Select Committee on European Union Forty-Ninth Report


Letter from the Chairman of the Committee to the Rt Hon Baroness Scotland of Asthal QC, Parliamentary Secretary, Lord Chancellor's Department

  The Green Paper was considered by Sub-Committee E (Law and Institutions) at its meeting on 12 June. The Committee was grateful for your Explanatory Memorandum and noted the cautious approach being taken by the Government to this wide-ranging document.

  The Committee also noted that while the Government is not proposing to consult on the Green Paper it has, however, drawn it to the attention of a number of interested parties. It would be helpful to the Committee when considering what further action to take in relation to the document if you could provide a list of those bodies and individuals to whom you have written requesting copies of any response they might make to the Commission. We would be particularly interested to see whether the following have been included: Dame Elizabeth Butler-Sloss, President of the Family Division; Lord Justice Thorpe, Chairman of the Court of Appeal Mediation Scheme Steering Committee; Mr Justice Colman; the Commercial Court Users' Committee; the Chancery Division Users' Committee; CEDR; the Law Society; and the Commercial Bar Association.

  The Committee decided to hold the document under scrutiny.

13 June 2002

Letter from the Rt Hon Baroness Scotland of Asthal QC to the Chairman

  Thank you for your letter of 13 June. You have asked that the Committee be kept informed of which individuals and bodies the Government has contacted requesting copies of their responses to the Commission's Green Paper on ADR.

  I can confirm that all those specified in your letter have been, or will be shortly, notified of the existence of the Green Paper and asked to copy any responses to this Department.

23 July 2002

Letter from the Chairman to the Rt Hon Baroness Scotland of Asthal QC, Parliamentary Secretary, Lord Chancellor's Department

  Thank you for your letter of 23 July which was considered by Sub-Committee E at its meeting on 9 October. We are pleased to learn that copies of the Green Paper have been sent to those listed in my letter of 13 June.

  The Committee decided to retain the document under scrutiny pending receipt of a copy of the Government's own response to the Green Paper.

10 October 2002

Letter from the Rt Hon Baroness Scotland of Asthal QC, Parliamentary Secretary, to the Chairman

  In your letter of 13 June you indicated that the Committee had decided to hold the European Commission's Green Paper under scrutiny, pending receipt of the Government's response.

  I now enclose a copy of the UK response to the Green Paper on ADR. The Committee will note that the overall response to the questions posed by the Commission is that regulation of ADR is to be avoided. This view is broadly supported by other respondents from within the UK, who have copied their responses to this Department.

1 November 2002


European Commission: Green Paper on Alternative Dispute Resolution on Civil and Commercial Law


  1.  In the United Kingdom there is strong and growing support for the use of alternative methods of dispute resolution. In this respect what is meant by alternative resolution relates to the practice of supporting negotiation towards an agreed settlement amongst disputing parties. This is sometimes achieved by direct negotiations between the parties or such negotiations supported by their representatives or legal advisers.

  2.  In other situations ADR relates to the conduct of mediation or conciliatory processes by the intervention of a third party. For the purposes of this response to the Green Paper the United Kingdom will use the expression ADR to mean that type of process where a third party is involved in supporting negotiation. The United Kingdom will not refer to as ADR arbitration, adjudication in the formal sense (such as construction contract adjudication), schemes whereby third parties decide or recommend decisions to litigants or those in dispute situations or any form of on-line or other complaints procedure which does not involve the actual resolution by agreement of disputes.

  3.  The UK believes that ADR, including online schemes, has the potential to make a valuable contribution to consumer confidence in the single market and in electronic commerce. As the Green Paper points out, going to court an be costly and time-consuming, particularly with cross border cases. ADR can offer low cost, user-friendly ways of settling contractual disputes. It can avoid some of the difficult questions of jurisdiction and applicable law. Efficient, low cost ways of settling contractual disputes are equally vital to business. We also see ADR as a component of self-regulation: good quality industry codes of practice should provide consumers with access to out of court dispute resolution. The UK has been a strong supporter of EU and international initiatives to promote business to consumer ADR.

  4.  A number of initiatives have been introduced to encourage and promote the increased use of ADR generally in England & Wales and Scotland. The other jurisdictions within the UK, are equally supportive of ADR and Northern Ireland will shortly be introducing pilot mediation schemes for both civil and family disputes.

  5.  The Civil Procedure Rules, that were introduced in England & Wales in April 1999, impose a duty on the courts to actively encourage the use of ADR. The overriding objective of the rules is to deal with cases justly, and this is being achieved by effective case management, giving the courts powers to control the conduct of litigation. This will include, encouraging the use of ADR, fixing timetables, or otherwise controlling the progress of a case, and giving directions to ensure that the trial of a case proceeds quickly and efficiently. The Rules also allow for proceedings to be stayed so that the parties can explore the use of ADR methods to settle their disputes. This can be done either by application of one of the parties on the court's own initiative.

  6.  The Rules also seek to influence the parties' behaviour before court proceedings are issued, by the introduction of pre-action protocols. Pre-action protocols try to engage parties who are in dispute to take all practical steps to try and resolve the matter as quickly as possible outside the court, including the use of alternative dispute resolution methods. Failure to comply with the protocol may lead to costs sanctions being imposed if the case proceeds to trail.

  7.  There have been some very significant judgments handed down by the Court of Appeal for England & Wales in the last 12 months.

  Cowl and others v Plymouth City Council ([2001] EWCA Civ 1935). The case involved a dispute between residents of a care home and the local authority about the closure of the home; the residents sought judicial review of the Council's decision.

  Giving the judgment of the court, the Lord Chief Justice said, in part, that the appeal illustrated that, even in disputes between public authorities and the members of the public for whom they are responsible, insufficient attention is paid to the paramount importance of avoiding litigation whenever possible. Both sides must by now be acutely conscious of the contribution alternative dispute resolution can make to resolving disputes in a manner which both meets the needs of the parties and the public and saves time, expense and stress.

