3 Mediation in civil and commercial matters
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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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| Department | Constitutional Affairs
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| Basis of consideration | Minister's letter of 14 March 2007
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| Previous Committee Report | HC 34-xi (2005-06), para 2 (23 November 2005); HC 34-x (2005-06), para 4 (16 November 2005); HC 34-v (2004-05), para 10 (12 October 2005); HC 38-ix (2004-05), para 2 (23 February 2005): HC 38-i (2004-05), para 6 (1 December 2004)
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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; information on progress awaited
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Background
3.1 We considered this proposal on the mediation of civil and
commercial disputes twice in November 2005, when we held the document
under scrutiny. At that time, the Parliamentary Under-Secretary
of State at the Department for Constitutional Affairs (Baroness
Ashton of Upholland) informed us that the informal Justice and
Home Affairs Council in Newcastle in September 2005 had agreed
that proposals under Article 65 EC[6]
(of which this was one) should be limited to cross-border disputes.
This accorded with the view which we and the previous Committee
had taken on the proper scope of measures under Article 65 EC.
3.2 We agreed with the Minister about the benefits
of mediation and alternative dispute resolution, but we noted
that the question of defining what constituted a cross-border
dispute remained in issue. We had no further questions of principle
to raise on the substance of the proposal, but remained concerned
about the use of Article 65 EC to propose measures which would
affect matters which were purely internal to a Member State. In
reply to the Minister's request, we agreed that the Minister could
move towards reaching a general approach on the text during the
UK Presidency, except for the definition of the cross-border restriction.
The Minister informed us that the effect of this would be to reach
a position where the content of the Articles was effectively "frozen"
while the opinion of the European Parliament was awaited and that,
in the meantime, negotiations would continue within the Council's
Civil Law Committee to resolve the issue of restricting the proposal
to cross-border disputes. We agreed that this was a reasonable
way of proceeding and accepted the Minister's undertaking to keep
us informed of these negotiations.
The Minister's letter of 14 March 2007
3.3 In her letter of 14 March 2007, the Parliamentary
Under-Secretary of State at the Department for Constitutional
Affairs (Baroness Ashton of Upholland) informs us that there has
been no further consideration of the proposal since the UK Presidency
and that the opinion of the European Parliament is still awaited,
although the latter is expected with the next few weeks.
3.4 The Minister further explains that it is likely
that the European Parliament will call for the proposal to be
restricted to cross-border disputes and that, with a large majority
in the Council, the Government is hopeful that the scope of the
measure will be limited in this sense. The Minister explains that
a definition of the cross-border restriction will be more difficult
for mediations, by reason of their flexibility, than it is for
court based procedures.
3.5 The Minister refers to the problematic nature
of a definition based on the place of the mediation, because "there
are no rules to determine where that should be". The Minister
remarks that parties may choose to mediate wherever they wish,
with no constraints as to jurisdiction and "could choose
to mediate in a particular country to ensure either that the Directive
did or did not apply" and refers to the "added complication"
that if the mediation were by telephone or video conference the
parties could all be in different Member States. The Minister
acknowledges the argument that, mediation being a consensual process,
the parties should be able to decide whether or not the Directive
will apply, but believes that this "will lead to legal uncertainty
and a lack of consistency in the way cross-border disputes are
settled by mediation within the internal market". The Minister
is also concerned to avoid a situation where a party could inadvertently
consent to a mediation in a place which would lead to the Directive
not being applicable. In the Minister's view, this might happen
because the parties were unaware of the consequences of choosing
to mediate in a particular place, or because one party who was
aware of those consequences took advantage of the other party
who was not so aware. The Minister further comments that, as neither
the parties nor the mediator may be lawyers, "it is in the
interest of everyone for the restriction to be simple and to provide
legal certainty".
3.6 The Minister informs us that the European Parliament
is considering a definition of a cross-border restriction along
the following lines:
"1. The provisions of this Directive shall
apply in cases having cross-border implications; in particular;
(a) Article 5 shall apply where an agreement
resulting from mediation, to which this directive applies, must
be enforced in a Member State other than that in which the agreement
in question was rendered enforceable;
(b) Article 6 shall apply where the competence
of the court seised of a claim arising from a dispute which the
parties have tried to resolve by mediation results from the application
of Community instruments on judicial competence, such as Regulation
44/2001 or Regulation 2201/2003;
(c) Article 7 shall apply where a claim arising
from a dispute which the parties have tried to resolve by mediation
must be brought, in the course of civil or commercial proceedings,
before a court which is competent as a result of the application
of Community instruments on judicial competence, such as Regulation
44/2001 or Regulation 2201/2003.
