Of the many legal implications of Brexit, the impact on mediation has received little attention. Amidst the debates over sovereignty and fishing rights, the fate of the EU Mediation Directive (the “Directive”) has, unsurprisingly, gone largely unnoticed. However, upon the expiry of the transition period following Brexit, legislation will come into effect which largely annuls the application of the Directive in the UK. The question is, what impact will this have on the mediation landscape in the UK going forward?
Mediation in the UK and Europe pre-Brexit
Alternative Dispute Resolution (“ADR”) is a well-established feature of the English legal system. It is expected that the parties to a civil dispute should attempt to settle their differences before resorting to litigation. In the UK, mediation is the most common form of ADR; for those not familiar with the process, mediation involves the parties voluntarily engaging an impartial third party (the mediator), to help them try and settle their dispute. Mediations are a flexible and confidential forum, in which it is the mediator’s role to actively assist the parties in reaching a negotiated agreement.
However, mediation is not just a domestic affair; the European Union has also come to recognise its benefits. Accordingly, on 21 May 2008 the Directive was adopted. The Directive focuses on five aspects of mediation: (i) the quality of mediations, (ii) court-encouragement of mediation, (iii) enforceability of mediation agreements, (iv) confidentiality of mediations, and (v) the effect of mediation upon limitation periods (i.e. the time limits within which legal proceedings must be commenced).
The Directive seeks to address these issues in disputes between parties based in Member States (‘cross-border disputes’). The definition of a cross-border dispute is, subject to some exceptions, a dispute where at least one party is domiciled in a Member State.
Member states were required to bring into force laws necessary to comply with the Directive by 21 May 2011.
Implementation of the Directive in the UK
The Directive was duly given effect in the UK on 20 May 2011 by virtue of the Cross-Border Mediation (EU Directive) Regulations (the “Regulations”). The Regulations resulted in the following rule changes to cross-border mediations taking place in the UK:
- Confirmation within the Regulations (and via changes to the Civil Procedure Rules) that a mediator has the right, subject to some exceptions, to withhold mediation evidence in court proceedings and arbitrations;
- Extensions of limitation periods where mediation is agreed in cross-border disputes (by amendment to numerous pieces of pre-existing legislation); and
- A procedure being inserted into the Civil Procedure Rules for the enforcement of cross-border mediation settlements (unimaginatively called “Mediation Settlement Enforcement Orders”).
It is interesting to note that the UK only gave effect to the Directive in cross-border mediations (i.e. the opportunity was not taken to apply the terms of the Directive to all UK-based mediations). The reasons for this were as follows:
- The confidential nature of mediations was already well established in the UK;
- Alternative options exist for parties who are up against a time limit for making a claim; and
- It is rare for a settlement achieved at mediation to be abandoned.
It is also telling that the Regulations only partially implemented the Directive. The government decided not to give effect to sections of the Directive regarding the quality of mediations and the court’s encouragement of mediation. The justification for this was that the body responsible for implementing the Directive considered that the existing framework in England and Wales adequately satisfied these requirements.
The effect of Brexit
As things stand, on 1 January 2021 the Regulations and associated changes to the Civil Procedure Rules will be repealed. As a result, the provisions of the Directive will no longer apply to cross-border mediations taking place in the UK. The only exception to this is where (before the end of the transition period) the parties agreed to mediate, mediation has been ordered by the court, or the court invites the parties to use mediation.
It should be noted that Brexit will not just see the Regulations fall by the wayside; there are further ADR-related consequences.
Take, for example, the EU’s ADR Directive; this promotes out of court resolution of domestic and cross-border disputes relating to sales and service contracts between traders and consumers based in Member States. This is to be achieved by Member States providing consumers with access to ADR procedures via designated ADR entities.
There is also the Online Dispute Resolution (“ODR”) Regulation which led to the establishment of an online platform – a free website (available in all languages of the EU) by which traders and consumers in Member States can attempt to settle disputes relating to online sales or service contracts. All traders within the EU which engage in online sales, service contracts, and online marketplaces are required to provide a link on their website to the ODR platform.
Brexit also represents the death knell of these two provisions in the context of cross-border disputes.
Impact and the future
It is extremely unlikely that cross-border mediations which take place in the UK will be noticeably affected by the Brexit-induced changes. There are well-established principles of the English legal system which already convey the benefits of the Directive to UK based mediations. In addition, there is evidence to suggest that cross-border mediations make up a small percentage of mediations which take place in the UK. The fact of the matter is that mediation is simply too deeply rooted in the UK for Brexit to have any significant impact.
Critics may try to argue that the move away from the ADR Directive and the ODR platform represent a step backwards. However, the ADR Directive remains in effect for domestic disputes, and the European Commission has itself recently admitted that the ADR/ODR framework is underused and yet to reach its full potential. In addition, the European Commission has admitted that the ODR platform only partially reflects user needs.
Regardless of any impact that Brexit may have, provisions for the resolution of cross-border disputes may be back on the cards in due course. By way of example, the United Nations has a working group which is, slowly, in the process of preparing procedural rules for the online resolution of cross-border electronic commerce transactions. In addition, the United Nations opened for signing the Singapore Convention on the Enforcement of Mediated Settlement Agreements in August 2019 (the “Singapore Convention”). The Singapore Convention, which will enter into force six months after ratification by three UN states, aims to provide a harmonized legal framework for the right to invoke and enforce settlement agreements achieved at mediation.
In a country where ADR and mediation are already embraced, the impact of Brexit, if any, will almost certainly be negligible. In any event, the increasing global appreciation for ADR, and efforts to embrace it, mean that it is unlikely to be long before alternative procedures are put in place to rectify any damage that Brexit might cause. Watch this space.