Should Mediation be Mandatory?

In Scotland, there has for a long time been a debate about whether mediation should be encouraged more by the courts, and further, whether mediation should be mandatory.

1st October 2013

Mediation in Scotland

In Scotland, there has for a long time been a debate about whether mediation should be encouraged more by the courts, and further, whether mediation should be mandatory. This was discussed recently in the context of The Report of the Scottish Civil Courts Review 2009 (SCCR) led by Lord Gill (now Lord President Gill), with the report recommending a change in approach to ADR generally, and in particular mediation. However, despite an increase in awareness of the benefits of mediation as an alternative to litigation, it looks as though Scotland will not be adopting a mandatory mediation procedure any time soon. Is this the same in other jurisdictions? And should mandatory mediation be something we ought to be considering?

Other jurisdictions:

Rest of the UK:

In England and Wales mediation has become more and more common over recent years. Sir Rupert Jackson’s Final Report on Civil Litigation Costs in England and Wales (2009) recommends that courts can and should in appropriate cases encourage mediation and point out its benefits; direct the parties to meet and/or discuss mediation; require an explanation from the party which declines to mediate; and penalise in costs parties who unreasonably refuse to mediate. Before this the Woolf Reforms of 1999 gave judges the powers “to encourage” the use of mediation at every stage of litigation, although they stopped shy of mandatory mediation. This approach has been reflected in the practice of the courts. In Burchell v Bullard, a party ignored an offer to mediate at the pre-action stage, and this was deemed to be an unreasonable refusal to mediate. A costs penalty was therefore applied. However, it was also held in Halsey v Milton Keynes General NHS Trust that no party can be forced to mediate. This shows that the courts south of the border are still opposed to mandatory mediation.

Europe:

It has been suggested that in the past there has been a general reluctance by continental European jurisdictions to use any kind of alternative dispute resolution process in their domestic law. Despite this, in recent years there has been a move towards more ADR, and in particular, mediation. However, this progress appears to only apply to voluntary mediation, with the majority of jurisdictions opposed to mandatory mediation.

(i)             Voluntary mediation:

The French approach to mediation is to have a system providing a framework for various forms of mediation, but on a strictly voluntary basis. They argue that in order to promote the future development of any ADR in France there cannot be a system of mandatory mediation (the Ordinance of November 16th 2011).

In Ireland, interestingly, there is a strict distinction between mandatory attendance at an information session about ADR processes or at a mediation session prior to any potential litigation and, in contrast, mandatory participation in an ADR process. Irish courts can compel attendance at a mediation or conciliation, but they will not compel a party to fully participate in the process to reach a settlement. They too therefore stress the voluntary nature of mediation, at least at the participation stage.

(ii)            The EU Mediation Directive

Therefore, there appeared to be reluctance in the EU to adopt mandatory mediation. However, this attitude shifted with the enactment of the EU Mediation Directive (Directive 2008/52/EC). The Directive, which focuses on certain aspects of mediation in civil and commercial matters, was adopted by the EU Parliament on 23 April 2008 and came into force on 13 June 2008. The Directive applies to all EU member states apart from Denmark (which has opted out). The primary aim of the Directive is to facilitate access to alternative dispute resolution (ADR) in the EU, when dealing with cross border disputes. It recommends that this can be achieved by promoting the amicable settlement of disputes by encouraging mediation and by ensuring there is a balanced relationship between mediation and judicial proceedings in all EU jurisdictions.

The Directive identifies a number of potential advantages of mediation over litigation generally, such as: it is a cost effective process; it can be tailored depending on the needs of the parties; and it can allow working relationships between the parties to be preserved. The Directive emphasizes that these benefits are particularly evident in cases with a cross-border element.

The Directive provides only for voluntary mediation. However, it says clearly that member states can make the use of mediation mandatory and impose penalties in the event of default. They can also extend the use of mediation as set out in the Directive to domestic disputes.

(iii)           Mandatory mediation:

The case of Rosalba Alassini and Others, Joined cases C-317/08 to C-320/08 reinforces the view that mandatory mediation would not be a breach of EU law. In March 2010, the ECJ confirmed the Advocate General's view in an earlier decision that an Italian law requiring a telecoms dispute to be subject to an out-of-court settlement procedure before being heard in court was not precluded by EU law. Prior to this there was a concern that mediation on a mandatory basis may be contrary to the right to a fair trial set out in Article 6 of the European Convention on Human Rights. However, this case provides authority that mandatory mediation in domestic legislation is not precluded by EU law.

