MEDIATION IN CIVIL AND COMMERCIAL MATTERS
(13852/04)
Letter from Rt Hon Baroness Ashton of
Upholland, Parliamentary Under Secretary of State, Department
for Constitutional Affairs to the Chairman
I am writing to inform your Committee about
recent developments in negotiations on this proposed Directive
and to share with you our thoughts on how best to restrict the
scope to cross-border disputes.
There has been no consideration of this proposal
in the Council since the UK Presidency while we have been awaiting
the opinion of the European Parliament. We are expecting that
opinion within the next few weeks.
It looks likely that the Parliament will call
for a restriction to cross-border disputes. With a large majority
in the Council also demanding such a restriction we are hopeful
that the scope of the instrument will apply only to cross-border
disputes.
Once the principle has been agreed we will need
to decide how best to define the restriction. This is more difficult
for mediations than it is for court based procedures because of
the flexible nature of mediation. For example a definition based
on the place of the mediation would be problematic because there
are no rules to determine where that should be. Parties can choose
to mediate anywhere without any jurisdictional constraints and
could choose to mediate in a particular country to ensure either
that the Directive did or did not apply. An added complication
is that if the mediation is by telephone or video conference the
parties and mediator could all be in different Member States.
While it might be argued that as mediation is
a consensual process the parties should be able to decide whether
or not the Directive will apply we believe 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.
We want to avoid situations where a party could
inadvertently consent to mediate in a place which would lead to
the disapplication of the Directive. This might happen because
the parties were unaware of the consequences of the choice of
the place of mediation or because one party who is aware of those
consequences takes advantage of one who is not. As neither the
parties to the mediation nor the mediator may be lawyers, it is
in the interest of everyone for the restriction to be simple and
to provide legal certainty.
The European Parliament is currently considering
the following definition:
1. The provisions of the 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 Regultion
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.
In our view this does not provide the necessary
certainty or transparency. For paragraph (a) not only are there
no rules about where the mediation should take place, there are
no rules in the proposal which stipulate the Member State in which
a court/authority should declare an agreement enforceable. As
it can be done anywhere there is a danger that parties will not
know whether or not the Directive will apply. Again they could
choose to hold the mediation in one place or have it declared
enforceable somewhere just to influence the application of the
Directive. We believe that is undesirable for the reasons given
above.
We agree that the provisions of Article 6 (ensuring
that mediators cannot be compelled to give evidence in any subsequent
court proceedings) and Article 7 (ensuring that parties will not
lose their chance to go to court because of the expiration of
limitation periods) are important safeguards and are factors that
help to promote the use of mediation. Therefore we see merit in
making special provision for them in a cross-border restriction.
However rather than just referring to the jurisdiction of the
courts being determined by the application of Regulations 44/2001
and 2201/2003, as in paragraphs (b) and (c), we believe it would
be preferable to have another cross-border connecting factor—for
example, following the model of the European Order for Payment.
It seems to us that for mediations legal certainty
and transparency will best be achieved by attaching the cross-border
element to the domicile or habitual residence of the parties.
However there might be occasions when even though the Directive
will not apply to the mediation, if the mediation fails and the
dispute goes to court there may be a cross-border connecting factor
at that point if the court with jurisdiction is in a different
Member State. We believe that in such circumstances the parties
should be able to have the benefit of the safeguards provided
by Articles 6 and 7.
To achieve this we suggest that rather than
try and define what a cross-border mediation is it would be better
to state the circumstances when the Directive would apply to cross-border
disputes. This could be either at the point of the mediation or
at the point at which a court is seized. We believe this objective
could be achieved by the following provision:
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, Article 6
and 7 of this Directive apply in relation to court proceedings
following a mediation where the court seized is in a Member State
other than a Member State in which at least one of the parties
is domiciled or habitually resident.
We propose that we will define domicile and
habitual residence by reference to Regulations 44/2001 (Brussels
I) and 2201/2003 (the revised Brussels II). It should be clear
then that the Directive would apply to the mediation, or in relation
to any subsequent court proceedings, only where the parties are
domiciled or habitually resident in different Member States, or
a different Member State to the court seized.
