News & Updates

News & Updates

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UNCITRAL and the enforceability of iMSAs: the debate heats up – Part 4

“…the mounting global hubbub surrounding mediation, and highly varied perceptions regarding the nature and value of mediation, underscore the need for thoughtful conversation and deliberate reflection on present trends and tendencies. The failure to periodically step back and take stock of where we are and where we are going increases the likelihood of behavioural ‘drift’ – that is, action that becomes increasingly reflexive as opposed to deliberate.” Thomas J. Stipanowich,  ‘The International Evolution of Mediation: a call for dialogue and deliberation

As the 65th session of the UNCITRAL Working Group II on arbitration and conciliation draws to a close today, so too does our series of posts which has reflected on the issues likely to have been discussed and debated in Vienna. In this fourth and final post we consider the application of an arbitration enforcement framework to international mediated settlement agreements (iMSAs) particularly in light of recent trends in international arbitration.

Stipanowich’s appeal above to reflective, rather than reflexive, action has broad resonance. In this post, we focus on the potential relevance of these words to the current reliance on international arbitration to offer up a solution for the allegedly low levels of international mediation.

At the risk of over-simplification, the argument goes that it was the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1957 (the New York Convention) that established, and sustains, international arbitration as a popular dispute resolution process for international disputes. So, if this worked – and works – for international arbitration, why not adopt something similar for international mediation which, it seems, is not enjoying such popularity? It has been argued that until international mediation enjoys an equivalent enforcement mechanism, international mediation will remain less attractive than arbitration.

Some questions

There is, of course, the threshold question of whether we can attribute international arbitration’s rise to prominence and popularity solely to the New York Convention: what else might have led to, and sustains, arbitration as a popular choice for international dispute resolution?

There is then the question of whether it is appropriate to look to international arbitration for a way in which to increase the uptake of international mediation given the fundamental differences between these two dispute resolution processes. Put simply, what worked for arbitration might not work for the very different process of mediation. As noted in our second post, the consensual and voluntary nature of mediation – in contrast to the adjudicatory nature of arbitration – calls into question the need for an enforcement mechanism. Given that the parties themselves determine whether or not they reach a settlement, and the terms of any such settlement, there may well be a likelihood of compliance with the settlement. Indeed, this point has recently been noted by the European Commission in its report on the EC Directive on mediation in civil and commercial matters: “Mediation can provide a cost-effective and quick extrajudicial resolution of disputes in civil and commercial matters through processes tailored to the needs of the parties. It is more likely that parties voluntarily comply with agreements resulting from mediation. These benefits are even more pronounced in cross-border situations.”

And finally, there is the question – which, it seems, has not received much attention – of what are the present trends and tendencies in international arbitration which might inform UNCITRAL Working Group II’s continuing discussions on a proposed convention on the enforceability of iMSAs. It is this issue which will be the focus of the remainder of this post.

Present trends and tendencies

So, what is happening in the international arbitration arena which may be of relevance?

Recent research by the School of International Arbitration of Queen Mary University of London identified that: “A growing concern in international arbitration is a perceived reluctance by tribunals to act decisively in certain situations for fear of the award being challenged on the basis of a party not having had the chance to present its case fully (‘due process paranoia’).” (page 2)

Queen Mary’s study adds that “Many interviewees described situations where deadlines were extended, fresh evidence was admitted late in the process, or other disruptive behaviour by counsel was condoned due to what was perceived to be a concern by the tribunal that the award would otherwise be vulnerable to challenge. Notably, even arbitrators identified this phenomenon as both problematic and commonplace. Indeed, many revealed in interviews that this concern has influenced decisions they have made when sitting as arbitrator. Interviewees were generally sympathetic to the reasons behind the tribunals’ caution. However, they often expressed the view that some of arbitration’s more prevalent problems, such as lack of speed and increased cost, are partly rooted in this due process paranoia.” (page 10)

Why is this recent trend in international arbitration relevant to our discussions on a convention on the enforceability of iMSAs?

First, it reminds us that an enforcement convention cannot guarantee direct enforcement: there will be limited grounds, as there are under the New York Convention, under which the enforcement of an iMSA could be challenged. So, if parties to iMSAs tend not to comply with their agreements – as seems to be suggested by the push towards a convention on the enforceability of iMSAs, though there appears to be no empirical data to support this – a convention may not necessarily bring an end to any such problems of compliance. Put simply, and perhaps cynically, there will still be wriggle room even with such a convention. If the parties wish to renege on their agreement, an enforcement mechanism may not prevent them from doing so.

Secondly, as the research has identified, grounds for challenge can affect – or we might say infect – the process, in the case of international arbitration resulting in what has been termed “due process paranoia.” One of the draft grounds of challenge to direct enforcement which UNCITRAL is currently considering for iMSAs certainly has a “due process” flavour to it. Article 8(1)(e) of UNCITRAL’s draft instrument states:

The conciliator failed to maintain fair treatment of the parties, or did not disclose circumstances likely to give rise to justifiable doubts as to its impartiality or independence.”

Can we sense a collective concern? How will “fair treatment of the parties” be determined? Could a mediator spending more time with one party in caucus sessions (where the mediator meets separately with each party) be unfair treatment of the other party? And what about a perception that a mediator reality tests one party’s view more than another’s? Is that unfair – or fair – treatment? And who will determine “fair”? How will the requirement to treat parties fairly – whatever that might mean – alter the way in which mediators mediate? What might fall within “circumstances likely to give rise to justifiable doubts as to the mediator’s impartiality or independence?” At what point does a doubt become “justifiable”? And there are more questions…

As noted in our second post, there are characteristics of the mediation process which raise significant challenges for any basis of challenge to direct enforcement which touches upon the way in which mediation is conducted. These characteristics include the confidential nature of mediation, its flexibility, its voluntary nature, the focus on party self-determination and, of course, the use of caucus sessions. As UNCITRAL Working Group II continues to review the draft instrument on direct enforceability of iMSAs, the current trend of “due process paranoia” in international arbitration encourages us to continue to ask how the various grounds of challenge might sit with the unique characteristics, and opportunities, of the mediation process.

