EU Legislation — New perspectives in cross-border disputes. European Judicial Network in Civil and Commercial Matters

The general opinion in the Commission is that cross-border legal disputes among the EU-27 member states are best resumed through mediation rather than through courts. The European Commission reiterated at the end of August 2010 the potentials of existing EU-rules on mediation in cross-border legal disputes; the Commission reminded the EU-27 that these measures can only be effective if put in place by all the member states at national level. If mediation fails, disputes can always revert to traditional court proceedings.

The Directive 2008/52/EC on mediation in civil and commercial matters was adopted on 23 April 2008, the Commission proposed the Directive in October 2004.

 

Self-regulation and mediation: a short history

On 2 July 2004, at a conference Brussels self-regulatory initiatives for mediation and a specific European Code of Conduct on mediation were discussed. About a hundred guests took part in the conference, mainly representatives from the “national experiences in self-regulation”. The conference was attended by Mr. Faull, Director General for DG Justice, Freedom and Security of the European Commission. A special panel conducted debates on the European Code of Conduct.

See: http://ec.europa.eu/civiljustice/adr/adr_ec_code_conduct_en.htm

The participants generally supported the concept of a European Code of Conduct as a voluntary instrument to improve quality and trust in mediation. It was considered that the Code should remain an informal document at this stage and that it should not be adopted formally by any of the institutions of the European Union. It will be the responsibility of those individual mediators and organisations that wish to subscribe to the Code, including defining implementation mechanisms.

It was agreed that as a next step the Code will be made available on the internet together with general information on the Code and a first list of mediation organisations who have declared that they subscribe to the Code.

As follow-up, the Commission considers organising ad-hoc meetings with representatives of organisations subscribing to the Code to review the implementation process. Further large-scale meetings will be open to all interested parties, to discuss specific issues of Alternative dispute resolution (ADR) in order to maintain dialogue and encourage exchange of experiences.

The list of organisations subscribing to the European Code of Conduct is published at: http://ec.europa.eu/civiljustice/adr/adr_ec_list_org_en.pdf

Alternative dispute resolution (ADR)

Settling disputes and disagreements through court is not only costly and time-consuming; it can also destroy profitable business relationships. Cross-border cases are more complex due to different national laws and jurisdictions as well as practical matters like cost and language.

Alternative dispute resolution (ADR) through impartial mediators can address numerous civil and commercial issues and provide for better and constructive solutions. However, it needs skilled mediators and clear rules that both parties can trust. Cross-border mediation is trickier, as it needs to span different business cultures and both sides need common rules they can rely on. That is why the Commission introduced in 2008 the EU-wide rules on mediation; these rules entered into force in May 2008; and they have to be implemented by the member states by May 2011.

They create legal guarantees to mediation and ensure a high-quality process by applying codes of conduct or mediator training. Presently, only four EU countries ( Estonia, France, Italy and Portugal ) have informed the Commission that they have implemented the EU-rules on mediation in national legislation. European Commission (Brussels, 20 August 2010).

Commission's opinion

“These EU measures are very important because they promote an alternative and additional access to justice in everyday life. Justice systems empower people to claim their rights. Effective access to justice is protected under the EU Charter of Fundamental Rights. Citizens and businesses should not be cut off from their rights simply because it is hard for them to use the justice system and because they cannot afford it, cannot wait for their time in court, or cannot deal with the red tape. I call on member states to be ambitious in putting the EU rules on mediation in place swiftly: the bare minimum is to allow cross-border disputes to find amicable settlements. We have to introduce same measures available at national level, i.e. in the end, it is citizens, businesses, economies and the legal system that will benefit”.

Commission's vice-President, Viviane Reding, EU Commissioner for Justice.

The EU Mediation Directive

The EU Mediation Directive (2008)  applies when two parties who are involved in a cross-border dispute voluntarily agree to settle their dispute using an impartial mediator. EU member states are to make sure mediated agreements can be enforced. According to a recent EU-funded study, the time wasted by not using mediation is estimated at an average of between 331 and 446 extra days in the EU, with extra legal costs ranging from €12,471 to €13,738 per case.

See additional information on: The Cost of Non ADR – Surveying and Showing the Actual Costs of Intra-Community Commercial Litigation (a project funded by the European Commission and implemented by ADR Center, June 2010).