It is theoretically possible that parties to
a dispute who are domiciled or habitually resident in different
Member States might be living or staying in third countries and
decide to mediate in that third country. However we do not believe
that such a mediation would be caught by the Directive because
the Community cannot legislate for mediations outside the EU.
In our view our suggested definition has the
virtue of being clear and simple. It respects the cross-border
limitation of Article 65 TEC while not being too restrictive.
It also has the advantage of following the model of the Euroepan
Order for Payment in relation to the provisions on court proceedings
in Articles 6 and 7.
Until we know what restriction the European
Parliament will agree and until we have discussed this issue in
the Council, I cannot say what type of restriction will be considered
during future negotiations. However I thought your Committee would
be interested to hear our thoughts on this matter now. I shall
of course keep you informed of developments.
14 March 2007
Letter from the Chairman to Rt Hon Baroness
Ashton of Upholland
Thank you for your letter of 14 March which
has been considered by Sub-Committee E. We are grateful for the
information you have provided for the Committee and also for giving
us an opportunity to comment on the approach which the Government
are likely to take in relation to the definition of cross-border
dispute.
There is, we believe, a substantial measure
of agreement between the Committee and the Government in this
matter. First, we are at one in agreeing that it is necessary
to limit the scope of the proposal. Not only is this required
by Article 65 TEC but as you say the Community cannot legislate
for mediations outside the territory of the Member States of the
Union. However, we would have no objection to the Directive being
expressly limited to mediations taking place within the Union.
Given the consensual nature of mediation we see no problem were
the parties to choose to mediate outside the Union. On the other
hand, where enforcement of the mediation is sought within the
Union it is legitimate, provided always there is a "cross-border"
element (to which we return below), for the Community to lay down
rules.
Second, we agree that the European Parliament's
text, as described on the second page of your letter, is unsatisfactory
for the reasons you give. Your alternative is preferable. As you
will recall from earlier discussions of "matters having cross-border
implications" (for example, in the recent negotiations concerning
the European Small Claims Procedure) a test based on the different
domiciles/habitual residence of at least one or two parties may
not always produce a result which everyone would consider "cross-border".
It may be purely accidental or inconsequential that one of the
parties to the transaction or in the circumstances emanates from
another Member State. Nevertheless, as you say, it is necessary
to produce as clear and workable a solution as possible. Accordingly
we can agree with the approach set out in your letter.
We would be grateful if you would write again
when you have the text of the European Parliament's opinion and
the reactions of Member States to it. In the meantime the proposal
is retained under scrutiny.
29 March 2007
Letter from Rt Hon Baroness Ashton of
Upholland to the Chairman
I wrote to you on 14 March explaining the Government's
approach to a cross-border restriction in this proposed Directive.
In your reply of 29 March you agreed that approach and asked me
to write to you again when we had the text of the European Parliament's
opinion and the reactions of Member States to it.
The European Parliament adopted its opinion
on 29 March. For your information I enclose a copy (not printed).
The Civil Law Committee of the Council considered the Parliament's
amendments on 13 April.
As you will see, the final version of the European
Parliament's proposed definition of cross-border (amendment 15,
Article 1a) is very much in line with our preferred approach.
At the meeting on 13 April a majority of Member States either
supported this text or thought it was a good basis for further
discussion. Some of those were prepared to consider ways the scope
might be made a little wider, but there was no consensus as to
how that might be done. The European Commission conceded that
it was prepared to accept a general limitation to cross-border
disputes but it could not accept the proposed definition which
it considered too narrow. Only a small number of Member States
supported the Commission. We are waiting to see how the Presidency
will take this forward. I shall of course keep your Committee
informed of further developments.
Many of the Parliament's other amendments, subject
to minor drafting changes, have aligned the Parliament's opinion
with the Council text on which a common understanding was agreed
on 2 December 2005. I shall comment on the main changes of substance.
ARTICLE 1 (AMENDMENTS
12 AND 13)
All but one Member State that commented on this
Article, including the UK, called to retain the words in the Council
text: "except when certain such matters are excluded from
mediation by the relevent applicable law". This is to ensure
the instrument does not impose mediation in areas where there
are already statutory procedures.
ARTICLE 2 (AMENDMENTS
16 AND 17)
There was general agreement that there was a
contradiction between the references to mediation being voluntary
in paragraph (a) sand the fact that in Article 3 the text allows
national legislation that makes the use of mediation compulsory.
