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Draft: 17 octobre 2002 Représentant les avocats d Europe Representing Europe s lawyers RESPONSE OF THE CCBE TO THE EUROPEAN COMMISSION S GREEN PAPER ON ALTERNATIVE DISPUTE RESOLUTION IN CIVIL AND COMMERCIAL LAW OF APRIL 19, 2002 UNIÃO EUROPEIA - - RÅDET FOR ADVOKATSAMFUND I DEN RESPONSE OF THE CCBE TO THE EUROPEAN COMMISSION S GREEN PAPER ON ALTERNATIVE DISPUTE RESOLUTION IN CIVIL AND COMMERCIAL LAW OF APRIL 19, 2002 In the Green Paper, the European Union tends to look at Alternative Dispute Resolution (ADR) mainly as an access to justice project. For the CCBE, ADR should, however, be seen as a private autonomy and service delivery project. Mediation and other ADR proceedings should rather enable the parties to make use of their contractual freedom in which the courts or private arbitral tribunals would otherwise render a final decision. This freedom of the parties should be preserved to the largest possible degree. Any establishment of minimum quality criteria may entail an over-regulation, as it can respectively be seen in Austrian and Hungarian draft laws. Likewise, the European Union should not be too concerned as far as the assurance of legal minimum criteria is concerned. If ADR is deemed to expand the contractual freedom of the parties rather than to establish a new formal process that is subject to procedural minimum guarantees, these safeguards should be left to the parties. In addition, the CCBE wants to draw the Commission s attention to the fact that it follows expressly from the Code of Conduct for Lawyers in the European Union, adopted by the 18 national delegations representing the Bars and Law Societies of the European Union at the CCBE Plenary Session held in Lyon on 28 November 1998 (Article 3.7.1) that a lawyer at all times shall strive to achieve the most cost effective resolution of the client s dispute and shall advise the client at appropriate stages as to the desirability of attempting a settlement and/or a reference to ADR. Looking at the field of alternative dispute resolution, lawyers assume many different tasks and roles. Three different approaches are to be mentioned: First, the lawyer may serve as an advisor in the decision making process, selecting the appropriate instrumental or procedural method of conflict resolution. In this role, the lawyer should be able to determine whether a case is suitable to be presented at court or to be mediated. Second, the lawyers role representing parties in mediation involves deciding on the forum and finding out what kind of mediation and what mediator is required. It may also involve dealing with the documentation, or - after the substantive mediation drafting and formalising a settlement agreement. Third, the role of the lawyer may cover his role as facilitator of the process, as information gatherer, as reality tester, evaluator or supervisor. The CCBE also wishes to emphasise that it is fully in agreement with the Commission when stating (point 9 in the Green Paper) that ADR constitutes a complement to judicial procedures and consequently not - and in spite of what the terminology ADR, traditionally standing for Alternative Dispute Resolution, might indicate - a substitute to proceedings before a court of law. The CCBE finds that it is essential to maintain that the purpose of ADR is to offer parties in dispute supplementary ways of having a given dispute resolved and/or managed, if appropriate, and if the parties so wish. As stated by the Commission in the Green Paper (point 11), ADR is at present characterized by being flexible, meaning in particular that the parties, in principle, are free (1) to have recourse to ADR, (2) to decide which organization or person will be in charge of the proceedings, (3) to determine the procedure that will be followed, (4) to decide whether to take part in the proceedings in person or to be represented and (5) to decide on the outcome of the proceedings. When considering possible new measures to be taken in order to develop and expand the use of ADR, the CCBE finds that it is essential to keep the above in mind and ensure that such measures do not interfere with the basic spirit of ADR, being a voluntary, party driven way of resolving/managing a given dispute. UNIÃO EUROPEIA - - RÅDET FOR ADVOKATSAMFUND I DEN 2 The CCBE notes, however, that the Green Paper, on this particular point, is not completely consistent. In point 3 the Commission thus talks about ADRs which are conducted by the court or entrusted by the court to a third party ( ADRs in the context of judicial proceedings ). Further, in point 27, when summarizing existing legislative measures already taken within the Member States, the Commission refers to With regard to ADR conducted by a court, the Member States code of civil procedure allow for the possibility of seizing a judge concerned with conciliation, make conciliation the compulsory phase of the procedure or explicitly encourage judges to intervene actively