Reflexive or reflective action?

If there is a tendency for parties to not comply with iMSAs – though there does not seem to be empirical data which suggests that this is the case – is a convention on the enforceability of iMSAs the only, or the best, way in which to address this tendency? Might we be being “reflexive” in borrowing one element (an enforcement mechanism) from international arbitration to address a supposed problem with international mediation? If there is an issue with compliance, in addition to considering a convention on the enforceability of iMSAs, might we also try to establish why parties choose to not comply with their agreements? Could we look more broadly to the various stages and elements of the mediation process, for example, how the parties entered into the process, how it was conducted and how it was concluded, for insights into the reasons why parties renege on their agreements? We could then seek to address these reasons. Adopting an external enforcement mechanism might not be the only – or most effective – way to reduce the likelihood that parties will walk way from their agreements. And, if we think of the broader purpose of a convention on the enforceability of iMSAs, such a convention might not be the only – or best – way to promote cross-border mediation.

There has been much for UNCITRAL’s Working Group II to consider in Vienna. We will eagerly await the outcome of these discussions.

UNCITRAL and the enforceability of iMSAs: the debate heats up – Part 3

If you have been following this four-part series, you will be aware that Nadja Alexander, Anna Howard and I have been reflecting on a very current subject for the dispute resolution community: the enforceability of international commercial settlement agreements resulting from mediation. This week, the UNCITRAL Working Group II on arbitration and conciliation has been discussing this very topic in Vienna. The Working Group has been exploring the creation of an instrument for the enforcement of international mediated settlement agreements (iMSAs). The Working Group has prepared  draft provisions for an instrument, which could take the form of a convention, a set of model provisions or guidance text.

Our first post discussed the legitimacy of a proposed multilateral convention for the recognition and enforcement of iMSAs, addressing the question of why iMSAs should be accorded higher status than other contracts, as well as the view that a convention may infringe the right of access to justice.

We then examined the implications of a convention on the objectives and values of mediation, raising some questions on how mediation confidentiality, mediator neutrality, party autonomy and creativity could potentially be affected by a convention that is not carefully tailored to fit the mediation process.

In this penultimate post, we shift our attention to the threshold issue of whether a convention is actually necessary. We consider some of the doubts that have been cast on the justifications for such a convention.

(A) Is enforcement a problem presently?

First, some have questioned whether iMSAs are seldom complied with and whether a convention is really necessary. Several commentators have pointed out that there are in fact high compliance rates for iMSAs. As the parties in mediation have themselves developed a resolution which they feel is fair and workable, the likelihood of non-fulfilment of their obligations is reduced. Also, in recent empirical research on international commercial mediation conducted by S.I. Strong, it is notable that the respondents were asked whether they thought it would be difficult to enforce an iMSA and not whether they had had experience of needing to do so.

Could the efforts to strengthen the enforcement regime for iMSAs be much ado about nothing?
These doubts could be easily put to rest by undertaking more comprehensive research across jurisdictions to gather more conclusive evidence on the rate of compliance with iMSAs as well as the existing reasons for non-compliance.

Notwithstanding the current uncertainty about compliance rates, it is important to recognise the more significant need of promoting cross-border mediation. Regardless of the actual level of compliance with iMSAs, there is an overarching goal of encouraging greater usage of international mediation. Strengthening the international enforcement regime is a means to achieving this overall aim. As Laurence Boulle has highlighted in a recent article, “While voluntary compliance is the reality of many mediated settlements in many jurisdictions, the fact should not be overlooked that the very existence of an enforcement regime might be a significant inducement for parties to perform in terms of their agreement, in what might be labelled a quasi-compulsory arrangement.”

(B) Do we need a convention to promote the use of international mediation?

We turn then to examine the goal of promoting the use of cross-border mediation. One major question is whether a convention will indeed encourage greater use of international mediation. If we consider the existing empirical evidence, there are mixed conclusions:

(i)  A report on a 2007 survey conducted by the International Bar Association (IBA) summarised that “the enforceability of a settlement is generally of the utmost importance” and “in international mediation…reinforcement is more likely to be sought because of the potential of expensive and difficult cross-border litigation in the event of a failure to implement a settlement”.

(ii) In a 2014 survey conducted by the International Mediation Institute (IMI), 90% of respondents agreed that the absence of any kind of international enforcement mechanism for MSAs presented an impediment to the growth of mediation in resolving cross-border disputes; and 93% indicated they would be likely to mediate a dispute with a party from a country that ratified a UN convention on enforcement of mediated settlements.

(iii) S.I. Strong’s survey in assistance of Working Group II indicated that 74% of respondents thought that an international instrument concerning the enforcement of settlement agreements arising out of an international commercial mediation or conciliation akin to the UN convention would encourage mediation and conciliation.

(iv) A recent study by Queen Mary University of London presented a less enthusiastic response from respondents – only 54% answered “yes” to the question on whether a convention on the enforcement of settlement agreements resulting from a mediation would encourage them to use mediation more often.

