Mandatory mediation in the EU
October 2015 | SPECIAL REPORT: INTERNATIONAL DISPUTE RESOLUTION
Financier Worldwide Magazine
“A ‘compulsory attempt at mediation’ brings insured disadvantages which are not easily understood. The attempt is therefore void.” These are the pithy and unambiguous words of the Frankfurt Higher Regional Court in a recent decision of April this year.
The fact that the policy was more favourable was held to be irrelevant. The defendant insurance company in the case had agreed to provide coverage for legal expenses for the costs of a court action in return for more favourable policies, but only if previous mediation proved unsuccessful. The court took the view that, inter alia, this constituted an unreasonable disadvantage.
The judgment highlights a fundamental question: how can mediation attempts be made compulsory? Is not the voluntary nature of the process one of the cornerstones of mediation par excellence?
In fact, in addition to structured implementation, confidentiality and neutrality of the mediator, the voluntary nature is one of the cornerstones of mediation. Without voluntarily participating parties to mediation it can hardly be said to be true mediation in the sense of the European Mediation Directive. Yet, there are few questions more disputed than that of the definition of voluntary nature and its scope; and few other questions with a more diverse range of answers.
What does the binding European legal framework envisage? How do the EU member states deal with it? And above all, when is mediation voluntary and when is it compulsory?
The European legal framework under the EU Mediation Directive and the spectrum within the EU
Bearing in mind the usual density of regulation, the European Mediation Directive allows for a largely free approach to the issue of voluntariness. The Mediation Directive’s only mandatory stipulation is that it must be possible for the mediation parties and the mediator to end the procedure at any time, i.e., that as regards the outcome they cannot be bound against their will. At the same time, the Directive has expressly left it up to the member states to choose whether to introduce mandatory mediation. The European legislators thus saw no contradiction between the principle of voluntary action and forcing parties to go to mediation, provided access to justice remains guaranteed.
Within this framework the European member states are divided essentially into two camps. The continental European member states have adopted a relatively restrained approach. Although the Mediation Directive has led most European countries to open up further in the direction of ADR, they remain somewhat sceptical when it comes to mandatory mediation; the judgment of the Frankfurt Higher Regional Court is one example of this. Another good example can be seen in the case of France, where participation in a mediation process can only take place on a voluntary basis. In Belgium, for example, there are only a few proceedings preceded by mandatory mediation. The situation is similar in Italy, where mediation is demanded only for certain types of proceedings. In Germany, the Netherlands, Poland and Portugal, for example, there is no general mandatory mediation either.
The English-speaking countries can be seen to be closer to the approach favoured in the US, where ADR won ground much earlier.
Although a mediation process ahead of court proceedings is not obligatory in the UK, it has been recommended that the courts should be allowed to demand an explanation from a party refusing mediation and that a refusal to engage in mediation should entitle the court to distribute the burden of costs to the refusing party’s disadvantage. The idea behind this is that the courts should encourage mediation and explain its benefits. In Scotland, the question of whether mediation should always be mandatory was discussed seriously for quite some time.
Despite the European harmonisation efforts there appears to be little change in the diversity of approaches toward ADR.
The basic principle of voluntariness – can happiness be forced on disputing parties?
Which group of countries is right – those that urge their citizens to enter mediation, or those that provide immediate access to the courts without mediation, and without any disadvantages in case of refusal? In order to answer this, one has to examine the origins of mediation. The demand for ‘voluntariness’ within the mediation process goes back to the most basic principle of mediation of all: that of enabling disputing parties to resolve their dispute on their own and to find and choose the solution which suits them best. It is the defendants in court proceedings who are forced to subject themselves to a procedure and to accept a solution imposed by a third party whom the legislators have empowered to make binding decisions. Defendants, however, are not parties to mediation.
Two equally valid perspectives can be derived from this. One stating that the disputants could be ‘nudged’ in the right direction, i.e., towards an alternative method, the other seeing this in itself as conflicting with the principle underlying autonomous dispute resolution.
Both views have their advantages and disadvantages. Disputing parties are often only partly open to rational arguments. Participation in an information event or a first mediation session could show them that this method is more appropriate. Furthermore, ignorance about mediation is still widespread; so that it may be that it is only after compulsory participation that a party has sufficient information for a fully informed decision.
On the other hand, as far as many parties are concerned, such an obligation could well degenerate to become no more than a senseless ritual taking up both time and resources. If costs are charged, this can easily result in a real increase in the obstacles in the way of access to the courts.
The boundaries and the framework of European law will, in any case, be exceeded where termination at any time is no longer guaranteed, since the Mediation Directive requires that parties to mediation must at all times be able to end the procedure.
Thus, ‘happiness’ cannot be forced on disputing parties, regardless of the European member state in which they are seeking to resolve their conflict. However, depending on the jurisdiction, they can sometimes be moved gently or more firmly in the direction of ADR.
Despite the different mentalities among EU member states, one should not forget the main considerations that prompted the European legislators – the Mediation Directive was intended to strengthen ADR in order to simplify and improve access to justice. It was this – and not the relief of the judiciary associated with ADR – that was crucial for the European legislators’ decision. But by its very nature, the possibility of relieving the courts does act as an incentive for putting increasing pressure on litigants to persuade them to seek alternative dispute resolution methods.
On the other hand, companies also see opportunities for cost optimisation, as in the aforementioned case before the Higher Regional Court in Frankfurt. But at this point the Mediation Directive assumes that citizens are well-informed and have the capacity to make decisions, and quite consciously leaves national legislation linking the use of mediation to incentives or sanctions unaffected.
Regardless of the constellation and the national legal system, the key is therefore for the party seeking to preserve its rights to be well informed about ADR and mediation in particular, even if only after seeing the help of a professional conflict resolution expert. In order to decide whether to accept a compulsory mediation or to end it ‘at any time’ and move to litigation, one has to be well informed.
Christian Wirth and Daniel Eckstein are attorneys and mediators at White & Case. Mr Wirth can be contacted on +49 30 880 9110 or by email: firstname.lastname@example.org. Dr Eckstein can be contacted on +49 30 880 9110 or by email: email@example.com.
© Financier Worldwide
Christian Wirth and Daniel Eckstein
White & Case