"Litigation… has gotten out of hand. It has become so expensive, time consuming, combative, protracted, and destructive of relationships that better means of resolving disputes must be considered. Fortunately, there is a trend throughout the country to use alternative means of dispute resolution in lieu of traditional litigation, with substantial benefits to all concerned." [1]
Whilst the above quote refers to litigation in the United States, Hutchinson outlines certain problems that are occurring in numerous jurisdictions from Europe to Asia and North America to South America. From an Irish perspective the issue is simple- the courts are stretched to capacity and solutions are needed immediately to enable the service to function according to its mission, namely "to manage the courts, support the judiciary and provide a high-quality and professional service to all users of the courts" [2]
The solution adopted in most jurisdictions is the use of alternative dispute resolution (ADR) to free up the courtroom for those with no other option. ADR involves the use of various procedures as alternatives to litigation. Of all the processes the most common in Ireland are Conciliation, Arbitration and Mediation. Policy in Ireland has embraced the concept of ADR however it can be argued that we do not go far enough.
This dissertation is concerned with the process of mediation and seeks to critically analyse the legislative provisions for mediation in Ireland and the EU and consider the argument for the process to be used as a mandatory tool in commercial disputes and shall conclude by setting out a well balanced framework for reform having considered similar mandatory schemes in other jurisdictions.
1.2 What is Mediation?
Mediation is defined in Article 3 of the European Directive 2008-521/EC on Certain Aspects of Mediation in Civil and Commercial Matters as;
"A structured process, however named or referred to, 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. It includes mediation conducted by a judge who is not responsible for any judicial proceedings concerning the dispute in question. It excludes attempts made by the court or the judge seised to settle a dispute in the course of judicial proceedings concerning the dispute in question" [3]
"In mediation the primary role of the mediator is: (1) to facilitate dialogue and communication among the parties in a structured, constructive way; (2) to help disputants realistically assess their positions; and (3) to be a catalyst for a resolution designed by the parties." [4] Thus from the above the role of the mediator is facilitative, he may be appointed by the parties or by a court and help reach an agreement that is mutually acceptable with both parties. A key element of mediation is that if the parties do not agree to a decision one will not be imposed which distinguishes the process from arbitration where the arbitrator has a duty to make an award based on the information provided in relation to the dispute. Instead the parties themselves agree the outcome and once this occurs, the terms will be reviewed before they are binding on the parties.
Before mediation can take place the parties must agree on the third party who will mediate, the various procedural and logistical issues of the process for instance, where they will meet and the timing of discussions. Once this is agreed and the mediator is appointed the mediator can proceed. "A typical mediated discussion session begins with the signing of a confidentiality agreement and introductions of the mediator and … the mediator usually discusses the format of parameters to which the parties have agreed, and confirms that all the parties have the same understandings." [5]
While there are no formal guides on the duties conferred on mediators by agreements and instruments like the UNCITRAL Rules for Arbitration for instance, it is generally accepted, given the definition of the process, that mediators like conciliators and arbitrators must remain neutral and impartial. Issues of disclosure and conflicts must also be considered by the mediator as such issues may well affect the outcome of any settlement agreed. While it is a mediators' duty primarily to assist the parties, conflict of interest issues and non disclosure could deter a party from continuing with the process and would damage the reputation of any established mediator.
Fundamentally impartiality is crucial to a mediator's many tasks. Robert A. Baruch Bush in his article quite rightly points out that the mediator
"has to create an effective environment for bargaining, develop information, and persuade the parties to explore different options, search for areas of agreement and exchange, and finally accept something different from their initial demands; and the ability to do all this depends on maintaining the trust and confidence of both parties in the mediator's complete impartiality" [6]
1.3 Mediation in Ireland
Statistics available from the Commercial Court relating to the 2007-2008 year suggest that almost two thirds of disputes referred to mediation were settled through the process. Although mediation is a relatively new concept to commercial law in Ireland the use of the process as a method of dispute resolution is increasing as a result of an increased awareness by practitioners and the endorsement it receives from the judiciary.
