Legal update - Mandatory mediation: Working together

With Italy making mediation mandatory before a civil or commercial dispute can go to court, Michael Dawson looks at whether the UK will follow suit.

Hot on the heels of the Italian Ferrari Formula One victory in Bahrain, the Italian government has become the first in Europe to introduce mandatory mediation for civil and commercial disputes — including insurance — before the matter can be determined in a court of law by a judge. The legislation takes effect in March 2011.

This follows a recent European Commission directive requiring all member states to introduce legislation by May 2011 to put processes in place to ensure that cross-border civil and commercial disputes can be mediated.

Whether the action of the Italian government was brought about by this directive or by the volume of long and protracted cases — which are understood to be a feature of Italy's existing judicial system — is questionable, but Italy has decided to force mediation upon its citizens in an attempt to resolve disputes occurring within the Italian border before recourse to litigation.

The EC directive, published in May 2008, suggested that mediation should be more frequently used by all member states, stressing that "mediation can provide a cost-effective and quick extra-judicial resolution of disputes in civil and commercial matters through processes tailored to the needs of the parties".

The directive also argued that "agreements resulting from mediation are more likely to be complied with voluntarily and more likely to preserve an amicable and sustainable relationship between the parties".

Alternative avenues
As well as recommending mediation as an alternative method of dispute resolution, the directive also requires judges to be allowed, at any stage of the litigation process, to suggest parties consider mediation and also requires that individual governments establish systems whereby agreements from mediation can be enforced if those involved in the dispute want them to be.

Any time involved in mediation will not count towards any limitation period and all mediation is to take place confidentially, with information that is obtained during the mediation not being used against any party in subsequent judicial proceedings if the mediation fails.

The directive encourages the training of mediators and the development of quality control mechanisms, such as voluntary codes of conduct, to ensure mediation is conducted as effectively as possible, and impartially. It also states that information on how to contact mediators and organisations providing mediation services should be made more accessible, particularly online.

UK implications
To comply with the directive, the UK will have to introduce legislation to facilitate and promote mediation for cross-border disputes by May 2011. But it is unlikely the UK government will follow the Italian example.

The UK judiciary, following the leading case of Dunnett v Railtrack (2002) — together with successive decisions including McMillan Williams v Range (2004) and Burchell v Bullard (2005) — have tended to force commercial disputes towards mediation through the use of cost sanctions if mediation is not attempted. These penalties will only be waived by the judge if there is a good reason why mediation was not tried.

However, many practitioners of mediation will agree that mediation is intended to be a voluntary process entered into by the disputing parties, not one which they are compelled to follow to resolve their differences. The EC directive side-steps this issue by defining mediation as "a structured process… whereby two or more parties to a dispute attempt by themselves, on a voluntary basis, to reach an agreement on the settlement of their dispute with the assistance of a mediator. This process may be initiated by the parties or suggested or ordered by a court or prescribed by the law of a member state".

The directive also states that it is "without prejudice to national legislation making the use of mediation compulsory or subject to sanctions, whether before or after judicial proceedings have started, provided that such legislation does not prevent the parties from exercising their right of access to the judicial system".

It is clear from the above that three different approaches have been taken to promoting mediation, with the EC adopting a facilitative approach — much like mediation itself; Italy adopting a mandatory approach; and the UK currently with a semi-compulsory approach.

However, within the UK, few members of the general public understand what mediation is, how it functions and the benefits to be gained from its use. It is a reasonable assumption to make that the average man or woman in the street would first of all consult a solicitor with a view to litigation if involved in a dispute.

Communication over compulsion
Communicating the benefits of mediation to members of the public and businesses more clearly is perhaps preferable in the long term to any form of compulsion. This is a mammoth task, but inroads have already been made in the fields of divorce, family, employment and neighbourhood disputes where mediation is now more mainstream. But there is a natural resistance to change from many in the legal profession.

Mandatory mediation may be an oxymoron, but it is clear that the EC and the Italian government both see mediation as a better way to resolve civil and commercial disputes than expensive and lengthy litigation. It is likely the UK will continue to allow the judiciary to apply sanctions to force the use of mediation but the government must soon follow the EC directive in respect of cross-border disputes, bringing mediation into the government domain.

It is to be hoped that the government may use the opportunity to provide greater awareness of mediation to the public at large — and thus preserve the true voluntary nature of the mediation process.

Michael Dawson is an accredited mediator at Cunningham Lindsey

What will UK mediation look like?
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