The majority of these studies indicate a preference for greater certainty of enforcement of iMSAs. In comparison to arbitration, the enforcement options for cross-border mediation seem to lack certainty and uniformity across jurisdictions. It is highly likely that such “weaknesses” in the enforcement regime have affected the users’ perceptions of mediation in comparison to arbitration. A convention could then be instrumental in reinforcing the users’ confidence in the mediation process, marketing international mediation and sending a symbolic message about the global importance of mediation. Elevating mediation to a similar status as arbitration and litigation could have a huge impact on its future development.

Notwithstanding the benefits of strengthening the enforcement regime, we have suggested in our  previous post that it is much more crucial to ensure that the resulting instrument is consistent with the underlying values of the mediation process. We note, in this regard, that the respondents in the above surveys were not informed about the potential substance of the convention or how it may alter the mediation process. We can thus only conclude that the respondents welcome greater certainty of enforcement of an iMSA, but without any consideration of the content and consequences of such a convention.

We would therefore argue that increasing the level of certainty in cross-border enforcement of iMSAs is secondary to, and conditional upon, crafting an instrument that is in tune with the mediation process. A more rigorous enforcement regime which results in undermining the essential qualities of mediation is far from desirable.

If we were to adopt such an approach, there is perhaps a need to shift our attention to research examining whether an international legal instrument will increase the use of cross-border mediation, enhance client satisfaction of the mediation process and be suitable for the type of mediated outcomes being achieved in cross-border settings.

(C) Are we placing too much reliance on a convention to promote cross-border mediation?

As the ADR community considers how to promote the use of international mediation, there is the danger of focusing narrowly on one option – the multilateral instrument for cross-border enforcement – and neglecting other varied and multi-pronged ways of promoting mediation. The conversation should be opened up to consider how international mediation might be encouraged through other means, such as raising the awareness of mediation and increasing the usage of multi-tiered ADR clauses in contracts. It is also worth examining the ways in which parties enter the mediation process, rather than confining our discussion to how they conclude the mediation process.

The race towards drafting a “NY Convention” for iMSAs may also cause policy-makers to overlook the existing mechanisms and cross-border legal instruments that can support the enforcements of iMSAs. Examples include the  arb-med-arb process, the Brussels I Regulation  and the Hague Convention on Choice of Court 2005. These options deserve further study as to the extent they address the call for harmonisation of enforceability of MSAs.

In sum, a convention for enforcement of iMSAs certainly raises the status of international mediation, putting it on par with other well-used dispute resolution processes. Nevertheless, we hope that the dispute resolution community and policy-makers would look further than a convention, and that researchers provide greater clarity on the existing factors that affect the development of international mediation.

Keep posted for our final post on the application of an arbitration enforcement framework to iMSAs particularly in light of recent trends in arbitration.

UNCITRAL and the enforceability of iMSAs: the debate heats up – Part 2

The 65th session of the UNCITRAL Working Group II on arbitration and conciliation in Vienna has commenced. Many mediators have been keenly monitoring the Working Group’s deliberations and discussions concerning the enforcement of international commercial settlement agreements resulting from conciliations (iMSAs).

An unresolved but crucial question is the exact form that the final instrument should take. One option is a multilateral convention, analogous to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards for arbitral awards (New York Convention). Dispute resolution practitioners are rather divided on this move. The tendency, as in all conflicts, has been to be positional on either view on this matter.

Yet, all mediators will be aware of the need to dig deeper to understand the concerns underlying the debate. In this four-part series of posts – jointly written with Nadja Alexander and Anna Howard – we seek to crystallise the key concerns about the move towards a multilateral convention. We have grouped the concerns under four clusters:

1. the legitimacy of such a convention;
2. the impact of such a convention on the objectives of, and values underpinning, the mediation process;
3. the justifications for a convention; and
4. the application of an arbitration enforcement framework to iMSAs, particularly in light of recent trends in arbitration.

In this second post, we now focus on the impact of a convention on the objectives of mediation, a subject which will undoubtedly be close to many mediators’ hearts.

A convention which is meant to support the use of mediation ought to be consistent with the nature, underlying values and objectives of the mediation process. But challenges inevitably arise because of the confidential, consensual, flexible and informal nature of mediation, as well as its strong philosophical underpinnings of party autonomy and mediator neutrality. Can such a unique process ever be subject to strict rules of enforcement without losing its essential qualities? This is probably the most fundamental question that the Working Group and other dispute resolution practitioners have to address in order to arrive at a satisfactory outcome. Let us unpack the issue further.

(A) Concerns about mediation confidentiality

Confidentiality can be said to be a hallmark of the mediation process, one which distinguishes it from adjudicatory dispute resolution processes. Mediation confidentiality provides a safe space for disputants to candidly share their thoughts, with the assurance that all their discussions will be shielded from public scrutiny. Confidentiality is one of the key characteristics of mediation that makes it an attractive dispute resolution process.

A convention to enforce iMSAs is likely to introduce enforcement mechanisms, together with grounds to challenge enforcement. Once these grounds are raised, the mediation process will inevitably be scrutinised by the courts, resulting in an erosion of confidentiality.

The Working Group in its latest note for the current meeting acknowledged that disclosure during the enforcement process may be at odds with the confidential nature of the mediation process. For instance, one of the defences to enforcement in the proposed draft provision 8(e) states: “The conciliator failed to maintain fair treatment of the parties, or did not disclose circumstances likely to give rise to justifiable doubts as to its impartiality or independence.” An argument premised on this defence will certainly entail the disclosure of communications made during the mediation.

Nevertheless, this tension between enforcement and mediation confidentiality is not new. Many countries’ domestic jurisprudence have wrestled with these clashing needs and sought to strike a balance. Mediation confidentiality has never been upheld absolutely; various jurisdictions have carefully calibrated exceptions to mediation confidentiality.

