Select Committee on European Scrutiny Thirty-Fifth Report





COM(02) 196

Commission Green Paper on alternative dispute resolution in civil and commercial law.

Legal base:


Document originated:

19 April 2002

Deposited in Parliament:

9 May 2002


Lord Chancellor's Department

Basis of consideration:

EM of 22 May 2002

Previous Committee Report:


To be discussed in Council:

No date fixed

Committee's assessment:

Legally and politically important

Committee's decision:

Not cleared; further information requested




    1. There have long been 'alternative' means of settling disputes in the Member States, such as by arbitration or negotiation and mediation. Latterly, there has been increased interest in consensual means of resolving disputes as a method of avoiding the high and increasing costs and complexity of civil litigation. The European Council at Tampere in October 1999 stressed the importance it attached to alternative means of settling cross-border disputes. The Laeken European Council in 2001 also drew attention to the role which voluntary mediation mechanisms might play in employment relations.
    2. Such voluntary mechanisms are referred to collectively by the term ADR (alternative dispute resolution). As the Commission's Green Paper points out, they may take a number of forms and may involve the participation of courts or judicial officers, or they may be entirely consensual and private. Such methods of resolving disputes are in operation throughout the world, including EU Member States, the United States and other countries party to the Hague Conference on Private International Law, the Council of Europe and the OECD.
    3. The Commission Green Paper

    4. The aim of the Commission's Green Paper is to outline the current practice in relation to ADR in the Member States and to initiate a broad consultation on a number of legal issues arising from the use of such systems in civil and commercial disputes. The Commission indicates that it plans to consider the views "as input for defining the general lines of its own policy to be conducted in the years ahead in its role as promoter of legislative and operational initiatives".
    5. The Green Paper outlines the history and context of ADR schemes in the Member States and elsewhere before identifying a number of legal issues on which views are sought. The first set of questions ask if there are problems such as to warrant action at Community level, and if so, whether initiatives should be general or limited to a particular field, such as that of commercial or family law. A further two questions seek views on whether on-line dispute resolution should be dealt with separately and on how ADR might be developed in relation to family law.
    6. The next set of questions seeks views on the issue of whether the legislation of Member States should be harmonised so that ADR clauses have the same legal validity in all Member States and on whether it should be provided that an ADR clause is effective to deprive a court of jurisdiction, at least for the period that ADR is being attempted. A further question seeks views on whether the legislation of Member States should be harmonised so as to provide that national limitation periods are suspended while ADR is being attempted.
    7. A further set of questions seeks views on minimum quality standards of the ADR process. The Green Paper refers to two recommendations adopted by the Commission on the principles applicable to out-of-court settlements of consumer disputes[33] and seeks views on whether these procedural principles on such matters as impartiality, transparency, effectiveness and fairness should be harmonised at Community level. The paper also asks if there should be any initiative concerning the ethical principles to be followed by third parties involved in ADR such as mediators, and on whether the legislation of Member States should be harmonised so as to guarantee the confidentiality of ADR proceedings in every case.
    8. The Government's view

    9. In her Explanatory Memorandum of 22 May 2002, the Parliamentary Secretary at the Lord Chancellor's Department (Baroness Scotland of Asthal) comments that the Government will wish to be satisfied that any future proposal for legislation in the fields covered by the Green Paper complies with the principle of subsidiarity. On the substance of the Green Paper the Minister indicates that the Government is a keen supporter of ADR and that it welcomes the opportunity provided by the Green Paper to offer a view on the future direction of Community policy.
    10. The Minister further comments that while the Government can see a case for appropriate Community action to encourage and facilitate the use of ADR in cross-border cases, it would wish to be persuaded of the case for harmonisation of the principles addressed in some of the Commission's questions, particularly as they relate to purely domestic disputes.
    11. The Minister also voices a concern about the legal base of any proposed legislation concerning purely domestic disputes:
    12. "The Government would also wish to establish at an early stage under which article of the TEC any proposed legislation concerning purely domestic disputes might be brought forward, having regard in particular to the ruling of the European Court of Justice that measures under, for example, Article 95 must genuinely have as their object the improvement of conditions for the establishment and functioning of the internal market (see Case C-376/98 Germany v. Parliament and Council [2000] ECR I -8419)."

    13. The Minister also explains that the Government considers:
    14. "that any proposed legislation should aim to bring about clear benefits both for citizens and for businesses, and should not be unnecessarily prescriptive, given that flexibility is one of the keystones of ADR. These considerations apply particularly in relation to contractual clauses for ADR and the effect recourse to ADR should have on limitation periods. Care should be taken to avoid unnecessary complexity and to preserve, so far as is consistent with appropriate protection of consumers and other weaker parties, freedom of contract."

    15. The Minister adds that the Government is still considering the other issues raised in the Green Paper and that it will supply us with a copy of its response to the Commission.
    16. Conclusion

    17. We thank the Minister for her helpful Explanatory Memorandum and we note and endorse her concern that any future proposals for legislation in the fields covered by the Green Paper must comply with the principle of subsidiarity. We also endorse her concern that unnecessary complexity should be avoided. Having regard to the essentially voluntary nature of Alternative Dispute Resolution and its varied and rapid development, we consider that the principle of proportionality is also of particular relevance.
    18. We also note the remarks made by the Minister on the appropriate legal base of legislative proposals in this area, and we consider that, in relation to ADR and purely domestic disputes, reliance on Article 95 EC as a legal base is far from being properly established.
    19. We are grateful to the Minister for her undertaking to supply us with a copy of the proposed reply to the Green Paper, and we ask that this be done in sufficient time to allow us to comment before it is sent to the Commission. In the meantime, we shall hold the document under scrutiny.


33  OJ No L 115, 17.4.1998, p.31. OJ No L 109, 19.4.2001, p.56. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 19 July 2002