Articles

The Road To Resolution – The Growth Of Commercial Mediation In Ireland

14 Feb 2012

Alternative Dispute Resolution (“ADR”) has long been established in Ireland but recent developments have seen it grow in importance for parties who find themselves embroiled in a variety of disputes. There are two important benefits of participation in ADR. It gives parties access to dispute resolution who might not otherwise engage in litigation and it provides an effective and often more efficient alternative to those who face contentious litigation. This article examines some recent developments in Irish commercial mediation.

A recent survey carried out by ICMA, the Irish Commercial Mediation Association www.icma.ie illustrates growth in the use of commercial mediation, which grew by 33% from 2007 to 2008. Although mediations are confidential for the most part, these survey results confirm the growth seen by many practitioners who had been unable to quantify it.

The Development of ADR and Commercial Mediation

The Arbitration Act, 1954 was the first piece of modern legislation to give statutory recognition to ADR. Since then, various forms of ADR have received legislative recognition albeit little legislative attention to their conduct or regulation. Most notably the Judicial Separation and Family Law Reform Act, 1989 and the Family Law (Divorce) Act, 1996 require solicitors to discuss the possibility of mediation with their clients before court proceedings can be initiated.

Arguably, the most significant impact on commercial mediation in Ireland has been the creation of the Commercial List of the High Court. This court has been operating since January 2004. Almost since its inception the Commercial List has dramatically changed the litigation of commercial disputes in Ireland. The Commercial List has also impacted on the growth of commercial mediation in Ireland for two principal reasons. First, there are significant costs associated with commercial litigation and commercial mediation where appropriate, may result in effective dispute resolution without the significant costs of litigation. In addition, the Commercial List has been continuously supportive of the use of ADR and has actively encouraged parties to engage in it where appropriate. Significantly, the Rules of the Superior Courts of Ireland provide that proceedings may be adjourned in order to refer a dispute to mediation, arbitration or conciliation. Notwithstanding the effect of actively encouraging parties to engage in ADR, the promotion of commercial mediation by the Commercial List during proceedings has also resulted in practitioners discussing the alternative options with their clients in advance of proceedings.

Where to now?

The growth in commercial mediation suggests a bright future for ADR in Ireland. However, questions have inevitably been asked about the future development of mediation as it grows in demand.

The Law Reform Commission (the “LRC”) published a consultation paper on Alternative Dispute Resolution in July 2008 www.lawreform.ie and made several provisional recommendations. The LRC has provisionally recommended that statutory recognition is given to the definition of terms used in ADR, the voluntary nature of ADR, the confidential nature of ADR, the enforceability of agreements reached through mediation or conciliation, among other considerations.

The LRC consultation paper also seeks to clarify the current situation with regard to ADR in Ireland. However, the paper raises many questions including the extent of the relationship between the Courts and ADR processes, the imposition of costs where a party unreasonably refuses to consider mediation and the applicability to domestic disputes of the 2008 EC Directive on Certain aspects of Mediation in Civil and Commercial Matters.

While ADR and commercial mediation in Ireland undoubtedly have a secure future, it is clear that commercial mediation is at a critical juncture. While most observers agree that some form of statutory recognition and guidance should be in place, any statutory initiative should be carefully considered. A significant benefit of engaging in commercial mediation is that resolution of the dispute can be facilitated by a mediator who has a particular knowledge of or expertise in the environment from which the dispute arose. To place a strict statutory code on the manner in which commercial mediation is executed may result in depriving commercial mediation of the flexibility that sets it apart.

EU Directive

As considered above, domestic developments have resulted in an increased use of commercial mediation and a corresponding increase in the need for legislative guidance on the various forms of ADR. However, there are significant further developments to come with the transposition of the EU Directive on Mediation in Civil and Commercial Matters (2008/52/EC).The Directive was first discussed by the European Council in October 1999. In April 2008, the European Parliament formally approved the Council’s common position on the Mediation Directive and the Directive was adopted on the 21st May 2008. The directive came into force on the 13th June 2008 and is to be transposed into Irish Law by the 21st May 2011.

According to the Department of Justice, Equality and Law Reform the current position on the transposition of the Directive is that the Directive is at an early stage of review in terms of how best to secure implementation within the national framework of legislation. The Directive will force Member States to address various questions about the utilisation of mediation as a viable alternative to litigation and on how the Directive is to be implemented. Given the current growth trends in commercial mediation and other forms of dispute resolution it is unlikely that these questions will be answered lightly or that this Directive will be transposed in the near future.

The purpose of the Directive

The Directive is designed to promote the use of extra-judicial procedures and mediation in civil and commercial disputes and to establish a degree of uniformity in the manner in which mediation is utilised across the Member States. The Directive expressly excludes certain matters from its remit including revenue, customs, family matters, community law and administrative matters involving the liability of the State.

The Issues

While the Directive purports to create a uniformity of procedure and application of mediation among the Member States, it highlights many issues which Member States are to decide upon prior to transposing the Directive. One of the most important issues which is to be determined prior to transposition is the applicability of the Directive to internal disputes in addition to cross border disputes. The preamble of the Directive states that the Directive will apply to cross-border disputes but that nothing should prevent Member States from applying the provisions of the Directive to the mediation of internal disputes. The LRC has invited Submissions on this issue for its Consultation Paper on ADR as referenced above. The Directive also recommends that Member States introduce framework legislation to address key aspects in civil procedure. As outlined above, certain observers, including the LRC have already outlined the need for legislation addressing the provision of mediation services. It is likely that the possible enactment of any such legislation dealing with ADR will encourage significant discussion and debate prior to and at the time of the transposition of this Directive.

The Directive also recommends that Member States encourage the training of mediators and the introduction of effective quality control mechanisms concerning the provision of mediation services. While some statutory regulation of mediators may be desirable, it is interesting to note that the Irish Commercial Mediation Association has commented that while statutory regulation of mediators and the practice of mediation is important, it is to be distinguished from a statutory requirement of training or accreditation of mediators, particularly in the early stages of development of mediation practice.

Furthermore, the Directive explicitly refers to the importance of confidentiality in mediation proceedings and includes a prohibition on any effort to compel a mediator to give evidence in any legal proceedings subsequent to mediation. Although the principle of confidentiality is well entrenched in current practice of mediation, this is the first statutory recognition of this important principle and is therefore significant.

It is clear that commercial mediation and other extra-judicial procedures are growing in popularity and importance and are set to become a common and viable alternative for parties involved in a variety of disputes. Furthermore, from observing recent common law and EU developments, it would seem that this trend is set to continue. However, in order to ensure ADR as an effective alternative to litigation, it is crucial that the questions which now arise are addressed in the appropriate manner and in a way that will ensure that ADR will continue to grow and provide a viable and beneficial alternative to parties in litigation and other adjudicative processes.

© Compton Aylmer 2009

This article first appeared in The Expert & Dispute Resolver, Summer 2009.

The Information in this document is provided subject to the disclaimer contained on the Compton Aylmer website. The material is provided for information purposes only and does not constitute legal or any other advice.

For further information contact William Aylmer, email: william@comptonaylmer.ie or tel: 01 234 2678.