For example, the UK common law allows for admissibility of “without prejudice” communications to determine whether a settlement was reached (for the purpose of enforcing the settlement), or to show that an apparent agreement should be set aside on the ground of misrepresentation, fraud or undue influence (Unilever Plc v The Procter & Gamble Co.  [2000] 1 WLR 2536). “Without prejudice” communications are generally understood to refer to discussions between parties aimed at negotiating a resolution to their conflict, and include communications made in a mediation setting. Section 4 of the USA Uniform Mediation Act  also contains a balancing test for the court to decide if the need for the evidence in advancing a defence substantially outweighs the interest in protecting mediation confidentiality.

The challenge in balancing these opposing needs lies in ensuring that mediation confidentiality is not undermined greatly in a wide range of situations. Drawing from some of these approaches, the Working Group could perhaps frame the defences to enforcements narrowly and allow exceptions to mediation confidentiality in very limited circumstances.

(B) Concerns about self-determination, mediator neutrality and “fairness”

Party autonomy and mediator neutrality are two other tenets of the mediation process. The final outcome within a mediation hinges on the disputants’ joint decision, and not the mediator’s determination of the underlying issues. The disputants decide on whether to settle, and how to settle. Party autonomy or self-determination is one of the significant philosophical underpinnings of the mediation process. Mediator neutrality – a related concept – means that the mediator should remain impartial throughout the mediation and not side with any one disputant. Because the mediator respects the parties’ autonomy, he or she refrains from imposing personal views on them, as long as they have freely consented to the outcome.

Because mediation is a consensual process, the concept of “fairness” has been generally understood to be vastly different from “fairness” in an adjudicative process. Some commentators have pointed out, in this regard, that procedural fairness in mediation is associated with the parties’ perceptions on whether they were treated fairly by the mediator, rather than procedural rules. Similarly, the substantive fairness of a mediated settlement is linked to the disputants’ views on whether the mediation outcome met all their concerns, instead of being determined by existing law.

We can see how difficulties will abound once we apply the adjudicative meaning of “fairness” within the New York Convention to mediation. Such an understanding of fairness is simply incongruous with the mediation process. Art. V of the New York Convention  allows for a review of the arbitral award based on the lack of due process or procedural fairness. Likewise, Art V (1)(b) contains a due process defence of the party being unable to present his case. Is such a defence applicable to mediation, which is not premised on the adversarial process of presenting arguments and obtaining a decision? This is yet another defence in the New York Convention that sits awkwardly with the mediation process.

It is evident that the New York Convention cannot be easily transposed to the mediation context (and we will elaborate more on this in our fourth and final post). At a fundamental level, we may have to question whether “fairness” and “due process” are suitable concepts for the mediation process, or whether they have to be replaced with more appropriate standards. And if the concept of procedural fairness is to be used as a defence to enforcement of iMSAs, we have to articulate what this concept entails in a mediation setting. Several commentators, who have provided guidance on determining procedural fairness within mediation, have been careful to steer clear from notions associated with adjudication. As an illustration, researchers have referred to standards such as the opportunity to express one’s views and even-handedness in the mediator’s dealing with the parties.

(C) Concerns about creativity and flexibility within the mediation process

Mediation, being an informal and interest-based approach, can often bring about creative and future-oriented solutions, such as an apology or the fulfilment of a future condition. It has been noted that such solutions may not necessarily be “legally” enforceable as court orders or arbitral awards. How can a multilateral instrument accommodate the creative outcomes of mediation?

If enforcement is only allowed in very limited circumstances, disputants may craft their iMSAs narrowly to suit these restrictions. Some commentators have warned that iMSAs will then be deprived of the depth and creativity that could have been possible absent the convention. The convention may end up stifling, instead of accommodating, the creativity that is inherent in the mediation process.

The flexible nature of mediation is also at risk of being undermined. Many common law jurisdictions have been reluctant to regulate aspects of mediation, probably because of the belief that mediation as a flexible and informal process is not amenable to excessive regulation. Indeed, as observed by Nadja Alexander in International and Comparative Mediation (Kluwer Law International, 2009)  “an enforceability regime could reproduce the very legalities which parties have eschewed in the mediation.” Too many rules about what kind of mediation is enforceable and defences to enforcement may well frustrate the malleable nature of mediation.

It appears that these issues have not been fully resolved at the Working Group level. In an earlier2015 meeting, these concerns were alluded to in the following two passages:

(i) “It was said that the type of obligations stipulated in a settlement agreement might be broad. Elements of complexities pertaining to settlement agreements were mentioned, such as reciprocal obligations, or conditions for the implementation of obligations that would render enforcement more complex. It was also stated that settlement agreements usually contained dispute settlement clauses to resolve disputes arising from the agreement.” (para 34)

(ii) “It was mentioned that the introduction of an enforcement mechanism for settlement agreements could blur the distinction that currently existed between arbitration and conciliation by adding more formal requirements to conciliation.” (para 30)

The existing legal challenges in enforcing unusual iMSAs may well be an issue that cannot be resolved at this juncture. Even the current domestic laws are unable to accommodate enforcement of unusual MSA terms such as an apology. Disputants have already been crafting their settlement agreements to suit the present legal challenges relating to enforcement. Member states are unlikely to agree to create new enforcement methods that their own domestic laws do not provide for.