It was agreed that it was necessary to make a distinction between
people participating voluntarily in the mediation process and
the possibility of compulsory referral to mediation. It was suggested
that a recital could clarify this and that in paragraph (a) the
first reference to voluntary could be retained while the phrase
at the end "provided that the voluntary nature of mediation
is respected" should be deleted.
Most Member States thought that the additions
to paragraph (b) over-complicated the text. However whatever changes
were made there was a need for coherence with the working of Article
2a (2).
ARTICLE 2A
(AMENDMENT 18)
All Member States that commented on this amendment,
including the UK, wanted to remove paragraph 3 as this would introduce
an element of State regulation to mediation.
ARTICLE 3 (AMENDMENTS
19-21)
No Member State saw a need for new paragraph
2a.
ARTICLE 6 (OR
6A AS
NUMBERED BY
THE EUROPEAN
PARLIAMENT) (AMENDMENT
28)
We joined with other Member States in opposing
the extension of this provision to include a ban on disclosure
to third parties. This Article is meant to deal only with protecting
the confidentiality of the mediation in subsequent court or arbitration
proceedings rather than regulating confidentiality in mediation
more generally. Only one Member State supported the European Parliament's
text.
We also led the majority opposition to including
"other substantial reasons" in paragraph (a) as this
is a vague concept which could lead to legal uncertainty. We also
raised your Committee's suggestion to refer to the public policy
"of the Member State concerned". We wait to see if the
Presidency will take this forward.
ARTICLE 7 (AMENDMENTS
29 AND 30)
The European Parliament chose a formulation
based on the Council text of 8 November 2005 (Doc 14041/05) which
I sent you on 9 November 2005. In my letter of 5 January 2006
(which I see was incorrectly dated 2005) I explained that the
first paragraph of this text had been further simplified by the
Council to say:
"Member States shall ensure that parties
who choose mediation to try to solve a dispute are not prevented
from subsequently initiating judicial proceedings by the expiry
of periods of limitation or prescription during the mediation
processs".
We can accept either formulation as both simplify
the Commission's original text and allow Member States to decide
the way the objective of this provision can best be achieved.
Only two Member States expressed a preference for the European
Parliament's suggestion. All the others that commented wanted
to retain the Council text as above.
We raised your Committee's suggestion to delete
the final words of paragraph 2. Again we wait to see if the Presidency
will take this forward.
ARTICLE 7A
(AMENDMENT 31)
The Government supports this provision which
it believes will help to encourage the use of mediation. We already
encourage lawyers to inform their clients about alternative dispute
resolution. However the majority of Member States that commented
were concerned about the obligation that would be placed on Member
States and the practicalities of ensuring compliance.
ARTICLE 7B
(AMENDMENT 32)
This is likely to be rejected by the Council.
The Commission explained that only documents adopted by Member
States or the College of Commissioners could be published in the
Official Journal. The European Code of Conduct has been drafted
by the mediation profession and the Commission had no desire to
change the status of the document. However it did undertake to
ensure the Code was translated into all official EU languages
and to make it available on the website of the European Judicial
Network in civil and commercial matters.
ARTICLE 8A
(AMENDMENT 33)
All Member States that commented on this amendment,
including the UK, said they could accept a general review but
none could accept a review that included consideration of a future
instrument for harmonisation of limitation and prescription periods.
ARTICLE 9 (AMENDMENT
34)
One Member State supported this provision but
the Commission and all the other Member States that spoke opposed
it because of practical and legal difficulties caused by leaving
implementation of the Directive to the parties to the mediation.
While many issues in UK mediation are governed by agreement between
the parties (e.g. confidentiality clauses in agreements to mediate)
we shared the doubts about how this provision would work where
Member States were being asked to regulate self-regulation.
RECITALS (AMENDMENTS
1-11)
There was no support for a specific reference
to consumer mediation (recital 5a) or to incorporating the principles
of two Commission Recommendations into the text of this instrument
(recitals 5a and 13). Apart from the issues already raised in
the main text there was only very limited opposition from Member
States to the other recitals.
We do not yet know how the Presidency plans
to proceed with negotiations on this proposal. I shall keep you
informed of future developments.
25 April 2007
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