6 Mediation in civil and commercial matters
| (26068)
13852/04
+ ADD 1
COM(04) 718
| Draft Directive on certain aspects of mediation in civil and commercial matters
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| Legal base | Article 61(c) EC; co-decision; QMV
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| Document originated | 22 October 2004
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| Deposited in Parliament | 1 November 2004
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| Department | Constitutional Affairs
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| Basis of consideration | EM of 12 November 2004
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| Previous Committee Report | None; but see (23438) 8336/02: HC 152-xxxv (2001-02), para 12 (3 July 2002) and HC 63-i (2002-03), para 26 (20 November 2002)
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| To be discussed in Council | No date set
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| Committee's assessment | Legally and politically important
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| Committee's decision | Not cleared; further information requested
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Background
6.1 Arbitration, negotiation or mediation have long existed as
alternative means of resolving civil disputes without resorting
to litigation. In recent years, 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.
6.2 We considered a Green Paper from the Commission
on alternative dispute resolution (ADR) on 3 July and 6 December
2002. We noted that the aim of the Green Paper was to initiate
a broad consultation on a number of legal issues arising from
the use of ADR in civil and commercial disputes. We supported
the view expressed by the then Minister that any future proposals
for legislation should respect the principle of subsidiarity.
We also considered that the principle of proportionality was of
particular relevance to ADR, having regard to its essentially
voluntary nature and varied and rapid development. We agreed with
the Minister that the Commission should be cautious before introducing
regulation at EU level of ADR, since this might stifle flexibility
and innovation, which the Minister described as the very aspects
which made ADR a valuable part of the civil justice system.
6.3 We also endorsed the Minister's concerns over
the legal base of any legislative proposals which concerned purely
internal cases. We agreed with the Minister that in relation to
ADR and purely domestic disputes, a reliance on Article 95 EC
as a legal base was far from being properly established.
The draft Directive
6.4 The Commission describes its proposed Directive
as facilitating access to dispute resolution by means of two types
of provision. First, the proposal contains provisions which "aim
at ensuring a sound relationship between mediation and judicial
proceedings, by establishing minimum common rules in the Community
on a number of key aspects of civil procedure". Secondly,
the proposal provides "the necessary tools for the courts
of the Member States to actively promote the use of mediation,
without nevertheless making mediation compulsory or subject to
specific sanctions".
6.5 The Commission asserts that its proposal is properly
based on Article 65 EC, even though it would extend to all civil
and commercial matters and not just those with a cross-border
element.[8] The Commission
argues that "the objective and content of this proposed directive
fall squarely within the scope of Article 65 EC since it concerns
civil procedural rules". (It describes the provisions of
Article 4 of the Directive — which oblige Member States
to provide for the training of mediators — as "ancillary"
to the other provisions.) It states that:
"The [proposal] is necessary for the proper
functioning of the internal market in view of the need to ensure
access to dispute resolution mechanisms for individuals and business
exercising the four freedoms and in view of the need to ensure
the freedom to provide and to receive mediation services."
6.6 The Commission considers that in relation to
ADR the impact of cross-border elements is potentially greater
than in relation to civil procedure, but nevertheless concludes
that:
"It would not be feasible to restrict the scope
of the proposal so as to only aim at removing obstacles created
by cross-border elements or to ease the resolution of only those
disputes displaying a cross-border element, however defined."
6.7 The Commission goes on to argue that cross-border
elements make up only one of several relevant circumstances to
be taken into account in assessing the suitability of mediation
as a dispute resolution method. It suggests that promoting mediation
in relation to those disputes that display a cross-border element
only "would therefore be arbitrary and create a risk of
discriminatory effects" and that a restriction of this type
"will undoubtedly entail a substantial reduction [of] the
practical impact of the proposed directive". The Commission
adds that "making the applicability of the procedural rules
contained in the proposed directive subject to the presence of
cross-border elements would rather lead to increased legal uncertainty".
6.8 The Commission concludes that::
"introducing an explicit condition of cross-border
implications would invalidate the objectives of the proposed directive
and be counterproductive to the proper functioning of the internal
market. The directive must therefore apply to all situations regardless
of the presence of cross-border elements at the time of the mediation
or at the time of the judicial proceedings."
6.9 The substance of the proposal may be summarised
as follows. Article 1 determines the scope of the proposal. It
is to apply "in civil and commercial matters", with
no limitation to cross-border cases. Article 2 contains definitions
of "mediation" and "mediator". "Mediation"
means any process whereby two or more parties to a dispute are
assisted by a third party to reach an agreement on the settlement
of the dispute, regardless of how the process is iniated.
6.10 Article 3 provides that a court may "when
appropriate and having regard to all the circumstances of the
case" invite the parties to use mediation in order to settle
the dispute. It also provides that the court "may in any
event require the parties to attend an information session on
the use of mediation". Article 3(2) provides that the Directive
is without prejudice to national legislation which makes the use
of mediation compulsory or subject to incentives or sanctions,
"provided that such legislation does not impede on the right
of access to the judicial system, in particular in situations
where one of the parties is resident in a Member State other than
that of the court".
6.11 Article 4 is concerned with "ensuring the
quality of mediation". Article 4(1) provides that the Commission
and the Member States "shall promote and encourage the development
of and adherence to voluntary codes of conduct by mediators",
as well as "other effective quality control mechanisms concerning
the provision of mediation services". Article 4(2) obliges
Member States to "promote and encourage" the training
of mediators in order to allow parties in dispute "to choose
a mediator who will be able to effectively conduct a mediation
in the manner expected by the parties".