  The Lord Chief Justice also said that the parties should have been able to come to a sensible conclusion as to how to dispose the issues which divided them. If they could not do this without help, then an independent mediator should have been recruited to assist. That would have been a far cheaper course to adopt. Today sufficient should be known about ADR to make the failure to adopt it, in particular when public money is involved, indefensible.

  Dunnet v Railtrack ([2002] EWCA Civ 302)

  This case concerned a claim for damages in negligence. The Court of Appeal refused the successful party its costs on the grounds that the party failed to mediate when the other party indicated a willingness to do so.

  In handing down this judgment, the Court Said:

    "Skilled mediators could achieve results that went far beyond the court's powers and lawyers who dismissed the opportunity for arbitration or mediation out of hand would suffer uncomfortable consequences. . . It has to be emphasised that it was a lawyer's duty to further the overriding objective under CPR r1.1. If parties turned down ADR out of hand they would suffer the consequences when costs came to be decided."

  8.  A number of court-annexed schemes have been established in courts in England & Wales that steer parties towards ADR once proceedings have been commenced. However, research has shown that take up of these schemes, even where ADR is offered free of charge or at a reduced rate, is very low.

  9.  ADR plays an important role in the resolution of consumer disputes in the UK. A considerable number of schemes are in operation, including a range of mediation and conciliation services and sectoral ombudsmen, trade association arbitration schemes (of which the Chartered Institute of Arbitrators runs about 50[23].

  10.  There is little reference in the paper to the development of family mediation in England & Wales. Until 1963 any agreement between the parties about arrangements was an absolute bar to the grant of divorce or judicial separation. This prohibition was finally abolished in 1971 when the Divorce Reform Act 1969 came into force. The concept of what is now called mediation was by then in existence and was seen as assisting parties to reach agreement or reduce the extent of the dispute about every aspect of the breakdown of their marriage. Local mediation (then called conciliation) services were set up by volunteers from 1978. Voluntary family mediation services (organismes associatifs) developed widely across the country with national organisations being set up from 1981. In 1988 the Law Commission for England & Wales included mediation in its proposals for the reform of the divorce law which resulted in the Family Law Act 1996. This led to recognition of the need for the reduction of the fragmentation of services in England & Wales which in turn resulted in the consolidation of three major voluntary organisations providing family mediation into the UK College of Family Mediators in 1996. Publicly funded mediation has been implemented under the Act.

  11.  For family mediation, the Government supports the benefits of using ADR. It is not, however, the case that parties who receive publicly funded family mediation in England & Wales are free to choose any mediator to conduct the mediation. Only mediators meeting the Legal Services Commission criteria can conduct publicly funded family mediation.

  12.  On the operation of the Brussels II Regulation, anecdotal evidence about a small number of cases which we have received from the legal profession has shown that the need to establish jurisdiction has led to parties in divorce proceedings putting their case before their preferred jurisdiction without prior recourse to ADR, in line with the possibility suggested at paragraph 49 of the Green Paper.

  13.  The position in Scotland with regard to ADR and mediation is that there are some signs of advance in the use of supported negotiation and mediation. For many years the practice of the resolving of disputes in family law and parental responsibility issues has been supported by mediation. Family Mediation Scotland co-ordinates a number of regional mediation organisations in Scotland focusing particularly on the resolution of disputes between parents and children. These are supported by funds provided by the Scottish Executive.

  14.  In recent years this practice has been extended to other areas of family law, notably in relation to property matters. Comprehensive Accredited Lawyer Mediations operate to resolve property disputes following the breakdown of marriage and this supports what is already well established as a negotiation culture amongst family practitioners in Scotland.

  15.  For many years the rules of procedure in the sheriff court have contained a power enabling the Sheriffs to refer cases involving children to mediation and this has recently been extended to other areas of family practice.

  16.  More recently new Commercial Cause Rules in the Sheriff Court in Scotland have contained a provision enabling Sheriffs to refer commercial cases for mediation where appropriate. These Rules are in force in Glasgow Sheriff Court which is one of the busiest courts in Europe and are shown to support negotiation effectively as a means of settling contentious commercial actions.

  17.  There is also in Edinburgh Sheriff Court a court-based mediation scheme in which low value and consumer claims are referred to accredited mediators for mediated resolution. This scheme, which was supported in its initial phase by EC funds, has demonstrated the value of mediation as a method of assisting negotiated settlement of claims of this kind and studies are being undertaken to consider how to roll this out further into other areas of the country.

  18.  In addition to these schemes, locally based mediation has been seen to be of value in relation to neighbourhood disputes of various kinds and also in commercial contracts where there is an incentive to the parties who are in dispute to try and resolve disputes between them in such a way that they can continue their commercial and working relationships. To this end a number of commercial mediator businesses have been established in recent years whose practice is growing and in which confidence is increasing.

  19.  The UK Government has further demonstrated its commitment to ADR by announcing the "ADR Pledge" in March 2001. Under the terms of the Pledge all Government Departments and Agencies are committed to using ADR to settle their own disputes, in all suitable cases. In leading by example in this way the Government hopes to promote and encourage the wider use of ADR. In July 2002 the Lord Chancellor's Department published a report detailing the activity of Government Departments resulting from the Pledge. A copy of this report, which includes the full text of the pledge, is annexed to this paper.

  20.  In general the United Kingdom does not take the view that regulating ADR is a sensible way forward. ADR is based on consensus and, therefore, is a matter of agreement. It must respond to the wishes and desires of parties in the free market to be able to choose the process of agreement or dispute resolution which suits them and also the third party who is going to support that process. Given the absence of generally public sponsored and organised ADR (with the exception of certain programmes such as Family Mediation which are supported by public funds) the UK takes the view that public regulation of ADR or mediation is at best premature and at worst inappropriate.