Nonetheless, the difficulty may not necessarily be as insurmountable as it seems. Mediators would be familiar with research showing high compliance rates for iMSAs, probably because of the parties voluntarily crafting and agreeing to the terms of settlement. In my personal experience as a mediator, the disputants arrived at creative and novel settlements usually when there is a high degree of trust and confidence in each other’s commitment to compliance. In such circumstances, breaches of the unconventional terms of settlement seldom arises after the mediation. Is this the same situation for international iMSAs, and can it be concluded that there is no pressing need to create specific enforcement mechanisms for creative iMSAs? This is where more detailed empirical research may inform and assist the Working Group.

We have highlighted but a few potential effects of a multilateral convention on the mediation process, in the hope of conveying the importance of maintaining the essence of the mediation process. Difficult but significant questions have to be explored concerning the nature of mediation, the current enforcement processes and how enforcement can be tailored to fit the exact contours of the mediation process. The UNCITRAL Working Group has no easy task of facilitating these discussions and mediating between the opposing perspectives. But we trust that such conversations on the deep-seated concerns underlying the debate will eventually bear fruit and result in workable solutions for all.

UNCITRAL and the enforceability of iMSAs: the debate heats up

As the 65th session of the UNCITRAL Working Group II on arbitration and conciliation nears, it seems timely to reflect on the issues likely to be discussed and debated in Vienna this week.

In this post, I focus on the legitimacy of a proposed multilateral convention on the recognition and enforceability of international mediated settlement agreements (iMSAs) outlining some concerns in this regard and constructive responses to them. But first some background for the benefit of the uninitiated.

As many readers will be aware the Working Group has turned its attention to the settlement of commercial disputes and in particular on the preparation of an instrument on the enforcement of international commercial settlement agreements resulting from conciliation . (Note that in UNCITRAL speak, the term ‘conciliation’ is used interchangeably with ‘mediation’. ) In terms of the type of instrument, the Working Group is considering the possibility of a convention, model provisions or guidance text. Draft provisions have been prepared without prejudice to the form of the final instrument but on the assumption that the instrument would be a stand-alone legislative text.

Previously —more than a decade ago now— the Working Group in drafting the UNCITRAL Model Law on International Commercial Conciliation (2002) was not able to agree on a uniform way forward for the enforcement of iMSAs. This has been one of the main criticisms of the Model Law. So it is perhaps not surprising that the issue remains controversial.

This is the first in a series of posts — written with Anna Howard and Dorcas Quek— to highlight the core concerns about the move towards a multilateral convention and the responses or counterarguments to those concerns. We focus on the legal form of a convention rather than a model law or guidance text as this focus allows us to be more specific in our comments. Moreover the notion of a multilateral convention as the instrument of choice has captured the imagination of many and seems to have encouraged the most spirited debate. If enacted it would also have the most direct impact in establishing a uniform approach to this issue.

We have placed what seem to be the main concerns about the drive towards a convention into four categories, namely concerns relating to:
1. the legitimacy of such a convention;
2. the impact of such a convention on the objectives of, and values underpinning, the mediation process;
3. the justifications for such a convention;
4. the application of an arbitration enforcement framework to iMSAs particularly in light of recent trends in arbitration.

Let me now turn to the first category of concerns, which will be the focus of the rest of this post: legitimacy of a proposed multilateral convention on the recognition and enforceability of iMSAs. It compromises two issues. The first is whether iMSAs should as a matter of principle, be accorded priority or special status vis-à-vis ordinary contracts. The second issue is whether the proposed convention compromises access to justice.

Priority being accorded to iMSAs over contracts?

The concern:
To what extent is it legitimate to grant iMSAs preferential treatment compared to other traditional contracts and unassisted negotiated agreements?

A Response:
Mediation is clearly distinguishable from unassisted negotiation as a matter of practice and of law. It is a definable and recognizable structured dispute resolution process involving an impartial third party who assists parties to:
• communicate with one another
• identify the issues in dispute between them
• explore the terrain of those issues
• generate options for resolution of the dispute
• reach an agreement in respect of the whole of, or part of, the dispute.

Around the world, regulatory regimes differentiate mediation from negotiation and other dispute resolution processes. In many jurisdictions, mediators are subject to ethical requirements, standards and accreditation. Accreditation standards are progressively international in coverage (e.g. IMI mediation certification). Furthermore, mediation is increasingly used in combination with arbitration in hybrid processes such as Singapore’s arb-med-arb.

The growth of mediation as a dispute resolution process with its discrete procedures and standards warrants a creation of a customised cross-border enforcement regime.

Access to justice compromised?

The Concern:
The granting of special status to iMSAs in relation to their recognition and enforceability may compromise fundamental rights associated with access to justice and access to the courts.

A Response:
This concern seems to have echoes of the oft-cited and misinterpreted English case of Halsey v Milton Keynes General NHS Trust. The case has been cited as authority for the principle that for the State to order mediation is a breach of the right to a public trial conferred by Article 6 of the European Convention on Human Rights. As Tony Allen points out, not only is this inaccurate but it has hampered the development of mediation practice and regulation as with each new regulatory initiative, such as UNCITRAL’s current talks, we are repeatedly taken down the rabbit hole of the now infamous Halsey judicial comments. The statements of the Court of Appeal in relation to this point were non-binding opinion or obiter dicta. Moreover, as Allen points out, Lord Dyson, who gave the judgement of the court in Halsey subsequently acknowledged that ordering parties to mediate in and of itself does not infringe their Article 6 rights.

How is this relevant to the current UNCITRAL deliberations? While UNCITRAL’s Working Group II is dealing primarily with the enforceability of iMSAs, it is relevant for two reasons.

