Professional Support Lawyer, London
The UK Government has published legislation to effectively revoke the implementation of the EU Mediation Directive (2008/52/EC) after Brexit.
The Cross-Border Mediation (EU Directive) (EU Exit) Regulations 2019 (the Regulations) were made on 1 March 2019 and will come into effect on exit day, whenever that occurs.
The development is part of a wider policy decision by the Government to revoke/repeal UK domestic legislation that implemented EU law in instances where that law is based on reciprocity between EU Member States. Continue reading
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.
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.
The UNCITRAL working group that has for several years now been considering the potential for an international enforcement regime for international mediation has now completed its work and produced draft instruments.
At its most recent meeting in New York, the UNCITRAL Working Group II (Dispute Settlement – formerly Arbitration and Conciliation) approved a draft convention and a draft amended Model Law on international settlement agreements resulting from mediation. Continue reading
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 EU Commission has launched a consultation to gather views on the extent to which the EU Mediation Directive (2008/52/EC) has achieved its objectives and to consider whether any changes to the Directive are appropriate.
Responses to the consultation will inform a report the Commission is required to submit to the EU legislative bodies by May 2016, assessing the development of mediation throughout the EU and the impact of the Directive. The report may, if appropriate, be accompanied by proposals to adapt the Directive. Continue reading
We are pleased to publish the eighth guide in our series of ADR Practical Guides, designed to provide clients with practical guidance on various processes falling under the banner of alternative dispute resolution, with a particular focus on mediation.
Guide No. 8: ‘Resolving disputes with HMRC’ examines when and how mediation and other forms of ADR can be used to resolve disputes with the UK’s tax regulator, HMRC.
Previous guides in the series can be found on our ADR webpage, including:
Following a successful mediation, parties usually prepare a formal agreement to record what was agreed. In some situations, the parties may initially prepare a less formal document, sometimes called a ‘heads of agreement’. Whether a heads of agreement is enforceable depends on whether the parties intended to be legally bound by its terms. An important factor in ascertaining the parties’ intentions will be how precisely the terms are drafted and whether the agreement contains any wording suggesting that the terms are merely agreed ‘in principle’.
A recent Australian case in the Supreme Court of New South Wales is a timely reminder that, before leaving a mediation, parties should ensure that the drafting of any heads of agreement accurately reflects their intentions as to whether they will be immediately legally bound by its terms. Continue reading
In a decision that will be of comfort to legal advisers representing clients at mediation, the Court of Appeal has upheld a finding that a solicitor was not negligent for failing to ensure the legal enforceability of handwritten terms signed by the parties at the conclusion of a mediation: Frost v Wake Smith and Tofields Solicitors  EWCA Civ 1960.
Key to the Court’s ruling was its finding that the terms agreed at mediation were not sufficiently certain and complete to constitute a final agreement capable of being legally binding. Alhough the parties had made progress in their complex dispute over the division of business assets, there remained numerous issues that needed to be clarified, including proper identification of the assets, treatment of tax consequences and treatment of third parties’ interests in some assets. Much of this detail was not available to the solicitor at the time of the mediation and needed to be the subject of further investigation and agreement between the parties.
Importantly, the Court rejected a suggestion that the solicitor should have, prior to the mediation, undertaken all the factual and legal investigations necessary to enable a complete and final agreement to be reached and documented at mediation. The Court held that it was simply ‘unrealistic’ to expect the solicitor to have spent the client’s time and money in immersing himself in the level of detail that would have been necessary, when it was impossible to know from the outset how the mediation would develop.
The decision is a welcome acknowledgment of the flexible and often iterative nature of the mediation process. As the Court noted, “it would be regrettable if any decision of this court were to cause practitioners to approach the process of mediation with anything other than the maximum flexibility“. The informality of the mediation process and its ability to result in pragmatic compromises could be undermined if parties were to regard the conclusion of an immediately binding agreement as a necessary requisite of a ‘successful’ mediation. The Court stressed this by observing that it “should be a cause for neither surprise nor dismay that the process of mediation did not in this case at the first session result in an immediately enforceable agreement.”
However, the judgment does suggest that the Court would have been more receptive of a complaint (if it had been properly pleaded and proved) that the solicitor had failed in his duty to warn the client as to the non-enforceability of the provisional agreement. Legal advisers should heed the Court of Appeal’s warning in this regard and ensure that their clients understand the nature of the mediation process and the fact that compromises reached may not be capable of enforcement through the courts without further agreement between the parties.