commercial parties as a mandatory step. Against this backdrop, delegates voted at the recent Global Pound Conference Hong Kong, which saw over 200 delegates from across Hong Kong's disputes market congregate to discuss their approach to commercial dispute resolution. Hong Kong's Secretary for Justice, Chief Justice and Solicitor General headlined the conference.
Click here to download the aggregated results from the first 18 Global Pound Conference events, which have taken place in 12 countries in Africa, the Americas, Asia, Europe and the Middle East. This includes the very first analysis of the overall trends set to shape the future of dispute resolution globally.
The above provide insights for all stakeholders – commercial parties, lawyers, experts, judges, arbitrators, mediators and government – on the areas of focus for Hong Kong as it seeks to maintain – and expand – its position as a leading dispute resolution centre.
In a recent decision, the High Court has found that documents relating to negotiations regarding recoverable litigation costs had to be disclosed to a third party (the claimant in the present action) who had an interest in the outcome of the negotiations: EMW Law LLP v Halborg  EWHC 1014.
The documents could normally have been withheld on the basis of the without prejudice ("WP") rule, which (in general) prevents negotiations genuinely aimed at settlement from being admitted in evidence in proceedings. However, the judge found that exceptions to the WP rule applied in this case, essentially on the basis that justice clearly demanded that an exception be made as there was a live issue as to whether the negotiations had led to a concluded settlement and that issue could not be determined without access to the documents.
The decision may be seen to expand existing exceptions to the WP rule. Although there is a recognised exception where documents are relevant to whether a concluded agreement has been reached, in previous cases it had been one of the parties to the litigation who alleged that an agreement had been reached. Here that question was put in issue by a stranger to the negotiations. The judge was also prepared to craft a new exception by analogy to the (much-criticised) exception established in Muller v Linsley & Mortimer  1 PNLR 74, where the WP communications were relevant to whether a party had reasonably mitigated his loss in negotiating a compromise of separate proceedings.
Although the issues in this case did not arise in the context of a mediation or other formal ADR process, they could potentially apply equally in that context. However, it is worth bearing in mind that, particularly in such formal ADR contexts, it is in practice very rare for the WP status of the discussions to subsequently be challenged and even more so for the challenge to be successful. The courts' approach to the exceptions to WP could be expected to continue to be one of applying the exceptions narrowly and preventing erosions of the protection, to avoid undermining the policy of encouraging settlement discussions.
Click here to read more on the decision on our 'Litigation Notes' blog.
A recent Court of Appeal decision is the latest instance of the court expressly sending a message to litigants confirming what it expects of them regarding mediation within the court process: Thakkar v Patel  EWCA Civ 117.
Upholding a first instance decision which it described as "severe, but not so severe that this court should intervene", the court refused to overturn a costs sanction on a party who had agreed to mediate but then "dragged its heels" in the discussions over the arrangement of the mediation, to the point where the other party ultimately abandoned the process.
The Court of Appeal has in recent years made clear to litigants that it now expects them to be proactive and engage constructively with each other during proceedings to fully explore the potential for the dispute to be mediated – to the point where ignoring a mediation proposal will usually warrant a costs sanction even if the circumstances were such that an outright refusal to mediate would have been justified (PGF II SA v OMFS  EWCA (Civ) 1288).
The present case confirms that, where mediation is appropriate, the constructive engagement expected by the court also requires that the parties cooperate and act proactively in the arrangement of the mediation: "It behoves both parties to get on with it. If one party frustrates the process by delaying and dragging its feet for no good reason, that will merit a costs sanction".
In a case referred to the Court of Justice of the European Union (CJEU) by the Italian courts, an Advocate General opinion has been issued which considers the scope of the Consumer ADR Directive, including whether it precludes national legislation from imposing mandatory mediation as a pre-condition to litigation: Menini and another v Banco Popolare Società Cooperativa (Case C-75/16).
Julian Copeman, May Tai and Anita Phillips discuss their client research and the outputs of the recent Global Pound Conference to assess what is required to bring mediation into the mainstream for commercial parties in Hong Kong. Click here to access their article in Asian Dispute Review, which was published on 3 April 2017.