in the search for an agreement between the parties. These specific missions entrusted to judges, which are not necessarily among their usual functions, must therefore be accompanied by suitable training programmes. The CCBE finds that it is indeed relevant to consider also the interaction between court proceedings and possible in-court and out-of-court conciliation/mediation efforts, but also notices that in-court conciliation does not fall within the above definition of ADR. In order to avoid confusion, the CCBE believes that it is preferable to reserve the term ADR exclusively for dispute resolution procedures conducted by a third party, which takes place out-of-court, excluding arbitration. This, in particular, because conciliation provided to parties in dispute by a judge in a court of law, in general, is based on a legal approach to the dispute, whereas this would often not be the case in relation to conciliation/mediation taking place out-of-court - at least not in business-to-business disputes. On the other hand, the CCBE supports that the use of ADR is encouraged within each Member State by requiring that parties in dispute prove that they have considered the possibility of resolving/managing their dispute out-of-court, before going to court. This, in order to relieve national courts of law of unnecessary disputes (as mentioned above) and thereby make it possible for the courts to concentrate their efforts on resolving conflicts, which require the thorough legal review that only they (and as case may be arbitral tribunals) can provide. Before commenting on the individual questions, the CCBE wishes to indicate that not all of its member delegations agreed with all aspects of this response. A small minority believes that only lawyers should be involved in ADR, that the European Community has no competence in this area and that ADR was not suitable for Member States where there is no backlog in the Courts. UNIÃO EUROPEIA - - RÅDET FOR ADVOKATSAMFUND I DEN 3 Question 1 Are there problems such as to warrant Community action on ADR? If so, what are they? What is your opinion on the general approach to ADR that should be followed by the institutions of the European Union, and what might be the scope of such initiatives? In order to realize the full potential of ADR, there are problems which justify European Union Initiatives. Advantages of Dispute Resolution outside court proceedings do not always appear to be achieved. The CCBE, therefore, supports the introduction or harmonization of a few framework provisions. At the same time, if any legal provisions are to be adopted, the CCBE urges the European Union to clearly define the scope of application. If mediation was at the centre of the EU initiatives, it should be defined more clearly even if this definition is as broad as possible. The CCBE recommends 1. a harmonisation of provisions regarding the suspension of the statute of limitation during settlement negotiations and mediation proceedings (see response to question 9), the enforceability of clauses in mediation agreements regarding the suspension of court proceedings (see response to question 5 and 6) 2. spelling out strong rules of protection of confidentiality of the settlement discussions (see response to question 15) 3. the enforceability of settlement agreements (see response to question 18). The CCBE would welcome a recommendation of the European Union which would require parties in Civil Litigation to examine whether their case is suitable for Alternative Dispute Resolution. It should be left to the discretion of the member states what mechanisms might be used to implement such assessment. Question 2 Should the initiatives to be taken be confined to defining the principles applicable to one single field (such as commercial law or family law) field by field and in this way discriminate between these different fields, or should they as far as possible extend to all the fields governed by civil and commercial law? To the extent that the CCBE sees the need for introduction or amendment of rules, they may apply to all areas of civil and commercial law. Special rules may apply to consumer disputes, employment disputes and family law disputes, but may also develop in other fields according to different professional standards. Question 3 Should the initiatives to be undertaken deal separately with the methods of online dispute resolution (ODR) (an emerging sector which stands out because of its high rate of innovation and the rapid pace of development of new technologies) and the traditional methods, or on the contrary should they cover these methods without making any differentiation? Generally speaking, the CCBE does not consider online dispute resolution as significant as it is deemed to be in the Green Paper. In terms of the process, the CCBE does not see a difference between onlineproceedings and other dispute resolution proceedings as far as the legal framework is concerned. The use of the online-platform does not have