The case also shows that Italian law has gone further than most in backing mediation. In March 2010, Italy implemented the EU Mediation Directive by legislative decree (the Decree). This therefore means that the Italian courts have the power to order mandatory mediation; and this applies not only to cross-border claims but also to certain domestic disputes. In 2012 the Decree was held to be unconstitutional. However, in June 2013 this ruling was reversed, and Italy once more has mandatory mediation. To avoid mandatory mediation being deemed ‘unconstitutional’ again in the future, changes have been made to the Decree, one being that litigants can withdraw from the mediation process in the early stages, thus participation is mandatory, but can be ended earlier than was allowed previously.

The courts in Romania have also adopted a form of mandatory mediation. The Romanian Civil Procedure Code was amended in 2010 to introduce an article requiring mandatory “conciliation” of all civil cases before proceedings can be issued. In this context conciliation includes negotiations with or without the assistance of a third party neutral.

Some countries have implemented quasi-mandatory mediation. Slovenia has an Alternative Legal Dispute Resolution Act which provided that all Slovenian courts must offer mediation to parties from June 2010. The Act introduced a quasi-compulsory procedure with an opt-out. Similarly, since 2007 the Dutch courts have also had the power, by letter or during a court hearing, to refer parties to mediate appropriate disputes.

Further afield:

Outwith Europe mandatory mediation has had better success. In North America there appears to be an acceptance to use mandatory mediation, with the US state courts being able to refer cases to the US Federal Mediation service (FMCS) for mandatory mediation, and in Ontario, Canada, mandatory mediation is provided for in their court rules (Ontario Court Rules for the Ontario Superior Court of Justice (Rule 24.1)). In Australia there has also been compulsory mediation for many years, especially in Victoria and Queensland. In Singapore there have also been a large number of cases have been subject to compulsory mediation, and the statistics show that around 95% of these cases were resolved.

Advantages and Disadvantages 

It is useful to consider the various arguments for and against mandatory mediation:

Advantages

  • Satisfaction – ‘Everyone is a winner’ – mediation offers remedies which are not available to the courts in a litigation process. Therefore, usually mediation results in parties getting something that they want; there is not an outright winner or loser. This should be encouraged
  • Fewer cases in the court – mediation prevents a backlog of cases, and this has been cited as one of the main reasons for the system in Italy. This reduces costs for the parties in dispute as well as costs to the public purse.
  • Access to Justice – mediation is more affordable; therefore even if a party lacks financial means it can still resolve its dispute in this forum. Mediation is much cheaper than litigation, and is also cheaper than some of the other ADR procedures. The cost of mediation will depend on how complex the dispute is, and how many people are involved in the process. 
  • Quicker – mediation forces parties to communicate and negotiate rather than take part in an adversarial process. Mediation can result in parties realising that the issues in dispute are actually quite narrow. Voluntary mediation in Scotland currently has an 80% settlement success rate on the day and up to another 10% of cases settle before commencing litigation.
  • Future relationship maintained – parties are more likely to maintain a positive relationship after attending mediation. This is relevant in Scotland given the size of our market, and the prospect of repeat business between the parties.

Disadvantages

  • Dissatisfaction – ‘Everyone is a loser’ – in order for mediation to be successful parties have to be willing to compromise, and they may not wish to concede anything. Mandatory mediation may therefore pressure parties to concede issues and leave them with a feeling of dissatisfaction with the legal system. The ‘injured’ party may challenge why they are out of pocket if they are ‘right’.
  • Fewer cases in the courts – this could result in a lack of precedent, due to mediation being a confidential process where cases are not reported. This is potentially more problematic in Scotland than other larger countries.
  • Access to Justice – disputants have a right to litigate, and therefore mandatory mediation would simply prolong the process and add another layer of cost. This may have adverse implications for access to justice.

Conclusion

As demonstrated above, many jurisdictions are adopting a range of measures in relation to mediation, and the majority are encouraging voluntary mediation as an alternative to the litigation process. However, mandatory mediation appears to lack the same support within the EU. Purist mediators and others believe a cornerstone of mediation to be that it is a voluntary, consensual process, and making participation mandatory would be paradoxical. The SCCR dedicates a chapter to mediation and points out that the “essence of mediation, and critical to its success, is that the parties entered into it voluntarily, and that it was not appropriate for the court to compel parties to attempt to settle their dispute by mediation.” Others for mandatory mediation argue that although a party can never be forced to make a decision at mediation, compelling them to attend the mediation would be enough to ensure that many more cases are resolved outside of traditional litigation, and surely this can only be a positive addition to the court process?

Considering the future of mediation in Scotland, it is useful to consider both Sir Rupert Jackson’s Final Report for England and Wales concluding that despite the considerable benefits of mediation, parties should never be compelled to mediate, and Lord President Gill’s comments above regarding the essential voluntary nature of the process. It can therefore be concluded that mandatory mediation is most unlikely to be adopted in the future as part of general civil court procedures in Scotland.