The emergence of mediation in Ireland as an effective form of dispute resolution is attributed to the advantages of the process over an action in court. The process seeks to resolve disputes in a cost and time effective manner. Furthermore unlike litigation, mediation takes place in private thus having the added advantage of a resolution without the publicity and the limited remedies of the traditional court case. The hasty resolution of disputes that are referred to mediation are evident in numerous cases, perhaps the most recent high profile case where mediation was successful was Charlton v. Kenny where the parties mediated a dispute over land ownership within 10 hours. Similarly, Conway [7] notes that Mr Justice Kelly regarded the case of The Dubliners (Baycourt Limited) & Ors. v EMI Records (Ireland) Limited as a case of record in that it was entered into the Commercial List on a Monday, (November 13, 2006) and was adjourned the next day in order to allow mediation take place and it was settled two days later on Thursday.
In Ireland mediation is provided for in numerous Acts of the Oireachtas. In 2004, the use of mediation as an alternative to litigation in commercial disputes came in the form of Rule 6(1) (xii) of Order 63A of the Rules of the Superior Courts 1986 [8]
which provides that a Judge may;
"on the application of any of the parties or of his own motion, that the proceedings or any issue therein be adjourned for such time, not exceeding twenty-eight days, as he considers appropriate to allow the parties time to consider whether such proceedings or issue ought to be referred to a process of mediation, conciliation or arbitration, and where the parties decide so to refer the proceedings or issue, to extend the time for compliance by any party with any provision of these Rules or any order of the Court".
From the above provision it seems that the responsibility of the Commercial Court in regard to mediation is merely to promote its usage. Consequently the power of the Court is limited in that it cannot compel an unwilling party to mediate however should this be the case? Certainly compelling an unwilling party to mediate could raise certain legal issues however given mediation's increased effectiveness in the Commercial Court has the time now come to embrace it?
Recently the Circuit Court Rules have been amended by S.I. No. 539 of the 2009 Circuit Court Rules (Case Progression (General)) 2009 with the insertion of Order 19A, section 7(1) of which provides:
"The Judge, or the County Registrar at a case progression hearing, may on the application of any of the parties on notice or of his own motion, when he considers it appropriate and having regard to all the circumstances of the case, order that the proceedings or any issue therein be adjourned for such time, ordinarily not exceeding 28 days, as he considers appropriate and invite the parties to use mediation, conciliation, arbitration or other dispute resolution process (each of which process is referred to in this sub-rule as "an ADR process") to settle or determine the proceedings or issue."
In contrast to Rule 6, section 15 of the Civil Liability and Courts Act 2004 provides that upon the request of any party to a personal injuries action, the court may "direct that the parties to the action meet to discuss and attempt to settle the action, and a meeting held pursuant to a direction under this subsection is in this Act referred to as a mediation conference". [9] Thus in a personal injuries action the Act provides for mediation in a mandatory way but stops short of allowing the Court to directly order it. Essentially the parties to the dispute can have a mechanism whereby one can seek to compel the other to mediate the dispute.
A more recent development in the field of mediation is the publication of the Law Reform Commission's Consultation Paper on Alternative Dispute Resolution [10] in July 2008. The paper provisionally recommends that mediation should be defined in legislation as a "facilitative, consensual and confidential process, in which parties to the dispute select a neutral and independent third party to assist them in reaching a mutually acceptable negotiated agreement" The obvious benefit of having a clear definition in legislation would be to enhance confidence in mediation and promote its usage.
The Commissions recognises the importance of confidentiality in the mediation process and recommends that the principle be placed on a statutory footing. Confidentiality in this regard relates to the contents of the mediation process being available as evidence in litigation. Unlike the European Directive the Commission's Paper recommends that not only should a prohibition be placed on the mediator or those administering mediation but also the parties to the process themselves. This would be hugely advantageous in enhancing a party's confidence in the process thus dismissing any hesitation to commit fully to the process.
