Alternative Dispute Resolution in the European Union: an Overview

Elisabetta Silvestri, LL.B., University of Pavia (Italy); LL.M., Cornell Law School (USA), Associate Professor of Comparative Civil Procedure, Director of the Center for Dispute Resolution, Director of the Postgraduate Program on ADR and Mediation, Faculty of Law, University of Pavia, Italy

1. Introduction. When we talk about Alternative Dispute Resolution, we make reference to a variety of procedures for settling disputes by means other than litigation: in order to identify these procedures collectively, it is common to use the abbreviation ADR, an ‘umbrella term’ that covers a vast array of processes which have little in common, except that each one is an alternative to full-blown litigation.

Alternative dispute resolution (henceforth, ADR) techniques have been known to every society since antiquity, and certainly have an interesting history. But it is beyond the purpose of this essay to describe the historical background of ADR; instead, this essay will concentrate on modern times and the development of ADR in our “litigious societies”[1], paying special attention to the ADR method that seems to have gained the highest consensus in the European Union, that is, mediation.

The success that ADR has acquired in contemporary legal systems cannot be fully understood unless some remarks are made with reference to the general context in which ADR has developed. It is well known that from the 1970s on, most legal systems experienced a dramatic increase in the number of civil cases filed with courts. The reasons for the so-called litigation explosion are complex, and it is not possible here to elaborate on them: suffice it to say that insofar as substantive law provides for new rights and grants individuals the possibility to turn to the judicial system for the enforcement of these very rights, courts are bound to become overloaded. At the same time, citizens’ access to justice becomes impaired by the costs and delays associated with litigation. The situation is the typical ‘vicious circle’ that seems impossible to break out of, short of drastic but also innovative measures taken with the aim of reducing the courts’ backlog while granting individuals the right of access to some forms of dispute resolution.

That was the situation in the legal system that is conventionally considered the birthplace of modern ADR, that is, the United States. Following the season of the civil rights movement and the enactment of statutes granting new rights to individuals who, up till then, had been discriminated against due to their race, ethnicity or gender, courts were buried under the pressure of unprecedented caseloads. That brought about the need to search for methods to handle and resolve disputes different from litigation, since litigation had become too expensive, too slow, and too cumbersome[2]. In the 1980s and 1990s, ADR techniques became very popular: they were used more and more, as parties and lawyers realized that these techniques could often help them resolve legal disputes quickly, cheaply, and to better satisfaction for the subjects involved. Besides arbitration and mediation – which had been very well established long before the ADR movement began – other techniques were developed with the view to devising dispute resolution methods suitable to the particular features of certain kinds of cases. Differently from litigation, which is like a “one size fits all” garment, ADR’s supporters advanced the idea according to which each case deserves treatment that is ‘custom-made’, that is, a resolution process that is suitable for meeting the specific characteristics of the case itself: therefore, the “A” in ADR should signal not only an “alternative” dispute resolution method, but also an ‘adequate’ one.

2. European Union and ADR: the beginning.

ADR techniques came to European shores toward the end of the 20th century. The growing consensus on the usefulness of ADR and its increasing development in several Member States, owing to initiatives taken both at the public level and in the private sector, persuaded European Union institutions to turn their attention to the issue of designing a common framework for ADR mechanisms so as to avoid inconsistencies in the schemes adopted by national legislatures. Initially, the interest of the European Union seemed to be focused essentially on consumer disputes, most of all when these disputes had a cross-border nature, that is, when they involved citizens from different Member States. In 1998 and 2001, the European Commission issued two Recommendations concerning the quality of ADR mechanisms available for consumer disputes. In both Recommendations, the Commission listed the basic requirements these mechanisms were expected to comply with.