See: http://www.adrcenter.com/jamsinternational/civil-justice/Survey_Data_Report.pdf

Mediation can solve problems between businesses, employers and employees, proprietors and tenants, or families, so that they can maintain and even strengthen their relationship in a constructive way – a result that cannot always be achieved through court proceedings.

Settling disputes out of court spares justice systems' resources and can potentially cut legal costs. Online dispute resolution makes long distance mediation more and more accessible.

What is missing presently, is a set of cross-border rules giving parties certainty about the process and its enforceability.

A crucial element in any mediation is trust in the process, especially when two parties come from different countries. EU rules therefore encourage member states to provide quality control, establish codes of conduct and offer training to mediators to make sure there is an effective mediation system in place.

European Code of Conduct for Mediators

Such a Code was developed by a group of stakeholders with the assistance of the European Commission in July 2004. The European Code of Conduct sets out a number of principles to which individual mediators can voluntary decide to commit; these principles refer to the competence, appointment and fees for mediators, the promotion of their services, their independence and impartiality, the mediation agreement and the confidentiality rule.

See: http://ec.europa.eu/civiljustice/adr/adr_ec_code_conduct_en.htm

The Code of Conduct sets out a number of principles to which individual mediators can voluntarily decide to commit, under their own responsibility. It is intended to be applicable to all kinds of mediation in civil and commercial matters.

Organisations providing mediation services can also make such a commitment, by asking mediators acting under the auspices of their organisation to respect the Code. Organisations have the opportunity to make available information on the measures they are taking to support the respect of the Code by individual mediators through, for example, training, evaluation and monitoring.

In the Code of Conduct, mediation is defined as any process where two or more parties agree to the appointment of a third-party, i.e. “the mediator”, to help the parties to solve a dispute by reaching an agreement without adjudication and regardless of how that process may be called or commonly referred to in each member state.

Adherence to the Code is without prejudice to national legislation or rules regulating individual professions.

Organisations providing mediation services may wish to develop more detailed codes adapted to their specific context or the types of mediation services they offer, as well as with regard to specific areas such as family mediation or consumer mediation.

The group of lawyer-linguists revised The European Code of Conduct for Mediators  in July 2009 and the European Commission assumed that the organisations that subscribed to the European Code of Conduct would receive written notice of any changes.

Mediation in consumer disputes

Mediators and organisations carrying out consumer disputes may also wish to adhere to the Code of Conduct. However, in 2001 the Commission adopted a formal recommendation on the specific issue of consumer mediation. The Commission recommends that any mediator or organisation falling within the scope of that recommendation respects the principles laid down in the Conduct.

See Consumer Affairs website and that of the ECC-Net: http://ec.europa.eu/consumers/index_en.htm

Organisations that have decided to commit to asking mediators acting under their auspices to respect the code may wish to inform the Commission services about the decision; name and contact details of the organisations that have sent in this form will be available on this website for information purposes only. This list does not represent an endorsement of the Commission of these mediators or organisations; the Commission is not carrying out any verification of whether the code is actually adhered to and does not accept any responsibility in this regard, nor for the services offered by these mediators or organisations.

Commission's expectations

By May 2011, the Commission expects that 26 Member States will have put these EU- rules in place (Denmark, has opted not to enforce these rules – a prerogative it can take under a protocol annexed to the EU Treaties). So far, four countries (Estonia, France, Italy and Portugal ) have informed the Commission that they have put the rules in place . Furthermore, Lithuania and Slovakia have notified the names of competent courts for enforcing cross-border mediation settlements.

Even though most of the Member States already had similar rules in place at national level before the adoption of the Directive, they should, before 21 May 2011, notify the Commission of the measures they adopt to put the Directive in place (these national measures should specifically mention the Directive). Some countries already have rules for mediation in certain sectors; for example, Ireland and Denmark in labour relations, Finland for consumer disputes, Sweden for traffic accidents or France and Ireland for families. Portugal has been training mediators since 2001.

Member States are to provide information on courts competent to make mediated agreements enforceable by an earlier date (21 November 2010), so that the Commission can publicize this information to make it easier for citizens and businesses to use mediation.

