In Great Britain, ADR denotes all possible variants of settling a dispute with the exception of legal proceedings and adjudication. Pursuant to the CPR, ADR is ‘a collective term for methods of alternative settlement of disputes without resorting to adjudication’.
There are generally several types of mediation-related procedures, such as:
- early neutral evaluation;
- expert determination.
Of these four, mediation is used most frequently.
What is Mediation?
Mediation involves an independent and neutral 3rd party that assists the sides in resolving their dispute through negotiation. Instead of resolving the case the mediator comes up with ways of discussing ways of settling the dispute. The sides will then have to make a decision in which manner they will settle the dispute.
Conciliation procedure is identical to mediation; what makes it different is the fact that the 3rd party applies every effort to induce the sides to reach a peaceful resolution of their dispute. To achieve this goal, they try to advance opinions pertaining to the lawsuit or suggest different ways of its resolution. Labour law disputes are also frequently resolved through conciliation .
How Mediation Evolved in Great Britain
Mediation history goes back a long way. Used as a tool for settling commercial disputes in ancient times, it is still widely practiced nowadays. However, it only took center stage in 1999 following the so-called “Woolf Reforms”. Their main goal was to streamline and accelerate court proceedings, thus making them less burdensome. From then onward, the parties have been required to look into all possible ways of resolving their disputes both at their commencement and up until their very end. In case any of them failed to suggest a viable alternative, the court could use its own judgement and oblige them to cover the other party’s expenses irrespective of whether they won their case or not. This resulted in ADR, and particularly mediation, becoming a widespread phenomenon.
Mediation is all about working toward resolution of the dispute and refraining from imposing a decision on either of the sides. On certain occasions, mediators can be approached to make an evaluation of a claim or a specific issue (a practice known as evaluative mediation).
Mediation in the UK in the Post-Brexit Period
The UK has yet to ratify the Mediation Convention (the so-called Singapore Convention). The EU is also undecided whether it is legally competent to sign it, especially after the UK’s withdrawal from this political entity. It is not clear how the situation will be developing in the future, given the uncertainty surrounding this issue.
Settling disputes through mediation is a highly recommended practice in Great Britain. The main goal of the CDR is to provide the courts with an opportunity to try cases fairly and on a cost-proportionate basis. In their turn, the courts are to ensure that the way they handle cases also serves the same purpose. CPR 1.4 (2) (e) states clearly and unambiguously: ‘The parties should be encouraged to resort to ADR for settlement of their disputes if the court finds its expedient and fosters its implementation’. Oftentimes, the court may suspend the proceedings to enable mediation or directly oblige the parties to partake in any form of ADR.
Even though the parties are highly recommended to resort to mediation, it may not be imposed on them. This is due to the fact that a successful outcome of mediation hinges on the willingness of the parties to collaborate and reach a mutually acceptable deal; if they have no desire to sit at the negotiation table and are compelled to engage in it, mediation has far fewer chances of being a success.
A partiy unwilling to partake in mediation should justify their position by providing their reasons for such a decision. This particularly applies to instances when the court believes that a party is to pay litigation fees. Should a party decline to resort to mediation (as per CPR 44.2), the court may use its own judgement to determine whether one of the parties is to reimburse the other party’s expense.
Accreditation of Mediators
The UK has no special organization or accreditation procedure for individuals wishing to become mediators. There is, however, a privately-owned organization called the Council for Civic Mediation which provides respective training for individuals and companies.
- Potential mediators are expected to undergo a licensed course of training at the CCM.
- Potential mediators are expected to be aware of the respective code of conduct which is no less stringent than the Typical Code of Conduct of Mediators adopted in 2004.
- Potential mediators are to abide by the procedure for handling claims which meets the minimal standards of the CCM, as well as keep record of any claims.
- Potential mediators are to undergo a minimum 6-hour course of continuous professional development in the area of mediation, including other practice-related requirements stated.