The Commission after research of various compulsory mediation schemes in England and Canada amongst others indicated an unwillingness to recommend compulsory mediation in Ireland. On the other hand the Commission provisionally recommends that in civil claims generally courts should be permitted to make an order requiring the parties to consider resolving their dispute by alternatives to litigation. In this instance it is assumed a test on whether the merits of the case indicate mediation could be successful would be provided.
The Commission's report does consider the mandatory schemes in other jurisdictions however it concludes simply that such schemes are unsuccessful. Indeed there are many disputes which undoubtedly require settlement through litigation, and mediation is clearly not the requirement, however should one party's desire to reduce costs and settle in an efficient manner override another's haste to proceed to the courts where mediation is a reasonable option?
1.4 Mediation and EU Policy
A significant factor affecting the mediation agenda in EU Member States recently is the publication of the European Directive. [11] The Directive is intended to promote the further use of mediation and to ensure that parties having recourse to mediation can rely on a predictable legal framework [12] of certain principles of the mediation process across the Member States of the EU. The preamble provides that the Directive only applies to cross-border civil and commercial disputes however it proceeds that nothing should prevent Member States from applying the provisions of the Directive to the mediation of internal disputes. This issue therefore must be considered before implementation of the Directive in Ireland.
In brief the Directive sets out the following;
As noted previously Article 3 provides for a definition of "mediation" while Article 3 further provides that a "mediator" means
"any third person who is asked to conduct a mediation in an effective, impartial and competent way, regardless of the denomination or profession of that third person in the Member State concerned and of the way in which the third person has been appointed or requested to conduct the mediation". [13]
Article 4 gives directions to Member States to encourage the development of and adherence to, voluntary codes of conduct by mediators and organisations offering mediation services. Furthermore it provides that Member States shall encourage the training of mediators to ensure that the process is conducted in an "effective, impartial and competent way in relation to the parties". [14]
Article 6 requires Member States to ensure that it is possible for the parties to request that the agreement relating to the mediations be made enforceable.
A significant provision worth mentioning at this stage is Article 7 which refers to confidentiality in the mediation process including the prohibition to compel a mediator to give evidence in civil and commercial judicial proceedings or in arbitration. Article 6 has been criticised providing for limited confidentiality in that the provisions "ought to apply to all participants in the mediation process" [15] and not just the mediator or those administering mediation.
Interestingly, Article 5 of the Directive provides the following
"A court before which an action is brought may, when appropriate and having regard to all the circumstances of the case, invite the parties to use mediation in order to settle the dispute. The court may also invite the parties to attend an information session on the use of mediation if such sessions are held and are easily available.
The Directive is without prejudice to national legislation making the use of mediation compulsory or subject to incentives or 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." [16]
1.5 Mediation in the UK
The ADR agenda has recently come to prominence in the UK with the publication of Lord Justice Jackson's Review of Civil Litigation Costs [17] in 2009. The report establishes a stamp of approval for the encouragement of mediation and outlines important survey statistics. For instance,
"The Lloyd's Market Association (the "LMA") represents all businesses which underwrite insurance at Lloyd's of London. The LMA states that ADR is used only in a very small percentage of cases. The LMA believes that a cultural change is necessary, so that lawyers will embrace ADR more readily. Claims Against Professionals ("CAP") is a body comprising some of the leading professional indemnity insurers from the Lloyd's and Companies' markets. In a survey of CAP members 65% agreed with the proposition that a party should be required to participate in ADR even when it is unwilling to do so." [18]
In the UK entering into mediation is a voluntary act decided by the parties. The Civil Procedure Rules- Practice Direction - Protocols provides that
"The parties should consider whether some form of alternative dispute resolution procedure would be more suitable than litigation, and if so, endeavour to agree which form to adopt. Both the Claimant and Defendant may be required by the Court to provide evidence that alternative means of resolving their dispute were considered. The Courts take the view that litigation should be a last resort, and that claims should not be issued prematurely when a settlement is still actively being explored. Parties are warned that if this paragraph is not followed then the court must have regard to such conduct when determining costs;
It is not practicable in this Practice Direction to address in detail how the parties might decide which method to adopt to resolve their particular dispute. However, summarised below are some of the options for resolving disputes without litigation:
Discussion and negotiation.