1. Recognition and enforceability of agreements to mediate and mediation clauses
The Working Group did consider whether the topic of recognition and enforceability of ‘an agreement to submit a dispute to conciliation’ should also be addressed in the proposed international instrument. The dominant view of Working Group members as reflected in the official reports seems to be that this topic is not needed, especially given the diverse pathways to mediation via mediation clauses, stand-alone agreements and court referrals. These comments do not provide a reason for the exclusion of agreements to mediate in a possible convention or other instrument; rather they suggest that including them might fall into the “too hard” basket. One wonders whether the misinformed legacy of Halsey was also hanging heavily in the UNCITRAL meeting rooms in relation to this point — at least for some members. For others, any type of incentive or requirement to mediate, is considered to be an anathema to the voluntariness of mediation. For some civil law European jurisdictions, this is a matter of a fundamental mediation principle. For example, in Austria the extent to which the law supports the enforceability of mediation and MDR clauses is unclear and academic commentaries are divided on this point. It seems that parties to mediation clauses cannot prima facie enforce such contractual provisions, that is have a court order issued to the other party to require it to attend a mediation meeting.

To my mind such an approach fails to differentiate the different parts of mediation to which voluntariness can attach:
1. turning up at mediation;
2. participating in mediation;
3. reaching an agreement to resolve the dispute in mediation.

While voluntariness seems important for points 2 and 3 above, there are many examples of successful mediation practices and schemes where parties have been effectively required to turn up to mediation as a result of recognition of a mediation clause or a court referral. Even in relation to point 2 (participation in mediation) contractual provisions, institutional and legislative rules increasingly require good faith participation in mediation, a requirement which would seem to set some boundaries for voluntariness in its fullest sense.

In summary, parties do not forfeit their legal rights by entering into the mediation process. A contractual obligation to mediate typically takes the form of a condition precedent to litigation and as such parties do not lose their right to access the courts. In addition numerous statutes and institutional rules, such as Article 13 of the UNCITRAL Model Law on International Commercial Conciliation, expressly recognise that parties may need to initiate legal proceedings while mediation is on foot.

If the objective behind a convention is to promote cross-border mediation, it seems worthwhile to also examine the ways in which parties enter the mediation process, rather than confine the discussion to how parties conclude the mediation process. For instance, Maud Piers from the University of Ghent suggests that the EU might promote better access to justice by adopting uniform rules on the legal status of an ADR clause under which parties consent to try to resolve their dispute through ADR.

2. Recognition and enforceability of iMSAs
The second reason why the legacy of Halsey may be relevant to the current UNCITRAL discussions relates to how Working Group members view Article 6 of the European Convention on Human Rights (ECHR) and similar legal rights instruments. I have heard it argued during many a spirited discussion that a convention recognising and enforcing iMSAs threatens to compromise a party’s fundamental right to access the courts under the ECHR.

How can this be the case? Does this mean that numerous national laws all over the world —including within the EU— that recognise and enforce MSAs are invalid on the basis that they potentially prevent parties accessing their fundamental right of access to justice in the form of a court trial in relation to the original dispute? No, of course not.

MSAs are prima facie enforceable as ordinary contracts. In addition in many countries they can take different legal forms, which offer different levels of enforceability — a practice giving expression to mediation’s flexibility and party autonomy by encouraging choice and flexibility in relation to the legal form of mediated outcomes.

Thus, depending on the jurisdiction, MSAs may take the form of ordinary contracts, settlement deeds, special mediation deeds, consent arbitral awards and/or court orders. In some jurisdictions parties may have different procedural paths to enforceability open to them.

The nature and extent of review available for MSAs depends largely on the legal form and status of the instrument containing the MSA. The grounds for challenging mediated settlements are generally more extensive in relation to standard contracts than settlement forms which involve review and ratification by professional dispute resolution practitioners such as lawyers, notaries, mediators, arbitrators and judges. This type of regulatory policy recognises that parties who seek a mediated outcome with an expedited enforcement mechanism waive the right to challenge the agreement as if it were an ordinary contract. Moreover such settlement forms are typically subject to review before they are ratified and it is arguably at this point that potential problems with, or potential challenges to, the mediated agreement should be addressed. In the absence of statutory provisions requiring a cooling- off period or ratification by a third party, contract law will prima facie recognise and enforce such MSAs.

So back to the current UNCITRAL meetings of Working Group II. A convention to recognise and enforce iMSAs that comply with criteria set out in the convention itself would extend to international MSAs the type of regulatory provisions that already exist for domestic MSAs in many countries. Parties to an iMSA would still be able to challenge an iMSA. The relevant defences available would depend on the legal form of the iMSA and the terms of the convention.

If, as the ECHR concern suggests, parties to an iMSA would be able to litigate the original dispute about which they mediated, there would be no point at all in having a convention. It would mean, for example, that if I have a dispute with my publisher about delivery of a manuscript, and we settle the dispute using mediation, I could later have second thoughts, for no reason other than a whim, and choose to litigate the dispute. This simply goes against mediation practice and regulatory developments around the world. It also makes a farce of party autonomy as a principle that gives parties the freedom to take on contractual obligations with others, provided they do not breach public policy. Now of course if there was an allegation of fraud, misleading and deceptive conduct or another substantive contract defence to challenge the validity and legitimacy of the iMSA, then a convention should provide for the iMSA in question to be challenged in a court of law. Such an approach is in line with best practice.

Finally, it is worth noting that many countries are signatories to the NY Convention on The Recognition and Enforcement of Foreign Arbitral Awards. Accordingly these jurisdictions seem to recognize agreements to arbitrate and arbitral awards, which can only be challenged in court in limited circumstances. While arbitration is a very different process to mediation, I wonder about the reasons for effectively treating mediation less favourably.

So where to from here?