  21.  Nevertheless, there is some room for evaluating the extent to which, for cross-border cases of various kinds, it may be appropriate to consider criteria and minimum standards which should be applied in relation to ADR activity. This should not amount in any sense to regulation. Still less should it be an attempt to establish uniformity or harmonisation of the various ADR networks within the Member States but rather to look at the way in which resolution of disputes cross-border can be assisted by supporting ADR activity for such disputes.

  Separate responses are given for civil & commercial law and family law. This is because, in the UK, family mediation is very much of its own kind as compared with mediation for consumer or commercial disputes. In particular the practice of mediation in family cases, most notably in relation to children matters, is so bound up with national law on these matters that it cannot be separated easily from the law and procedures which apply in the Member States and in particular in the UK jurisdictions.

Question 1: Are there problems such as to warrant Community action on ADR? If so, what are they? What is your opinion on the general approach to ADR that should be followed by the institutions of the European Union, and what might be the scope of such initiatives?

Civil & Commercial

  22.  The biggest problem with regard to ADR is lack of awareness. This problem requires focus on making clear to those concerned what benefits can arise in supporting negotiation to settle disputes. This is a particular problem for cross-border cases. The most important way of resolving this is to enable information to be transmitted about the way in which ADR schemes operate in the various Member States of the Community. The EU institutions, therefore, should concentrate on initiatives that encourage and promote cross-border ADR where appropriate and information about ADR schemes to this end.

  23.  In this connection the Civil Judicial Network established by Council Decision 2001/470 should be borne in mind as a vehicle for making information available. This should seek to co-ordinate all the information including that about the European Extra-Judicial Network to provide a comprehensive digest of knowledge available. The Civil Judicial Network will involve many of those engaged in seeking to resolve civil disputes including legal practitioners and advisers and the judiciary.

  24.  The Green Paper rightly draws attention to the contribution ADR can make to the resolution of consumer disputes, and we see a role for the Community in facilitating cross border ADR, which is little developed as yet. In particular the UK strongly supports the establishment of the European Extra-Judicial Network (EEJ-Net), following Council Decision 2001/470/EC and Commission Recommendations 98/257 EC and 2001/310/EC. We hope that priority will be given to the completion of EEJ-Net. This will require continuing investment of considerable time and money from the Commission and the Member States.


  25.  In England & Wales, family mediation is voluntary (ie not compulsory) and is undertaken to resolve disputes arising in the context of divorce or separation under the provisions of domestic legislation. Our research indicates that mediation is likely to remain a minority choice in family disputes and that the majority of cases will be resolved using other methods. The Government encourages the use of family mediation in appropriate cases. However, not all cases can be resolved through mediation and there are limits to the extent to which it is appropriate to promote mediation. The scope of any international proposals is likely to be limited. There is no evidence of a significant number of disputes which would be helped by an EU initiative. One current problem arising from an EU Regulation is identified at paragraph 12 above.

  26.  In Scotland family mediation has existed in some form or another for about 25 years. This is focused traditionally on the resolution of disputes between parents as to the upbringing of their children and is now entrenched firmly in the national law which also incorporates elements of the United Nations Convention on the Rights of the Child, notably Article 12 about the views of children. In principle, Scotland encourages a negotiation culture in these matters and seeks to return primary responsibility for relations with their children to parents.

  27.  It follows that negotiation should be the aim in all of these cases and where mediated or supported negotiation is feasible then it is encouraged. It has to be acknowledged, however, that this is not possible in all cases and indeed in certain cases should not be attempted, notably those where there is domestic abuse or a power imbalance.

  28.  To support this policy the rules of court in the sheriff court in Scotland where the bulk of family actions take place have for long enabled the Sheriffs to refer cases to mediation. There is a network of mediation organisations in Scotland which are voluntary and for which no charge is levied. These organisations are in part supported by public funds from the Scottish Executive and from local authorities. They are co-ordinated by a central organisation.

  29.  Developments in family law in Scotland have involved the introduction of a mediation stage in court procedures where matters of parental responsibility are under consideration. A special hearing called the child welfare hearing was established in the sheriff court to enable parties to reach conclusions with the negotiation support of the Sheriff. This responds to one of the norms of Scottish family law which is that the court should not make an order in relation to parental responsibility unless it is clearly in the interests of children that it should do so.

  30.  Mediation is also available for family matters after divorce. The network of Comprehensive Accredited Lawyer Mediators can be supported by legal aid in appropriate cases. These mediators deal primarily with matters of matrimonial property where the Scottish law enjoins an attempt at clean break.

  31.  All of these initiatives based on national law have lessons for cross-border cases but cross-border mediation will be that much more difficult given mediation techniques which involve shuttle diplomacy negotiation to and fro between the parties and a series of structured meetings in which the discussions become more profound and more focused. This would be something very difficult in international matters although this does not rule out attempting it.

Question 2: Should the initiatives be confined to defining the principles applicable to one single field (such as commercial or family law)—field by field—and in this way discriminate between these different fields, or should they as far as possible extend to all the fields governed by civil and commercial law?

Civil & Commercial

  32.  Although the two Recommendations referred to in the Green Paper describe as "principles" the requirements for out of court bodies, we consider they are in fact minimum standards. The adoption of minimum standards may be a way to deal with certain issues in relation to ADR. There are certain minimum standards which are applicable across the board such as, for example, those of impartiality, speed, openness and fairness to the parties and procedural propriety generally.

  33.  On the other hand these are not regulated, by and large, within Member States, including the UK, and therefore it seems difficult to see how this can or should be done at EC level.