- Potential mediators are expected to have professional insurance coverage in the amount of no less than £1 mln, as well as supplementary coverage, provided the amounts included in their work are higher than the said amount.
- Potential mediators are supposed to have access to proper administrative mechanisms.
- Potential mediators should be duly trained and have expertise and skills to handle claims that they mediate.
Agreement on conduction of mediation
The parties and mediator are not legally bound to sign a mediation agreement. Usually, they conclude a contract in writing, which precedes the commencement of mediation services. Quite a few mediators have their own agreements which they use as templates.
A mediation contract is a document that establishes a legal basis for mediation. Here is what it usually contains:
- procedure for the appointment of a mediator, including their function and duties;
- the parties’ written pledge that they will conduct negotiations fairly and conscientiously;
- information that whoever signed the contract on behalf of the parties is entitled to making it legally binding for them and thus resolve the dispute;
- information about mediation procedure, including any steps that need to be taken beforehand, such as exchanging statements on positions;
- information about terms of confidentiality;
- a condition that any settlement is to be in written form and signed before the agreement enters into force;
- information about the mediator’s fee, as well as other mediation-related expenses.
The mediator’s being impartial is the cornerstone of mediation, and anything that can call it into question is to be made known so that the parties can decide whether they should proceed with appointing a neutral party for peaceful resolution of the dispute. Even though the mediator is not legally bound to divulge information about a potential conflict, this is a standard practice, and the European Code of Conduct for Mediators requires its divulgement.
How Much Does It Cost to Hire a Mediator in Great Britain
There is no legally established mediator fee. The fee is individually agreed upon and reflects the formidability and monetary value of the dispute, as well as the mediator’s acumen and reputation. Oftentimes, mediators get paid a fixed amount of money which is enough to cover some of the preparation- and mediation-related expenses. Additional hours are paid for separately and on a per-hour basis.
Usually, the parties agree to share the costs of mediation, including the cost of leasing the venue, but each of them pays an individual fee to be legally represented in court. It is also possible (although it is done quite rarely) that one of the parties may suggest covering all mediation-related expenses to encourage the other party to resort to mediation.
Stages of Mediation
Given its flexibility, no specific rules regulate mediation procedure (the only exception is the minority of cases in which the parties agreed to resolve the dispute through mediation in accordance with the mediation rules of a specific legislative body, such as the London-based IAC). Nevertheless, there can be some conditions pertaining to mediation procedure and contained in the agreement on mediation.
- preparation of statements on the position or summary of the case - they will be prepared by each of the parties and their copies will be exchanged between the parties and handed over to the mediator prior to the commencement of mediation;
- preparation of the essential documents. As in the case with the court proceedings, the parties commonly agree on the set of documents. After that one of the parties undertakes to produce the documents and provide their copies to the other party and mediator prior to the commencement of mediation.
The documents required for mediation include:
- agreements and documents containing evidence;
- correspondence-related documentation;
- case-related materials and other relevant documents (e.g. witnesses’ testimony and calculation of expenses), if the proceedings have commenced.
By its nature, mediation is a private and confidential process, which is why terms of confidentiality are usually included in the mediation agreement. Confidentially is usually extended to anything happening during the course of mediation and other regulation stemming from it. Penalties for breaching the terms of confidentiality will be applied in accordance with the principles of the English Contractual Law.
How Brexit Affected Mediation in the UK
Following the UK’s withdrawal from the EU, the British government issued a law cancelling implementation of the Mediation Directive.
However, if the UK and EU reach a deal, domestic legislation derived from EU law, including the Mediation Directive, will continue to be in effect for the duration of the transition period. As of the time of writing, it is unclear whether the EU will leave the EU and whether the deal will be reached. It is not clear what measures will be in oplace once the transition period is over, either.
IQ Decision UK is closely monitoring the effects of Brexit on all spheres of entrepreneurial activity, including the issue of how to settle disputes through mediation after the UK’s withdrawal from the EU.