Early neutral evaluation by an independent third party (for example, a lawyer experienced in that field or an individual experienced in the subject matter of the claim).
Mediation -a form of facilitated negotiation assisted by an independent neutral party." [19]
Furthermore the Admiralty and Commercial Court Guide [20] provides that a judge may
if he considers it appropriate, adjourn the case for a specified period of time to encourage and enable the parties to use ADR. He may for this purpose extend the time for compliance by the parties or any of them with any requirement under the rules, the Guide or any order of the Court. The judge in making an order providing for ADR will normally take into account, when considering at what point in the pre-trial timetable there should be compliance with such an order, such matters as the costs likely to be incurred at each stage in the pre-trial timetable if the claim is not settled, the costs of a mediation or other means of dispute resolution, how far the prospects of a successful mediation or other means of dispute resolution are likely to be enhanced by completion of pleadings, disclosure of documents, provision of further information under CPR 18, exchange of factual witness statements or exchange of experts' reports.
Thus in the UK the parties to a dispute must consider the option of ADR from the outset and if it is a viable option they should pursue that course of action. Additionally it could be argued that the existence of the threat of punishment when costs are determined at the end of litigation where a party does not attempt to mediate is a major factor in the increased usage of mediation in the UK. The recent English Court of Appeal case of Halsey v. Milton Keynes General NHS Trust [21] set out a list of factors of relevance when considering whether a party has unreasonably refused to mediate. There Dylon LJ stated
"In deciding whether a party has acted unreasonably in refusing ADR, these considerations should be borne in mind… The question whether a party has acted unreasonably in refusing ADR must be determined having regard to all the circumstances of the particular case. We accept the submission of the Law Society that factors which may be relevant to the question whether a party has unreasonably refused ADR will include (but are not limited to) the following: (a) the nature of the dispute; (b) the merits of the case; (c) the extent to which other settlement methods have been attempted; (d) whether the costs of the ADR would be disproportionately high; (e) whether any delay in setting up and attending the ADR would have been prejudicial; and (f) whether the ADR had a reasonable prospect of success. We shall consider these in turn. We wish to emphasise that in many cases no single factor will be decisive, and that these factors should not be regarded as an exhaustive checklist." [22]
In that case the Court noted that the claimant failed to demonstrate that mediation had a reasonable prospect of success and the Trust was justified in refusing to mediate.
1.6 Concluding Remarks
Recent developments in the area of mediation indicate that mediation has a clear place in the settlement of disputes in Ireland and Europe while further publications are anticipated including the Draft Mediation Bill which is due to be published this year. An in dept look at the current provisions and rules dealing with the process in the UK and Ireland and the European Directive give rise to the conclusion that the court's role is to politely invite parties to a dispute to use mediation. Of course it may not be appropriate to make such an invitation in certain cases thus giving a judge the discretion to decide on a case by case basis having regard to each individual circumstance of the dispute at hand. Arran Dowling Hussey quite rightly points out that "the judicial "invitation" can carry considerable weight, as commentators have noted the reality is often that, in the United Kingdom and Ireland: "The Court's suggestion are more than that." [23] For instance in the Irish Commercial Court the presiding Judge Mr Justice Peter Kelly is a very strong supporter of alternatives to litigation and it is anticipated that the Court will adopt the same approach as its English counterpart in Halsey with regard to cost sanctions. Feeney [24] notes the strong indication given by Kelly J in the unreported case of Kay-El (Hong Kong) Ltd v. Musgrave Ltd [25] that he is willing to provide cost sanction to unwilling parties.
Therefore it seems that the judiciary are pushing mediation in the right direction however is it now time to substantially place mediation on a footing centrally within the court system? Is it time to oblige disputants to automatically mediate as soon as they knock on the court's door?
The proceeding chapters will outline the mandatory mediation and various mandatory ADR schemes that are being implemented in other jurisdictions. They will also discuss the issues that we may encounter should we implement similar schemes here and shall finally conclude with a well balanced framework for reform.