  34.  Rather the focus should be on looking at those areas where it can be seen empirically that there is real gain and added value to be brought to bear by using ADR as a method of supported negotiated settlement. This is likely to arise most frequently where there is value in the continuing relationships of the disputing parties and where legitimate savings can be seen by those involved in the disputes by way of time and expense.

  35.  We note that at paragraph 39 of the green paper the Commission says that it will not take new measures relating to consumers until there has been a full evaluation of EEJ-Net and extensive consultation with Member States, ADR providers and other interested parties. We very much agree with this approach.

  36.  Whilst we do not consider it necessary for principles to be defined at EC level, we are inclined to think that principles for ADR need to be specialised to a degree and that a field by field approach would be the most effective. Existing initiatives in some fields may restrict the scope for more general approaches.


  37.  Mediation in family disputes is unlike ADR in commercial disputes and currently different professional bodies are involved in the two fields in England & Wales and Scotland. In particular family disputes raise different issues from those in the commercial field. Therefore it would be appropriate at present to define family mediation as a separate field and consider the development of mediation in family disputes separately from the development of its use in other areas of law.

  38.  Whilst there are certain common denominators as between mediators supporting dispute resolution in family law matters and other consumer and commercial areas, for example, impartiality, fairness, speed there are particularities in relation to family law mediation which it will be difficult to apply elsewhere. Family mediation is highly specialised and one of the key elements in its development was to secure sensible arrangements that would remove the damaging effects of contentious disagreements between parents. It also depends very much on the stage at which mediated settlement is attempted in a matrimonial or (Scotland) parental responsibility dispute. Sometimes the process almost amounts to counselling which is unlikely to be the position in other types of mediation.

Question 3: Should the initiatives to be undertaken deal separately with the methods of online dispute resolution (ODR) (an emerging sector which stands out because of its high rate of innovation and the rapid pace of development of new technologies) and the traditional methods, or on the contrary should they cover these methods without making any differentiation?

Civil & Commercial

  39.  We do not at present see any need to deal separately with ODR, although it is always possible that new technologies and business models will necessitate a review at some stage.

  40.  For cross-border dispute resolution there are theoretical advantages in using new technology provided systems can be developed which are transparent and fair. It may be necessary, for example, to ensure that there is a clear distinction between ADR and in-house complaint schemes.


  41.  Currently on-line dispute resolution is only at a very early experimental stage in family disputes in England & Wales and Scotland. We suggest there should be separate initiatives to develop on-line dispute resolution and more traditional approaches.

  42.  It is difficult to see how, particularly in relation to child centred mediation on parental responsibility matters, it will be possible to achieve this by on-line methods. The issues are complex and the process too subtle to lend itself easily to such systems. The use of electronic means for contact or communication among parties and mediators is a separate issue but this does not deal with the substance of the process. Clearly information about mediation services can be transmitted electronically especially through the Civil Judicial Network.

Question 4: How might recourse to ADR practices be developed in the field of family law?


  43.  The Government is taking forward a number of options to encourage the use of family mediation. Publicly funded family mediation under the Community Legal Service Funding Code has been in place since March 1997 and has now been implemented throughout England & Wales. Over 270 mediation services have now concluded contracts with the Legal Services Commission (LSC) to provide quality assured mediation facilities in all parts of England and Wales.

  44.  In addition, the requirements of the Community Legal Service Funding Code referral to mediation, whereby people seeking public funding for family proceedings have first to consider whether mediation might be suitable, have also been implemented throughout England and Wales. In order to assist people who require legal advice while taking part in the mediation process, a new level of assistance, Help with Mediation; has been introduced in the Community Legal Service to enable people eligible for public funding to receive advice from a solicitor during and following mediation.

  45.  The Government is also considering how the public can be better informed about mediation, and supported a publicity campaign to raise public awareness of the potential benefits of family mediation in early 2001. A leaflet giving information about family mediation is available from the Community Legal Service.

  46.  The Scottish Executive is currently reviewing the level and nature of its support for family mediation in Scotland. Grants are paid to the umbrella organisation Family Mediation Scotland and to certain of the mediation services. Future policy on family law will look carefully at the place of mediation against the background that it is difficult to evaluate on a value for money basis the global effect of mediation in family law generally.

  47.  In principle, however, the Scottish Executive supports mediation where appropriate and sees this as a logical and significant strengthening of the negotiation culture which is, in any event, prevalent in the practice of family law in Scotland. The use of separation agreements, for example, is one way in which the outcome of a mediated negotiation can be expressed and these are enforceable under the law of Scotland.

  48.  There is some benefit in looking at the application of mediation and supported negotiation settlement for cross-border family law cases. This is particularly where there are difficult or intractable issues relating to children arising following separation or divorce. The existing proposal of Brussels II bis allows for this.

  49.  However, it should be recognised that not all cases are suitable for mediation and certain types of mediation techniques do not lend themselves readily to distance mediation of the kind envisaged. At EU level therefore whilst it might be possible to explore methods and standards in relation to mediation in family law such exploration should be tentative at present and designed to operate to test the feasibility of such a mechanism.

Question 5: Should the legislation of Member States be harmonised so that in each Member State ADR clauses have the same legal value?

  50.  No, harmonisation is not appropriate.

Civil & Commercial

  51.  In its response to the Commission's Communication on European contract law, the Government said:

    "The UK Government considers it axiomatic that

    —  any action at EC level should be in response to a demonstrable need for action at that level to deal with a real (not just a theoretical) problem;

    —  there should be a reasonable likelihood of achieving agreement;

    —  the measures proposed should be proportionate to, and targeted on, the problem in question; and

    —  action should be taken only after a careful assessment of the net effect of the change on business and consumers to ensure that it was, on balance, beneficial."

  52.  These points were explicitly recognised by the Commission in that Communication (paragraphs 41-44).

  53.  The Commission's Green Paper on ADR offers no evidence that there is a real and demonstrable need for "the legislation of the Member States [to] be harmonised so that in each Member State ADR clauses have the same legal value". We consider, therefore, that it should not be so harmonised.