any impact on the structure of the ADR proceedings. UNIÃO EUROPEIA - - RÅDET FOR ADVOKATSAMFUND I DEN 4 Question 4 How might recourse to ADR practices be developed in the field of family law? In certain member states, there are, for example, special provisions for the development of a consensus between parents regarding child custody. The harmonisation of such rules at the European level may not be necessary, but useful. However, the CCBE would like to leave the response to this question to family law and family mediation specialists. Question 5 Should the legislation of the Member States be harmonised so that in each Member State ADR clauses have the same legal value? ADR clauses are hereby understood as clauses that are inserted into contracts and that provide for a mediation attempt as a preliminary step prior to the initiation of legal proceedings in case of a dispute relating to the contract at stake. The CCBE does not believe that there is a need to harmonise such clauses. As any contractual arrangement, their content will and should reflect the free will of the parties. There is no need for legislation in this respect. Question 6 If so, should the validity of such clauses be generally accepted or should such validity be limited where these clauses appear in membership contracts in general or in contracts with consumers in particular? Multi-step dispute resolution clauses, providing for mediation as a first step, should always be enforceable. To the extent that the mediation part of the clause is concerned, it should also be valid if the clauses are part of standard terms and conditions. The only safeguard which should be made is that no party may be forced to give up non disposable rights. The enforceability of such clauses would result in an inappropriate treatment of the affected party. Likewise, a preliminary suspension of a suit may not turn into a prohibition to sue. Accordingly, mediation clauses should only be prevented from enforceability if they would make the parties loose rights or claims because the statute of limitations has expired. Question 7 What in any case should be the scope of such clauses? Since no binding outcome is imposed on the parties in ADR-proceedings, there are no risks in initiating ADR proceedings unless and as far as the parties rights are jeopardized already by the initiation of the proceedings. Question 8 Should we go as far as to consider that their violation would imply that the court has no jurisdiction to hear the dispute, for the time being at least? The court should be authorized to dismiss or postpone a suit for the time being if the parties stipulated that a claim may only be filed with the court after the mediation session has taken place. At the same time, there is no need for an automatic interruption of a case once a claim has been filed. The actual experience of those UNIÃO EUROPEIA - - RÅDET FOR ADVOKATSAMFUND I DEN 5 practising in the field shows that mediation proceedings may be completed successfully even if a suit has been filed already. Question 9 Should the legislation of the Member States be harmonised so that in each Member State recourse to an ADR mechanism entails suspension of the limitation periods for the seizing of courts? To the extent that any limitation periods may run, harmonized provisions within the member states may be useful. The German statutory provision that provides for the suspension of the period of limitation during negotiation and other dispute resolution proceedings (Sec. 203 of the Civil Code) may serve as an example. The provision reads as follows: If there are negotiations between the debtor and the creditor with respect to a claim or the circumstances pertaining to a claim, the period of limitation is suspended until or unless one of the parties refuses to continue this negotiations. The statute of limitation does not expire earlier than 3 months after the end of the period of suspension. Since this provision has been introduced to German law, there is no impending pressure anymore for the parties to terminate their negotiations prior to the expiration of the statutory period of limitation. However, the parties have to carefully establish whether negotiations have taken place. The CCBE would welcome the harmonization of a comparable approach within all member states. Question 10 What has been the experience of applying the Commission recommendations of 1998 and 2001? The CCBE is not aware of any impact of recommendations regarding Alternative Dispute Resolution in consumer disputes. To the best of its knowledge, the CCBE does not know whether the consumers confidence in Alternative Dispute Resolution has been strengthened. Question 11 Could the principles set out in the two recommendations apply indiscriminately to fields other than consumer protection law and in particular be extended to civil and commercial law? If the recommendations regarding consumer disputes would be applied to all disputes in civil and commercial law, the parties