Brexit: UK unwinds implementation of EU ADR laws

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.

Why?

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

Article published – ADR reform: one size does not fit all

On 6 March, the Civil Justice Council held a workshop to discuss the recommendations made in its interim report on ADR, which was subject to consultation late last year. The interim report addresses concerns regarding a perceived underuse of ADR within some sections of the civil justice system and suggests a variety of possible corrective measures. The proposals include a power for the court to determine whether costs sanctions should be imposed for unreasonable conduct relating to ADR (such as an unreasonable refusal to mediate) not only at the end of a case, as currently, but during the matter when the decisions regarding ADR are taken.

Jan O’Neill has published a post on Practical Law’s Dispute Resolution blog in which she questions how realistic the suggestion of “midstream” assessment of parties’ conduct relating to ADR would be in practice. She suggests that many of the concerns expressed in the report as to the underuse of ADR are not relevant to many larger, complex claims, and urges the working group to tailor any final recommendations to the specific courts or dispute types for which the evidence suggests they are needed and practicable.

Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

 

 

EU Parliament Resolution on the implementation of the Mediation Directive

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.

CJEU holds that mandatory mediation is not inherently precluded by EU law

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).  

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High Court decision potentially extends exceptions to without prejudice protection

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 [2017] 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 [1996] 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.

 

Court of Appeal sends further message on mediation: Don’t drag your heels in arranging it

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 [2017] 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 [2013] 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". 

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Advocate General Opinion on the Consumer ADR Directive and compulsory mediation

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). 

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Herbert Smith Freehills launches latest Guide to Dispute Resolution in Asia Pacific

Dispute Resolution in AP

Please click here to preview this publication.  To request a copy of the guide, please email asia.publications@hsf.com.


Our updated Guide to Dispute Resolution in Asia Pacific aims to provide answers to some of the basic questions a party unfamiliar with a particular jurisdiction will wish to ask when facing the prospect of having to engage in a dispute resolution process in that jurisdiction (including at the stage of negotiating contracts, when deciding on the choice of law and whether to include jurisdiction or arbitration clauses in favour of a particular jurisdiction).

Amongst the range of topics addressed in the Guide, we asked local counsel whether parties to litigation or arbitration are required to consider or submit to ADR procedures before or during proceedings. We will feature the responses of the various jurisdictions in upcoming posts and cover our first five jurisdictions (Australia, Bangladesh, China, Hong Kong and India) below. 

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Singapore publishes draft Mediation Bill

The Singapore Ministry of Law is seeking public feedback on a draft Mediation Bill. The Bill will give effect to one of the key recommendations of the International Commercial Mediation Working Group (ICMWG) in 2013, being the enactment of a Mediation Act (Act) to strengthen the framework for mediation in Singapore.

The other three recommendations of the ICMWG have already been implemented. As previously reported here, the Singapore International Mediation Centre and the Singapore International Mediation Institute were both launched on 5 November 2014. Withholding tax exemptions for non-resident mediators have been available since 1 April 2015. Click here to read more on our Asia Disputes blog.

EU Parliament questionnaire on effective mediation policy

The European Parliament has issued a public questionnaire (Assessing the Impact of the EU Mediation Directive and Exploring Legislative and Non-Legislative Measures to Encourage the Use of Mediation in EU Member States’) to gather information about mediation policy and practice in civil and commercial cases in EU member states. 

One of the stated purposes of the review is ‘to explore why mediation is not being as widely used as expected’ following the adoption of the EU Mediation Directive (a copy of the Directive can be found here). In addition to seeking feedback on existing mediation practice in the EU jurisdictions, the survey sets out a number of legislative and non-legislative proposals for readers to rate in terms of their ability, or inability, to improve the use of mediation in their jurisdiction.  

Responses to the questionnaire will inform a report to be presented to the European Parliament by the end of November, which will include proposals to foster the use of mediation across the EU.