2. This Article shall be without prejudice to
rules of national law that provide for the enforceability of settlement
agreements, the confidentiality of mediation or the effect of
mediation on limitation and prescription periods in cases other
than those having cross-border implications within the meaning
of this Article."
3.7 The Minister considers that the above text does
not provide the necessary certainty or transparency. In relation
to paragraph (a) the Minister points out that there are no rules
determining the place of the mediation or stipulating the Member
State whose judicial authorities are to declare an agreement enforceable.
The Minister refers to the danger of parties not knowing whether
the Directive will apply, and to the risk of the parties influencing
the applicability of the Directive by their choice of the place
where the mediation is held or where its results are declared
enforceable.
3.8 The Minister agrees that Article 6 (which provides
that mediators cannot be compelled to give evidence in subsequent
proceedings) and Article 7 (which ensures that the claims of the
parties do not become time-barred by reason of having resorted
to mediation) provide important safeguards. However, the Minister
also considers that, rather than relying only on the jurisdiction
of the courts under Regulation 44/2001or Regulation 2201/2003
(as is done in paragraphs (b) and (c) of the European Parliament
text), it would be preferable to have another cross-border connecting
factor, such as domicile or habitual residence of the parties.
3.9 The Minister notes, in this regard, that there
may be occasions where the Directive would not apply to the mediation,
but where there would be a cross-border element in subsequent
proceedings, should the mediation fail. Such occasions could arise
where the court having jurisdiction under Regulation 44/2001 or
Regulation 2201/2003 was in another Member State. In those circumstances,
the parties should still have the protection of the safeguards
under Articles 6 and 7.
3.10 To meet these concerns, the Minister is proposing
a provision along the following lines;
"1. This Directive applies if at the time
the parties agree to mediate at least one of the parties is domiciled
or habitually resident in a Member State other than the Member
State of any other party.
2. Notwithstanding paragraph 1, Articles 6 and
7 of this Directive apply in relation to court proceedings following
a mediation where the court seised is in a Member State other
than a Member State in which at least one of the parties is domiciled
or habitually resident."
3.11 The Minister considers that the proposed draft
would make it clear that the Directive would apply to a mediation
(or in relation to any subsequent court proceedings) only where
the parties are domiciled or habitually resident in different
Member States, or in a different Member State from that in which
the court is seised. The Minister notes that it is "theoretically
possible" for parties to a dispute who are domiciled or habitually
resident in different Member States to decide to mediate in a
third country in which they happen to be living or staying. The
Minister does not consider that such a mediation would be caught
by the Directive, "because the Community cannot legislate
for mediations outside the EU".
3.12 In conclusion, the Minister considers that the
suggested definition has the value of being "clear and simple",
of respecting the limitations imposed by Article 65 EC, whilst
not being too restrictive. The Minister also points out that it
follows the model of the European Order for Payment[7]
in relation to the provisions on court proceedings in Articles
6 and 7.
Conclusion
3.13 We thank the Minister for her helpful letter.
We think it important that the provisions of Article 65 EC are
strictly complied with. Accordingly, it is essential that the
scope of the proposal should not include purely internal cases,
but apply only to those having cross-border implications and then
only to the extent necessary for the proper functioning of the
internal market.
3.14 We also think it important that the process
of mediation should not be obstructed, and we are less concerned
than the Minister about the situation where parties choose a place
for mediation which has the effect of causing the Directive not
to apply. In our view, this is merely a consequence of party autonomy,
which is particularly important in a process which is essentially
consensual at all stages.
3.15 We agree with the Minister that the Directive
should not apply to mediations conducted in third countries, even
where the parties may be domiciled or habitually resident in the
Member States.
3.16 We are grateful to the Minister for showing
us the proposed definition which the UK will seek to advance in
order to limit the scope of the proposal, as required by Article
65 EC. We support the general approach, and agree that a reference
to domicile or habitual residence of the parties, whilst possibly
giving rise to the occasional anomaly, will nevertheless produce
a clear and simple rule for the generality of cases.
3.17 We look forward to a further account, in
due course, of further negotiations on this point. In the meantime
we shall hold the document under scrutiny.
6 Article 65 EC provides for the adoption of measures
in the field of judicial cooperation in civil matters 'having
cross-border implications and in so far as necessary for the
proper functioning of the internal market'. Back
7
See (27688): HC 41-iv (2006-07) para 4 (14 December 2006). Back
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