private autonomy would be restricted rather than expanded. Accordingly, the CCBE does not recommend the application of the consumer dispute principles to other areas of law. Recommendation 98/257/CE, in essence, deals with ADR systems in which the third party «proposes or imposes a solution; it does not concern procedures that merely involve an attempt to bring the parties together to convince them to find a solution by common consent (Eighth Consideration). Since the latter is, however, the primary purpose of mediation and other means of dispute resolution, the principles contained in the recommendations are not necessarily transferable into any ADR system. Without a doubt, they seem quite adequate for ADR mechanisms, as envisaged in the Recommendations regarding consumer dispute settlement mechanisms that must lead to a binding or enforceable resolution of the dispute. Not all of them can, however, be reconciled with the non-binding ADR systems, in particular with mediation. Addressing these principles one by one, the CCBE would support the following as they apply to mediation in particular: Principle of independence: Applicable; good rules of professional conduct should go even further than the rules indicated there; one submits, however, as a rule of ethics, that the principle of independence can be waived by the parties, if fully informed about the reasons of non- UNIÃO EUROPEIA - - RÅDET FOR ADVOKATSAMFUND I DEN 6 independence, and when the parties are fully able to make an independent judgment about a waiver thereof. Principle of transparency: Applicable but for the publication (see comment to question 16 hereafter). Adversarial principle: Not applicable. Although good mediation principles require that the mediator hears the parties in joint sessions, this is not an essential element of mediation. Indeed, separate caucus sessions are an essential feature of many a mediation. Principle of effectiveness: Mixed reply. - Use of counsel: not indispensable but highly recommended in civil and commercial mediation. The presence of independent counsel enables the mediator to better remain independent and neutral inasmuch as he is not required to provide an opinion to the parties, hence remaining neutral and not risking to loose the image of neutrality; the presence of independent counsel is a guarantee that each party s right has been adequately considered prior to a settlement being reached; - Procedure free of charge: not doable in mediation carried out by professional and trained mediators; - Short time: yes, but the necessities of each case may demand otherwise: the parties must always, under the guidance of the mediator, remain in control of the process, including of its most appropriate timing. - Active role of the competent body: yes, but always in co-operation with the parties and with their approval. Principle of legality: Not applicable: this is not, by nature, an essential principle of mediation. Without a doubt, recourse to mediation may not deprive a litigant from the rights he may avail himself of under all applicable legal rules. Mediation, however, is not equivalent to a judicial recourse. It is nothing but one of the alternatives to court adjudication if and when the parties agree that it should be attempted prior to legal action or as an attempt during a judiciary process. A solution brought about through mediation does not necessarily need to be in accordance with the legal rights and duties that the parties have or had when embarking in the mediation process. On the other hand, the contract (whether a settlement or any other type of arrangement) needs to be legally enforceable if and when needed. In that respect attention ought to be given to the fact that an arrangement reached pursuant to mediation with the assistance of independent counsel for the parties and a qualified mediator may deserve a simplified enforcement procedure, thus avoiding the risk for the parties to find themselves with a settlement agreement that is left unperformed and having to go through a whole court procedure in order to get the settlement contract recognized and enforced. Common rules simplifying enforcement of settlements reached through mediation would be a welcome addition to any European code of civil procedure or a Convention applying within the EU (see also reply to question 18). Principle of liberty: Applicable, though under a proviso: In civil (except family matters) and commercial cases, one sees no reason why a recourse to mediation could not be agreed upon in advance, for instance in a commercial contract containing a clause under which the parties commit to attempt to try to solve disputes through mediation prior to having recourse to the courts or to arbitration. Such clauses should be encouraged and their enforcement enhanced in all EU countries through appropriate legislation (see reply to question 9). Principle of representation: Applicable. UNIÃO EUROPEIA - - RÅDET
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