  54.  In principle the UK takes the view that for family law matters harmonisation is not the issue. So far as substantive matrimonial property disputes are concerned the position in England and Wales is that there is no ante-nuptial contract into which an ADR clause could be inserted. Unlike some other Member States the matrimonial property regime does not enable or require contracting out in this way.

  55.  In Scotland disputes following the breakdown of a marriage can be resolved by agreement but this is based extensively on the application of the rules of national law. Any such agreement may be enforceable however.

  56.  In relation to children the position in England and Wales is that the courts deal with parental responsibility orders and any variations. In this respect, therefore, it would be extremely difficult to achieve harmonisation. Even in Scotland where agreements are possible it is extremely unlikely that any resort to mediation would be the subject of such an agreement but rather a separate matter for the parties. In any event harmonisation would tend to stifle or restrict development of ADR as a consensus-based dispute resolution mechanism.

Question 6: If so, should the validity of such clauses be generally accepted or should such validity be limited where these clauses appear in membership contracts in general or in contracts with consumers in particular?

Civil & Commercial

  57.  Given the answer to Q.5, this question falls. In any event it should be noted that there is already some harmonisation of rules in relation to contract matters for cross-border cases. The Rome Convention on Applicable Law will determine the law to be applied in relation to such agreements. No further work is needed in this respect.

  58.  However, to the extent that contractual terms are the result of agreement freely reached between the parties to the contract, there can be no grounds (other than those in the general law relating to the validity of contractual terms) for limiting the validity of ADR clauses. Protection of consumers, and of businesses dealing on the other party's standard terms, is already provided for in sufficiently general terms by the Unfair contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999, implementing the Directive 93/13/EEC on unfair terms in consumer contracts, and we see no evidence that additional protection is necessary when the contract provides for ADR.


  59.  We do not consider that harmonisation of family law is a practical or desirable proposition.

Question 7: What in any case should be the scope of such clauses?

Civil & Commercial

  60.  The scope and terms of such clauses should be entirely a matter for the contracting parties, not for national or EU legislation.


  61.  Not applicable to family law in the UK.

Question 8: Should we go as far as to consider that violation would imply that the court has no jurisdiction to hear the dispute, for the time being at least?

  62.  No.

Civil & Commercial

  63.  As a matter of common law, contractual clauses entirely outsting the jurisdiction of the courts in favour of a private tribunal in questions of law are void as being contrary to public policy. The courts are similarly not bound by a contractual provision that private remedies must be exhausted before recourse is had to the courts (although in these circumstances, the claimant would have to show cause why the court should intervene). Under the Civil Procedure Rules parties are expected to behave reasonably both before and during litigation. An unreasonable refusal to attempt ADR (whether or not a clause exists) may be seen as unreasonable behaviour and costs sanctions may be imposed.

  64.  To do as this question suggests raises questions under Article 6 of the European Convention on Human Rights.


  65.  If mediation fails or is considered inappropriate in a particular case, then the dispute will have to be referred to the court. It would be illogical for cases where clauses relating to ADR have been breached, and therefore where ADR has failed or has been rejected, then to be ruled outside the jurisdiction of the courts. This suggestion would not be appropriate in family disputes, in which in the majority of cases it is not possible for mediation to be used successfully.

Question 9: Should the legislation of the Member States be harmonised so that in each Member State recourse to an ADR mechanism entails suspension of the limitation periods for the seising of courts?

  66.  No.

Civil & Commercial

  67.  We do not agree with the Commission's proposal that parties should be able to suspend limitation periods by agreement to explore settling the dispute by way of ADR. This would lead to different limitation periods applying in different cases, and, as the ADR procedure could take some time, could in some cases mean that the limitation period is extended considerably beyond what is prescribed in statute. This uncertainty would create a general lack of clarity in the law and the possibility of disputes in individual cases over when the ADR process began and ended and what its precise effects on the limitation period in question were.

  68.  The general practice, in England & Wales, where the parties are concerned that a limitation period may expire during or shortly following ADR would be for them to initiate court proceedings within the relevant limitation period, and then request the court to stay the proceedings to enable ADR to take place. This method works well to avoid the dangers of exceeding a limitation period without losing the benefits that ADR can bring.

  69.  In Scotland the law of prescription normally would lead to any obligation arising from contract to expire five years after it arose. In relation to a dispute this would be five years after the dispute crystallised. There is a long negative prescription of 20 years which might catch some other cases but broadly speaking it will be necessary for the prescription period to be broken by a claim being stated or raised. This should normally take place within a mediation or ADR process in any event.


  70.  This question does not apply to family law since limitation periods are not appropriate in family law matters. We do not consider that harmonisation of family law is a practical proposition. Furthermore, the legislative framework and policy intention in family proceedings relating to children is that the best interests of the child is the paramount or a leading consideration.

Question 10: What has been the experience of applying the Commission recommendation of 1998 and 2001?

Civil & Commercial

  71.  The principles in the first Recommendation have been a useful foundation for EEJ-Net. In applying the principles to UK ADR bodies applying to join EEJ-Net we have not encountered any significant problems. We are however aware that some commentators have raised questions about some elements of the principles in Recommendation 98/257, eg:

    —  principle of independence: whether it is necessary to rule out as decision makers individuals who have worked in the industry in the previous three years, since this could deprive some ADR schemes of otherwise well qualified people.

    —  principle of transparency: whether it is possible to apply paragraph 2, which requires ADR bodies to publish annual reports setting out decisions taken etc, to procedures which may be designed to be private.

    —  principle of legality: whether the provision on applicable law could be clarified.

  72.  We have no experience of the application of the second Recommendation; EEJ-Net has not yet been expanded to cover consensual ADR schemes.