6.12 Article 5 is concerned with the enforcement
of settlement agreements. It provides that Member States must
ensure that a settlement agreement reached as a result of a mediation
can be confirmed in a "judgment, decision, authentic instrument
or any other form by a court or public authority that renders
the agreement enforceable in a similar manner as a judgment under
national law, provided that the agreement is not contrary to European
law[9] or to national law[10]
in the Member State where the request is made".
6.13 Article 6 prohibits any mediator, or any person
involved in the administration of mediation services, from giving
evidence in any civil proceedings on any matter relating to the
conduct or handling of the mediation. Article 6(3) provides that
no court or other judicial authority may order the disclosure
of such information in civil proceedings, and that any such information
which is offered as evidence is to be treated as inadmissible.
A number of exceptions are provided for. These allow information
to be disclosed or admitted in evidence for the purpose of implementing
or enforcing a settlement agreement reached as a result of mediation,
for "overriding considerations of public policy, in particular
when required to ensure the protection of children or to prevent
harm to the physical or psychological integrity of a person",
or where the mediator and the parties agree.
6.14 Article 7 provides for the suspension of limitation
or prescription periods under national law. Article 7 provides
that time ceases to run for such purposes for so long as the mediation
process is under way. Article 7(2) provides that where a mediation
has ended without a settlement agreement, time will again begin
to run from the date when one or both parties or the mediator
declares that the mediation is terminated or withdraws from it.
Article 7(2) further provides that "the period shall in any
event extend for at least one month from the date when it resumes
running, except when it concerns a period within which an action
must be brought to prevent that a provisional or similar measure
ceases to have effect or is revoked".
6.15 Articles 8 to 10 are concerned with implementation,
transposition and entry into force. Article 9 obliges Member
States to include a reference to the Directive in their implementing
provisions.
The Government's view
6.16 In her Explanatory Memorandum of 12 November
the Parliamentary Under-Secretary at the Department for Constitutional
Affairs (Baroness Ashton of Upholland) explains that it will be
for the United Kingdom to consider whether it wishes to opt in
to this proposal pursuant to the Protocol on Title IV. The Minister
notes that the Commission has not limited the scope of the proposed
Directive to cross-border mediations, but has said that the procedure
should apply in all situations regardless of the presence of cross-border
elements at the time of the mediation or at the time of the judicial
proceedings.
6.17 The Minister explains that the Government supports
measures which improve access to justice and is "keen to
encourage mediation as a low cost, user friendly way of settling
disputes and which will be of benefit to consumers, businesses
and families". It believes that improving redress mechanisms
for cross border disputes between consumers and traders will encourage
consumers and businesses to take full advantage of the single
market in goods and services.
6.18 The Minister states the Government's belief
that legislation on ADR should not be unnecessarily prescriptive,
since flexibility is an important feature of the process and mediation
should be based on consensus. The Minister records that, in general
terms, the Government is satisfied with the content of the proposal,
which it believes applies "a sufficiently light touch to
regulation in this field". The Government is also pleased
that the proposal takes account of the particular sensitivities
of family mediation in terms of child protection issues.
6.19 The Minister also refers to issues which "will
require further exploration during the negotiations". In
this context, the Minister refers to the provisions of Article
5 for confirming a mediation agreement through a court judgment
and the suspension of limitation periods under Article 7. In both
cases, the Minister states that the Government will wish to ensure
that the provisions respect the fundamental principles of mediation.
6.20 The Minister also states that the Government
"will pursue the issue of the Commission's legal authority
to propose a measure which is not limited to cross-border mediations".
The Minister also informs us that the Government will consider
whether the fact that the proposal touches on family mediation
causes it to attract the exception in Article 67(5) EC so that
unanimity would be required for its adoption by the Council.
Conclusion
6.21 Although this proposal may not be excessively
prescriptive, we believe the Minister is entirely right to question
the Commission's legal authority to propose a measure under Article
65 EC which is not limited to cross-border mediations. As is apparent
from its own explanatory memorandum, the Commission sets out deliberately
to disregard the requirement in Article 65 EC that the matter
must have cross-border implications before Community action is
justified.
6.22 The Commission states that to introduce an
"explicit condition of cross-border implications would invalidate
the objectives of the proposed directive", but, in our view,
the failure to observe the limitation set out in Article 65 EC
would make the Directive to that extent unlawful, since it
would exceed the powers conferred on the Community. We therefore
ask the Minister if the Government will exercise its right not
to opt in to such a measure.
6.23 We note the Minister's concern that the proposal
also covers mediation in family disputes and may therefore concern
"aspects relating to family law", thus requiring the
measure to be adopted by unanimity, in accordance with Article
67(5) EC. We ask the Minister to inform us, before any decision
is taken to opt in to this measure, of the outcome of the Government's
consideration of this point.
6.24 We shall hold the document under scrutiny
pending the Minister's reply.
8 Article 65 EC provides that "measures in the
field of judicial cooperation in civil matters having cross-border
implications, to be taken in accordance with Article 67 and in
so far as necessary for the proper functioning of the internal
market, shall include:
…(c ) eliminating obstacle to the
good functioning of civil proceedings, if necessary by promoting
the compatibility of the rules on civil procedure applicable in
the Member States." Back
9
What is meant by 'European law' in this context is not defined. Back
10
Presumably, this would cover the case where enforcement of the
agreement would be contrary to the public policy of the forum. Back
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