The UNCITRAL Working Group II meeting taking place during these two weeks (12-23 September) will set firm parameters for the negotiations that will inevitably follow over the coming months. Whatever choices are made, it is imperative that they are informed decisions based on solid and accurate arguments. We need something more convincing than the ECHR argument for the purposes of the UNCITRAL discussions, especially given the enormous UN and national resources from participating countries that have poured into this proposal.

The members of UNCITRAL’s Working Group II have a choice to make. Design the type of regulatory regime we want for the enforcement of cross-border mediated outcomes. Or let the current regulatory jungle continue to develop in a piecemal and unmanaged way.

We can take charge of regulation or it can take charge of us. There is no getting away from it for there is no such thing as a regulatory vacuum.

The UNCITRAL discussions offer an an opportunity for those involved to shape the future of our field and make a difference. If we don’t take this chance, it may be a while before it comes around again.

The Regulatory Robustness Rating in Practice: Part 3

Yes, here it is. The final part of the Regulatory Robustness Rating (RRR) trilogy. For those of you who are just picking up the RRR topic for the first time, you might like to check out Part 1 andPart 2 first.

Three-gold-stars

You will recall that the aim of the Rating System is to offer an indication of the regulatory robustness of a jurisdiction in relation to cross-border mediation. It is not an indicator of the popularity of mediation or the amount of practice in a jurisdiction. The RRR takes the perspective of mediation users, i.e. what is likely to be important for parties and their legal advisers in assessing the how mediation is regulated in a given country.

In this post, Part 3, I will focus on apply the RRR System with the help of fellow blogger, Sabine Walsh. We will apply the System to Ireland. In other words, we will examine the regulatory robustness of cross-border mediation in Ireland.

You will recall from Part 2, that there are 12 criteria to consider. For each criterion in awarded a star rating of up to five stars. However because not all criteria are equal from a user’s perspective, they are weighted. Each criterion has a weighting of either one, two or three with three indicating that the criterion usually holds greater importance from a user perspective.

Before we get to the actual Regulatory Robustness Rating, let’s start with a few comments about cross-border mediation in Ireland.

Ireland is an excellent example of a jurisdiction where regulation of mediation is having to catch up with practice. A variety of factors including the impact of the economic crisis and a gradual but fundamental change in dispute resolution culture have contributed to the increased use of mediation in a range of different forms of disputes. The courts, in particular, have played a significant role in this development, enthusiastically using what few regulatory powers they have to divert cases into mediation and generally creating an environment conducive to mediation.

These developments have all taken place in the absence of a coherent comprehensive regulatory framework for mediation, or perhaps in the shadow of the promised reforms which have been pending for a number of years now. The RRR highlights the strength of areas such as mediation infrastructure and services, the relationship of the courts with mediation services and the court’s positive attitude to mediation. Regulatory areas desiring high levels of flexibility such as insider-insider confidentiality also score highly on the star scores. However in terms of transparency and clarity of content of mediation laws, we see a different story. The laws on insider-outsider and insider court confidentiality suffer from a lack of certainty and predictability. While the long awaited Mediation Bill, if it is enacted, will certainly increase the regulatory robustness rating of Ireland’s framework, it will be interesting to see whether it has the same impact on boosting the use of mediation as the change in culture, and the tireless efforts of numerous bodies and institutions to raise awareness of mediation have.

The RRR for Ireland is set out in the table below. You will notice that there are four columns. The first column identifies the criterion. The second column describes the application of the criterion in the given jurisdiction. This is a very brief and basic description that enables the RRR to be presented in a tabular form so that readers can benefit from an overview of the jurisdiction’s regulatory framework. The third column shows the star rating (from 1 to 5) and also indicates the weighting given to the criterion. The fourth and final column multiplies the star score and the weighting to come up with the RRR for that criterion. This way readers can see how the various calculations have been made. Should the situation arise where users place particular importance on a certain criterion and less on others, they are able to adjust the weighting to suit their needs and this will give them an ultimate rating that better reflects their needs and interests.

You will note that there is no single final score. There is a good reason for this. If you conducted the RRR analysis with say four countries and gave each an ultimate rating, then less attention would be paid to the individual criteria. Further, the RRR would turn into a competition and countries would be ranked by their overall score only. The RRR is not a competition. It’s a tool for analysis and it’s important to look at the individual criteria and the star scores and weightings allocated to each one. Then if you are still interested in finding out more about that country, you have a framework for doing so, and you know what to look for.

So let’s take a look at Ireland.

RRR

Remember the RRR System offers an indication not a comprehensive analysis. It gives users a helpful starting point for finding and analysing the law applicable to cross-border mediation in any jurisdiction.

For example, if you are a lawyer looking to identify suitable laws for your mediation clause, you might use the RRR System to identify three jurisdictions with high regulatory robustness ratings. The RRR System should not be the only indicator in making an informed choice about the governing law and jurisdiction. But it might provide a starting point for you to do some further research to look more closely at these jurisdictions for the purposes of identifying governing law and jurisdiction for your mediation clause.

Michelin II or the Regulatory Robustness Rating: Part 2

What makes good mediation law?

Three-gold-stars

For those of you who have been following the plot, you will recognise this as the second in a series of three posts introducing what is now called the RRR — Regulatory Robustness Rating for mediation jurisdictions. You may also notice the name change. Yes, what originated as the Mediation Friendly Star System has transformed into the Regulatory Robustness Rating. Why? Simply because it’s more accurate. I have amended my previous post to reflect this new language and there is also a more detailed explanation of the reasons to be found there.

Now, to Part 2 of the Triology.