  73.  Not applicable to family law in the UK.

Question 11: Could the principles set out in the two recommendations apply indiscriminately to fields other than consumer protection law and in particular be extended to civil and commercial law?

Civil & Commercial

  74.  Whilst the principles set out in the Recommendations are, broadly speaking, equally desirable in all fields of civil and commercial law, much work will be necessary to ensure that the definitions that support each principle can be fairly applied to all areas. We are aware, for example, that some providers of ADR (notably some Trade Association Arbitration schemes) cannot meet the requirements for independence.


  75.  In family mediation in England & Wales the parties to the dispute are helped to reach their own resolution of the dispute by a neutral third party, who does not intervene in the sense described at paragraph 37 of the Green Paper referring to the Commission's 1998 Recommendation. Family mediations do not usually reach a conclusion in one session as set out in the 2001 Recommendation. The conduct of a family mediation is a matter for the independent mediator in conjunction with the parties, subject to relevant codes of practice where the mediation is publicly funded. The provisions of these recommendations are therefore incompatible with family mediation in England & Wales and Scotland.

  76.  We would suggest, therefore, that, again, a field by field approach would be more effective and limited to cross border disputes.

Question 12: Of the principles enshrined in the recommendations, which in your view could be incorporated in the legislation of all the Member States?

Civil & Commercial

  77.  We are firmly opposed to the idea of turning the principles into legislation. The strengths of ADR is that it is relatively informal, flexible, low cost and user-friendly compared to court procedures. There is a risk that further legislation would have the effect of making ADR much more like a court process, doing away with its advantages and making it less attractive to users.

  78.  We are not aware of any evidence to suggest a need for greater regulation of business to consumer ADR. From our perspective existing methods of control, which include self-regulation, oversight by professional bodies and national laws (eg in the case of arbitration and some ombudsman schemes in the UK) seem adequate. And while principles or guidelines allow some adaptability, there is a risk that general legislation would not be able to take account of the many different kinds of ADR scheme in operation.


  79.  Not applicable to Family Law in the UK.

Question 13: In your opinion, should the legislation of the Member States in regulated areas such as family law be harmonised so that common principles may be laid down with regard to procedural guarantees?

  80.  No, we do not consider there should be harmonisation in regulated areas of law.


  81.  We do not consider that harmonisation of the whole of family law is a practical proposition. Specific EU instruments deal with specific aspects of family law and provide procedural guarantees for the issues addressed. In family mediation in England & Wales the agreement reached in mediation may be submitted to the court as a "consent order" which is then approved by the court. It might be beneficial for such a court order to have available to it the provisions of recognition and enforcement available for orders which are already covered by EU instruments. However, this should be confined to cross-border matters and not lead to harmonisation of national laws.

  82.  In Scotland an agreement concluding mediation may be enforceable if registered in the Court Books following consent to execution by the parties. Where this agreement relates to maintenance or payment of money then it will be enforceable directly.

Question 14: What initiative do you think the institutions of the European Union should take in close co-operation with interested circles, as regards the ethical rules which would be binding on third parties?

Civil & Commercial

  83.  The UK Government recognises the importance of binding ethical rules for ADR providers, in particular rules of professional ethics and professional competence, which apply to those professionals involved as mediators or otherwise. For cross-border cases standards of this kind need to be recognisable for confidence to exist in cross-border mediation.

  84.  That said, an attempt was made within the UK to develop common standards but was unsuccessful. Within the United Kingdom this is left to the professional organisations to police through their self-regulatory mechanisms. The Law Society has set up its own levels of competence as part of its establishment of its own panel for civil and commercial mediators. The Law Society launched its civil and commercial mediation panel in summer 2002.

  85.  In principle, therefore, the UK agrees with the proposition that the most effective initiatives are likely to be those that help boost such self-regulatory activity as noted in paragraph 72 of the paper. In addition this helps to preserve the flexibility of ADR. Accessible information on the establishment and monitoring of such ethical and professional standards, as well as their enforcement, will assist this process.


  86.  For family mediation we see no need for an EU initiative. In England & Wales and Scotland, the Government believes that family mediation should be an independent, self-regulated profession. Many family mediators are members of the UK College of Family Mediators, which was established in 1996. The standards set by the Legal Services Commission were recommended as the common standard for all mediators. The standard developed by the Legal Services Commission should reassure the public that those mediation providers given contracts to carry out publicly funded family mediation are competent. The Law Society has set up its own levels of competence as part of its establishment of its own panel for family solicitor-mediators. The Law Society launched its family mediation panel in late 2000.

  87.  In Scotland accredited mediators provide the mediation services organised under the umbrella of Family Mediation Scotland and there is thorough and rigorous training available for such mediators. In addition the Law Society of Scotland accredits family practitioners both in general and as mediators as part of the scheme of Comprehensive Accredited Lawyer Mediators. The EU should not do more than make accessible information on the arrangements in Member States about ethical standards and norms and complaint procedures of those bodes responsible for accrediting mediators in the different fields.

Question 15: Should the legislation of Member States be harmonised so that the confidentiality of ADRs is guaranteed in each Member State?

  88.  No.

Civil & Commercial

  89.  Again this is an area where an attempt to introduce legislation may do more harm than good. The confidentiality requirements will differ between disputes and should, therefore, be a matter for parties themselves to decide based on the individual circumstances. To introduce legislation here would stifle the flexibility that is one of the attractions of using ADR.


  90.  We do not consider that harmonisation of family law is a practical or desirable proposition. Furthermore, in England & Wales, in circumstances where family mediation relates to children, it is not possible to give an absolute guarantee of confidentiality since the mediation may reveal information on child protection issues on which action must be taken to protect the child.

Question 16: If so, how and to what extent should such confidentiality be guaranteed? To what extent should guarantees of confidentiality apply also to publication of the results of ADR?