For more information, see Commission's Justice Newsroom:

http://ec.europa.eu/justice/news/intro/news_intro_en.htm

Mediation in the E.U. (August 2010)*

ADR Schemes in force (August 2010)	For domestic disputes	For cross-border disputes (implementing Dir.2008/52)
Austria	Mediation (statutory law)
Belgium	Mediation (statutory law)
Bulgaria	Mediation (statutory law)
Cyprus	n.a.
Czech Republic	Arbitration (statutory law)	Legislation in preparation
Denmark	Mediation	Not party to the Directive
Estonia	Conciliation (statutory law)	Notified legislation
Finland	Arbitration
France	Mediation (statutory law)	Notified legislation
Germany	Amicable settlement of disputes (statutory law)	Legislation in preparation
Greece	Mediation	Legislation in preparation
Hungary	Mediation (statutory law)
Ireland	Mediation (statutory law)
Italy	Mediation (statutory law)	Notified legislation
Latvia	Conciliation (voluntary basis)
Lithuania	n.a.	Notified competent courts
Luxembourg	Arbitration (statutory law)	Legislation in preparation
Malta	n.a.
Netherlands	Mediation (voluntary basis)	Legislation in preparation
Poland	Mediation (statutory law)
Portugal	Mediation (statutory law)	Notified legislation
Romania	n.a.
Slovenia	Mediation (statutory law)
Slovak Republic	Mediation (statutory law)	Notified competent courts
Spain	Mediation (statutory law)	Legislation in preparation
Sweden	Mediation (voluntary basis)	Legislation in preparation
UK	Mediation (voluntary basis)

* Sources : http://ec.europa.eu/civiljustice/adr/adr_gen_en.htm and

http://www.adrcenter.com/international/cms/?page_id=259

Note: in bold are countries of a Baltic Sea Region

Supplement

Alternative dispute resolution – an overview

Alternative disputes are those that can be solved without going to court.

You are in dispute with a firm, a tradesperson, your employer, even a member of your family, in your own country or abroad. If you cannot settle the dispute amicably, you can go to court of course, but you can also consider other dispute settlement procedures such as mediation or conciliation.

Sometimes the law or the courts will say you must go to alternative dispute resolution, but more often it is the parties to the dispute themselves who decide to do so. Alternative dispute resolution techniques can help you solve you problems by involving a neutral and qualified third party. Alternative dispute resolution comes in different forms, distinguished by ways in which the third party gets involved.

In certain cases, the third party helps the parties come to an agreement without formally expressing an opinion on one or other possible solutions to the dispute.

In the course of these processes, known as “conciliation” or “mediation” , the parties are invited to open or resume a dialogue and avoid confrontation; they themselves choose the technique for settling the dispute and play a particularly active role in endeavoring themselves to find the solution that suits them best. These methods provide an opportunity to go beyond the purely legal position and come to a personalised solution matching the real nature of the dispute. This consensus-based approach boosts the chances that once the parties have settled their dispute, they will be able to maintain normal business or personal relations.

See: Commission's website on European Judicial Network in civil and commercial matters at: http://ec.europa.eu/civiljustice/adr/adr_gen_en.htm

Third party's involvement: examples

In consumer disputes in particular, there are various forms of alternative dispute resolution in which the third party produces the solution. Sometimes the third party makes a recommendation that the parties are then free to accept or not.  

The “consumer complaint boards” in the Scandinavian countries work in this way. A consumer who has taken a complaint to one of these boards can subsequently go to court if he is not satisfied with the proposed solution.

Sometimes the third party takes a decision that is binding on the tradesperson.  

This is for example the case with the “ombudsman” set up in certain businesses such as banking and insurance. His decisions are binding on firms taking part in the scheme. If the consumer is not satisfied with the decision, he can take his case to court.

In other hypotheses, more closely resembling the conventional court procedure, the third party is called an “arbitrator” and takes a decision to settle the dispute.

The decision, binding on both sides to the dispute, can be taken in accordance with rules of law (classical arbitration) or on an equitable basis (amicable arbitration). The arbitrator's award has the status of an enforceable decision, which means that the settled dispute –as a rule- cannot be taken to court.

It has to be said however, that arbitration is not generally regarded as a real form of alternative dispute resolution. There are instruments of the EU and international law governing or encouraging alternative dispute resolution.

Eugene ETERIS, 23.08.2010

№9(47), 2010