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A beginner's guide to cross-border mediation

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Cross-border mediation is a process where a mediator assists two or more parties to manage and resolve a multi-jurisdictional dispute within the EU. Vincent Adon, mediator and founder of London ADR, presents a beginner’s guide.

Cross-border mediation (CBM) is a process where a mediator assists two or more parties to manage and resolve a multi-jurisdictional dispute within the European Union (EU).

It was introduced under Directive 2008/52/EC (the directive), which came into force in all EU member states bar Demark on 20 May 2011.

What is its aim?

The aim of CBM is to encourage and facilitate mediation as an alternative form of resolution of cross-border disputes in the EU.

The directive covers certain aspects of mediation in civil and commercial matters, and it defines cross-border disputes as disputes in which at least one of the parties is domiciled or habitually resident in a member state other than that of any other party (or parties) the former is in dispute with.

In other words, the directive is applicable only to disputes where the parties live or work in separate jurisdictions, such as the UK and Germany.

What kind of disputes is it suitable for?

Disputes that fall under the remit of CBM are wide. Such disputes may include those arising out of:

  • bilateral or multilateral commercial contracts;
  • insurance contracts;
  • employment agreements;
  • malpractices; and
  • consumer rights.

It is worth noting that cross-border mediation is not restricted to civil and commercial disputes alone, although the directive applies to civil and commercial disputes only. Cross-border family mediation is also well established within the EU, and deals with a wide range of family disputes of a cross-border nature to prevent acts such as abduction. 

A key aspect of the directive is that it allows the parties to still use a judicial or an arbitrary process if the mediation fails – any limitation or prescriptive period is generally suspended during the mediation. Not all EU jurisdictions have implemented this provision.        

CBM can arise out of a number of circumstances: for instance, a contractual clause may refer disputes arising out of, or in connection with, the contract to attempt mediation first, before issuing proceedings. A court may refer or order mediation, or one party may invite the other to mediation; in some cases, the parties may simply mutually agree to mediate.  

How does the mediation process work?

The mediation process in CBM, not necessarily the mediation itself, is significantly different from the mediation process within the same jurisdiction.

Appointing a mediator

There are all kinds of cultural and language issues faced by the mediator. In order to address some of these issues, the mediator is usually in close contact with the parties long before the mediation takes place.

To this end, it is very important that the parties choose the right mediator, not only for their skills and experience in mediating the type of issues in dispute, but also for their flexibility and their ability to understand and steer the parties through any cultural and jurisdictional differences.

It is not uncommon to appoint a co-mediator to assist the mediator. It is important that either the mediator or the co-mediator is familiar with the legislation and culture of both parties, to the extent that it applies to the dispute.

There are other matters that will require time to address, such as the venue for the mediation, although CBM can be conducted through a telephone conference system or with the use of a secure online platform.

The mediator will also need to consider compliance of any settlement agreement with the laws of either party’s jurisdiction, but the terms of any such settlement agreement, pursuant to article 20 of the directive, will be recognised and enforceable in a party’s country as long as it is enforceable in the other party’s country. 

Costs

As both parties are in different jurisdictions, costs is a vital issue to consider, particularly where the parties and the mediators meet in one party’s country, or a neutral country. The cost of the mediation itself will depend on the value of the dispute, and other costs may arise, such as travel and accommodation costs – this doesn’t even take into consideration legal fees where the parties are legally represented. Online or telephone mediation, where suitable, remains the most cost-effective form of CBM.

The mediation agreement

The mediation process begins with the parties agreeing to the mediation by signing the mediation agreement, which is sent to the parties beforehand.

The principles of mediation, namely, confidentiality, impartiality, without prejudice etc, will normally apply to CBM, as it is in the UK, although the mediator will check the understanding of all the parties and the rules in the parties’ respective jurisdictions, in order to ensure correct compliance with and enforceability of any agreement.

Differences in any aspects of the mediation process based on jurisdictional practices can be addressed in the mediation agreement. Following the signing of the mediation agreement, the parties will enter the preparatory stage. This is vital, as any issues which arise can be dealt with here. If necessary, an interpreter will be appointed.

At this stage, the parties will, by mutual consent, agree the form of mediation and if relevant, what country the mediation would hold. The mediator will also have the opportunity to read any papers, including the parties’ position statements, which set out their case and how they propose to settle the dispute. Following the relevant preparation, the mediation holds in the form agreed, and if a settlement is reached, a settlement agreement is typically drafted by the parties’ legal representatives.

In spite of possible cultural and language hurdles to overcome, CBM remains a cheaper and quicker form of resolving disputes compared to cross-border litigation. Businesses or individuals who have built strong relationships across borders stand a better chance of preserving such relationships and continuity of business through mediation.

It remains to be seen what impact Brexit would have on CBM. What is predictable is that the directive enabling CBM may no longer be effective in the UK, which may be a precursor to a more rigid regime for parties and mediators engaged in CBM. 

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