Civil & Commercial

  91.  The confidentiality arrangements need to be flexible and should depend on the views of the parties and the circumstances of the individual dispute. In addition, we think it useful for the spread of ADR to give examples of real life cases—suitably anonymised and with the agreement of the parties.


  92.  The question is not clear whether publication relates to disclosure between the parties, disclosure to the court, or disclosure beyond the court. In cases where the mediation is concluded by a consent order of the court, the confidentiality provisions applicable in family proceedings will have effect.

Question 17: In your opinion, should there be a Community rule to the effect that there is a period of reflection following ADR procedures before the agreement is signed or a period for withdrawal after the signing of the agreement? Should this question be instead handled within the framework of ethical rules to which third parties are subject?

  93.  No.

Civil & Commercial and Family

  94.  As we say above, we are not in favour of Community rules on ADR. In the case of reflection periods, it seems as though this is an area where differences between sectors and schemes would make any sort of common rule particularly difficult. In some fields both parties may have a mutual interest in rapid enforcement, while in others the complexity of cases may call for a period to reflect. However, we recognise that there may be concerns where parties have no legal representation.

  95.  Rather than a rule we would suggest some form of guidance. This refers back to our earlier suggestion that ADR bodies across the Community should share best practice.

Question 18: Is there a need to make ADR agreements more effective in the Member States? What is the best solution to the question of recognition and enforcement of ADR agreements in other Member States of the European Union? Should specific rules be adopted to render ADR agreements enforceable? If so, subject to what guarantees?

Civil & Commercial and Family

  96.  Questions of enforcement or enforceability of mediated agreements should relate to the position under national law except where there is international agreement existing which covers the matter.

  97.  Within the EC the provisions of the Brussels I Regulation and of the Convention (as noted in paragraph 87) provide the possibility of enforcement of a mediated agreement where this is within the nature of an authentic instrument.

  98.  This is not something which requires further Community activity but which can be recommended as a solution in those legal systems where authentic instruments are known.

  99.  In any event mediated agreements are usually signed by the parties at the close of mediation and should, in principle, have the same status as far as enforcement is concerned as any other such contracts. Therefore, they should be enforceable on this basis.

Question 19: What initiatives in your view should the Community institutions take to support the training of third parties?

Civil & Commercial

  100.  We recognise that confidence in the quality of ADR services is needed if they are to be widely used and that training needs to be good. As the Lord Chancellor's 1999 discussion paper on ADR noted, ADR services are still developing to meet user needs, so it will be particularly important that any form of supervision or regulation does not stifle innovation and competition. Our view at present is that existing quality assurance mechanisms in the UK are adequate; they include, for example, the Chartered Institute of Arbitrators Guidelines and Code of Ethical Conduct, the criteria of the British and Irish Ombudsman Association and the codes of conduct of organisations such as CEDR and Mediation UK.

  101.  We would, therefore, suggest that initiatives should be confined to those that support the mutual recognition of training, such as encouraging shared practice.


  102.  See response to Question 14 above.

Question 20: Should support be given to initiatives to establish minimum training criteria with a view to the accreditation of third parties?

  103.  Yes.

Civil & Commercial and Family

  104.  Establishing minimum training criteria will go a long way towards providing quality assurance for users. A comparable initiative is currently being developed in England & Wales.

  105.  The Legal Services Commission (the organisation responsible for the administration of public funding for legal services in England & Wales) is developing a Community Legal Service Quality Mark for Community and Family mediators. The aim of the CLS Quality Mark is to ensure that there is a minimum standard that is followed by all Quality Mark accredited organisations. One of the major benefits is that the quality mark will provide organisations with a facility to give a high level of confidence to their clients. The public will eventually recognise the Quality Mark logo and will know that, where it is displayed, the service they are using is one they can trust to provide the service they require. The Quality Mark itself will cover such areas as: access to services; people management; running the organisation and commitment to quality. It also includes a training element.

Question 21: Should special rules be adopted with regard to the liability of third parties? If so, which rules? What role should ethical codes play in this field?

  106.  No.

Civil & Commercial

  107.  We do not consider that it would be necessary to adopt special rules. Any professional (whether or not they are lawyers) will hold Professional Liability Insurance which will include acting as a third party. In any event most ADR providers have established complaints procedures. Information on the insurance by way of professional indemnity and complaints procedures should be made available. The existence of a complaints procedure is one of the elements of the quality mark referred to in the answer to question 20 above.


  108.  In family mediation in England & Wales this is a matter for the independent, self-regulated profession.


  109.  The UK welcomes the Commission's Green Paper on ADR and considers that it has correctly identified the issues that need to be addressed. However, we would urge the Commission to be cautious before attempting to introduce regulation for ADR. Regulation would stifle the very aspects of ADR that make it such a valuable part of the civil justice system—its flexibility and innovation.

  110.  Instead, we suggest that the Commission should, as the Green Paper suggests at paragraph 57, concentrate on initiatives that encourage best practice and facilitate the use of ADR in civil disputes in cross border matters only.


  The aim of this report is to evaluate the progress Government Departments and Agencies have made in implementing the ADR pledge, which was announced by the Lord Chancellor in March 2001.


  Under the terms of the ADR Pledge, all Government Departments and Agencies have made the following commitments:

    —  Alternative Dispute Resolution will be considered and used in all suitable cases wherever the other party accepts it.

    —  In future, Departments will provide appropriate clauses in their standard procurement contracts on the use of ADR techniques to settle their disputes. The precise method of settlement would be tailored to the details of individual cases.

    —  Central Government will produce procurement guidance on the different options available for ADR in Government disputes and how they might be best deployed in different circumstances. This will spread best practice and ensure consistency across Government.

    —  Departments will improve flexibility in reaching agreement on financial compensation, including using an independent assessment of a possible settlement figure.