Previously, I introduced the 12 criteria upon which the RRR System is based. Together they form the foundations of the RRR System and inform the ratings given to each jurisdiction. The purpose of this post is to explain the thinking, assumptions and value judgments underpinning each criterion. After all, the rating indicates the extent to which a given jurisdiction offers a robust regulatory regime for cross-border mediation, or not.

Each criterion is given a rating of up to five stars, five being the highest score possible and one being the lowest. In addition, the criteria are weighted according to their importance from a user perspective. The weighting scale is one to three, with the higher number providing a higher weight. So if the ranking of each category is one to five, then a ranking of five:
• on weighting of three would result in 15 points;
• on a weighting of two would result in 10 points;
• on a weighting of one would result in five points.

I have set out the RRR criteria, weightings and underlying principles in tabular form for ease of reference. So when you click on the link below you will get a pdf with the RRR in tabular form.

Regulatory Robustness Rating for Mediation

The next and final post in the RRR triology will deal with how to apply the Regulatory Robustness Rating to any legal jurisdiction. Watch out for this next week.

Regulatory Robustness Rating (RRR): A Michelin Guide to Mediation Regulatory Regimes

Previously I posted some musings about a Mediation Friendly Star Rating System. Sort of like a Michelin Guide on the robustness of a jurisdictions regulatory framework in relation to mediation. In this post, I’d like to revisit the topic and take the idea a little further. Before I start, let me say thank you to many colleagues who commented on the earlier ideas especially Sabine Walsh, Martin Svatos, Geoff Sharp and Michael McIlwrath.

Three-gold-stars

So in terms of developing the Rating System, the first thing I have done is change the name from Mediation Friendly Star Rating System to Regulatory Robustness Rating (RRR) for Mediation. While ‘Mediation Friendly’ is a catchy title, it does not accurately capture the purpose of the rating. Apart from the nice alliterative effect of ‘Regulatory Robustness Rating’, the new title more accurately reflects what the rating is about.

As the title suggests, the RRR focuses on regulatory criteria to determine the robustness of a jurisdictions regulatory framework in relation to cross-border mediation.

Certainly, there will be other non-regulatory factors — inter alia economic, behavioural psychological, cultural, policy and so on — that will influence the choice of law and jurisdiction for mediation. The RRR does not deal with these.

In essence the RRR offers a way to:
• analyse the quality and robustness of a jurisdiction’s legal framework for cross-border mediation;
• factor such an analysis into choices about governing law in mediation clauses and other agreements;
• inform law and policy making in relation to cross-border mediation.

The RRR aims to support legal advisers and other users of mediation to make informed choices about the type of regulatory frameworks that support best practice mediation and where to find them. In addition, the RRR can be used as a design guide for law and policy makers seeking to improve the regulatory attractiveness of their jurisdiction in relation to mediation. To this end the RRR is based on a set of assumptions about what makes good mediation law and what makes a jurisdiction attractive for mediation purposes in terms of its regulatory framework.

In the RRR, the term “law” is understood broadly to encompass diverse regulatory forms beyond legislation. It extends to soft law options and private contracting (for example, agreements to mediate and mediation clauses) and industry norms (for example, codes of conduct, practice standards, and accreditation standards). This broad understanding of law is consistent with contemporary regulatory theory, which has shifted its focus from government rule-making to the context of institutions and interest groups. Moreover, it is also consistent with the EU Directive, which envisages compliance by EU member states through a wide range of regulatory forms.

The 12 criteria upon which the RRR System is based are set out below. Together they form the foundations of the RRR and inform the ratings given to each jurisdiction.

For each criteria a rating of up to five stars may be given with five being the highest score possible and one being the lowest. In addition, the criteria are weighted according to their importance from a user perspective. If this sounds too complicated, don’t worry for now. Let me set out the 12 criteria for the Regulatory Robustness Rating in this posting (you will they have undergone further refinement since my initial post) and follow up with a more detailed explanation and some examples during the next few weeks.

Here they are.

Criterion 1: Congruence of domestic and international legal frameworks

Criterion 2: Transparency and clarity of content of mediation laws in relation to:
i. how mediation is triggered;
ii. the internal process of mediation;
iii. standards and qualifications for mediators;
iv. rights and obligations of participants in mediation

Criterion 3: Mediation infrastructure and services: quality and access

Criterion 4: Access to internationally recognised and skilled local and foreign mediators

Criterion 5: Enforceability of mediation and MDR (multi-tiered dispute resolution) clauses

Criterion 6: Certain, predictable regulation of:
i. insider/outsider confidentiality with some flexibility
ii. insider/court confidentiality

Criterion 7: Responsive informed self-regulation of insider/insider confidentiality

Criterion 8: . Enforceability of MSAs (mediated settlement agreements) and iMSAs (international mediated settlement agreements)

Criterion 9: Impact of commencement of mediation on litigation limitation periods

Criterion 10: Relationship of the courts to mediation

Criterion 11: Regulatory incentives for legal advisers to engage in mediation

Criterion 12: Attitude of courts to mediation (based on case law/jurisprudence).

So there you go. And just to ensure that you are not bored during the summer month of August, next week I will follow up with some of the assumptions underlying the criteria and the different weightings given to each. Yes, I bet you can’t wait :)

Michelin guide assessing Mediation Friendliness in EU states

Michelin guide to mediation is from the new book written by Nadja Alexander and Sabine Walsh, which provides guidance on the Mediation Friendliness of each of the EU jurisdictions. It is the first of its kind to compare and contrast the mediation law and regulatory framework in each state, and offers insight for cross-border practitioners and mediation users seeking the best jurisdiction to conduct their mediation.

For more information, please click here.