    —  Government Departments will put in place performance measures to monitor the effectiveness of this undertaking.


  The information submitted to the Lord Chancellor's Department shows that the number of Government disputes in the financial year 2001-02 where a method of dispute resolution has been used or attempted is 49.

  Whilst this appears a somewhat disappointing figure, it must be remembered that it would be too ambitious to expect the first year to provide anything more than a baseline that can be used, over time, to give a feel for the volume of disputes that are settled by ADR. Over time, however, these annual returns will demonstrate whether the level of ADR use has increased, remained stable, or decreased.

  Although outside the period of the report, it is also worth mentioning that the Ministry of Defence (MoD) has recently reached an agreement over the claims of Kenyan tribes people bereaved or injured by British Army explosives left on their land. This issue has been in dispute for two years, but now, following a two day mediation in London, the MoD has agreed to pay, on limited liability, a £4.5 million settlement.

  That said, the information received this year already demonstrates that the ADR Pledge is taken very seriously. Many Departments have embarked on progressive steps to implement training programmes to ensure that ADR is a fundamental part of their dispute handling process.

  The Treasury Solicitor's Department has set a target that by 2002-03 all case workers within its litigation Division will have had mediation awareness training. The Head of Litigation has personally attended a training course for mediators and some case workers will also receive mediation skills training.

  One of the senior lawyers from the Department of Transport Local Government and the Regions (before the reorganisation of responsibilities in May 2002, and now from the Office of the Deputy Prime Minister) has undertaken the necessary training to become a mediator herself. Her aim is to use this training, and experience of acting as a mediator on a pro bono basis, to inform the development of policy and the handling of Departmental business. Training is also being arranged for the Department's legal group as a whole.

  During the year the Department for Work and Pensions and Department of Health lawyers, including all their litigation lawyers, have also received awareness training.

  The Home Office has set up a pilot mediation scheme within the Prison Service's Eastern area. The scheme will deal with certain personal injury disputes and will operate with the assistance and support of the Treasury Solicitor's Department.


  Departments are also encouraged to provide anecdotal information about costs savings as a result of using ADR.

  The Department of Transport, Local Government and the Regions (before the reorganisation of responsibilities in May 2002) reported success in at least one substantial case, where the claim was settled at much lower cost than would otherwise have been incurred.

  The Treasury Solicitor's Department has estimated an overall saving of legal costs of £2.5 million, through the use of ADR.


  There have been a number of initiatives introduced as a direct result of the ADR Pledge.

    —  Procurement Guidance

    The Office of Government Commerce, with the assistance of the Lord Chancellor's Department, the Department of Trade of Industry and the Centre for Effective Dispute Resolution, published new guidance on dispute resolution in April. The new guidance places fresh emphasis on the importance of forward planning and seeks to put into effect sound dispute avoidance and dispute management practices. It contains the full text of the pledge, identifies the distinguishing features of both non-binding and binding ADR techniques and provides model clauses for incorporating different methods of dispute resolution at the time a contract is agreed.

    Several hundred hard copies of the guidance have been distributed and 405 hits were recorded on the text on the OGC website in June at

    —  Conference for Government Lawyers

    LCD hosted a conference for Government Lawyers on 21 November with the aim of promoting the use of ADR. The Lord Chancellor and the Attorney General addressed the conference, which also included presentations from ADR providers, a leading barrister and several Government lawyers on their experiences of using ADR methods.

    The conference generated a great deal of enthusiasm and was successful in achieving its aim of encouraging Government Departments to understand the benefits of ADR. A small number of delegates have already arranged to undergo training as mediators and a number of the speakers have been invited to assist with various Departmental training programmes.

    —  Government Legal Service ADR Sub-Group

    Following the conference in November an ADR Sub-Group of the Government Legal Service Liaison Group has been set up. The aim of this group is to identify the issues that need to be tackled and to distinguish suitable cases where ADR can be used.

    —  National Health Service Litigation Authority (NHSLA)

    The encouragement of greater use of mediation, and other forms of alternative dispute resolution, is one of the options considered by the NHSLA, who are responsible for handling clinical negligence claims made against the NHS. The NHSLA is working with the Legal Services Commission to develop joint strategy for promoting greater use of mediation as an alternative to litigation in clinical negligence disputes.

    Since May 2000 the NHSLA has been requiring solicitors representing NHS bodies in such claims to offer mediation in appropriate cases, and to provide clear reasons to the authority if a case is considered inappropriate.

    In June 2000, the authority began an initiative to encourage the use of mediation to resolve all suitable cases; 77 offers for mediation had been accepted and at the end of April 2002, 32 had been mediated, 31 successfully.

Letter from the Chairman to the Rt Hon Baroness Scotland of Asthal QC, Parliamentary Secretary, Lord Chancellor's Department

  Thank you for your letter of 1 November enclosing a copy of the Government's response to the Commission's Green Paper. This was considered by Sub-Committee E (Law and Institutions) at its meeting on 20 November.

  We fully support the approach being taken by the Government. There should be no unnecessary regulation of ADR, whether at national or European level. As regards the latter, we urge the Government to seek to ensure that any action at Union level respects the principle of subsidiarity and is limited to cross-border cases. We would not expect the Commission to do anything more than look at ways to encourage the use of ADR in cross-border cases and to support the mutual recognition of training.

  The Committee decided to clear the document from scrutiny. I should be grateful if you would keep us informed of developments.

23   The Chartered Institute of Arbitrators has responsibility for promoting and facilitating the determination of disputes by arbitration and ADR, including mediation and adjudication. It has 10,000 members in 89 countries, and is committed to upholding standards in arbitration and mediation. Its series of examinations, training programmes, workshops and stringent criteria aim to ensure that members designated as "Chartered Arbitrator" are operating at the very highest professional standards. Back

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