The first Recommendation[3] applies to ‘procedures which, no matter what they are called, lead to the settling of a dispute through the active intervention of a third party, who proposes or imposes a solution’, but 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’: in other words, the Recommendation does not apply to procedures such as mediation, but it is applicable to consumer arbitration. The principles laid down as fundamental guarantees that the ADR procedures must offer to their users are the following: (1) independence and impartiality of the decision-making body; (2) transparency of the procedure (for instance, the parties must be adequately informed about the procedural rules that will be followed, the foreseeable costs of the procedure, and so forth); (3) adversarial principle, which means that each party must be afforded the right to present his viewpoints before the decision-making body, and to hear the defenses put forward by his opponent; (4) effectiveness, meaning, for instance, that the consumer is free to take part in the procedure without the assistance of an attorney; (5) representation, a principle according to which at all stages of the procedure the parties have the right to be represented or assisted by a third party; (6) legality; and (7) liberty, a principle according to which the decision shall be binding on the parties only if they had previously been informed of the decision’s binding nature and had specifically agreed to that.

The second Recommendation[4] applies to “procedures, no matter what they are called, which facilitate the resolution of a consumer dispute by bringing the parties together and assisting them, for example by making informal suggestions on settlement options, in reaching a solution by common consent”: consumer mediation falls within the range of these procedures. The principles listed are the same as in the Recommendation of 1998, even though they are placed under different headings: (1) impartiality; (2) transparency; (3) effectiveness; and (4) fairness.

Based upon the Recommendations, we can make a distinction between two different types of ADR methods taken into account by the European Commission, namely, the distinction between methods in which a third party ‘proposes or imposes a solution’ to the dispute, and methods in which the third party neither suggests nor imposes a solution, but only helps the parties to the dispute to work out a solution by themselves, a solution based “on common consent”. ADR methods of the first type conventionally are called adjudicative: as in adjudication, the third party examines the parties’ contentions so as to decide which party is right and which one is wrong. Arbitration is the most important adjudicative ADR. ADR methods of the second type are called facilitative. The third party does not decide anything, but he assists the parties in reaching an agreement: the litigants, and not the third party, choose how and under which terms to resolve their dispute[5]. Mediation (sometimes known as conciliation) is the most significant and popular facilitative ADR.

Throughout the years, the interest of the European Union has shifted from consumer disputes to civil and commercial disputes at large, while focusing more and more on facilitative ADR. These new trends surfaced in a seminal document released by the European Commission in 2002, the “Green Paper on Alternative Dispute Resolution in civil and commercial matters”[6] (henceforth, the Green Paper), in which it is made clear that in the European context ADR means ‘out-of-court dispute resolution processes conducted by a neutral third party’ other than arbitration. Therefore, one can say that in the eyes of the Commission the preferred ADR method is mediation or any variations on the theme of mediation that fit the concept of a facilitative process, including mediation in the context of a judicial proceeding, that is, either the mediation attempted by the judge in charge of a case or the mediation deferred by this judge to a third party.

The Green Paper underscores the connection between ADR and access to justice, a fundamental right enshrined by Article 6 of the European Convention on Human Rights and Article 47 of the Charter of Fundamental Rights of the European Union. ADR methods open up access to justice. They complement judicial procedures or even substitute for them when they are ineffective due to overworked court systems. According to the Commission, ADR methods (and mediation in particular) are also effective at restoring ‘social harmony’: the attitude of the parties before the mediator is not confrontational, since the purpose of the process is to have them meet halfway and reach an agreement that satisfies them both; if the mediation is successful, there is neither a winner nor a loser, but two individuals who have worked out a mutually acceptable solution to their dispute. ADR’s procedures also have another feature that people highly appreciate: the parties are in control of their dispute, and they must play an active role if they are committed to reach an agreement, since the third party (the mediator, for instance) can only assist their negotiations, but is not supposed to interfere in them. While litigation is often perceived by the parties as an obscure rite performed by the high priests of the law, mediation offers an informal environment in which the parties feel at ease and in control.

Having emphasized the importance of facilitative ADR methods, the Green Paper goes on to draw attention to some problems that need to be taken care of in order to ensure that within the European judicial sphere national laws and initiatives concerning ADR are harmonized and reflect the same standards of fairness and quality. The problems identified by the Commission are the following:

• Most Member States do not have detailed regulations on ADR even though many provide for conciliation, either out-of-court or as a mission entrusted to the court at the very outset of a case.
• In general, the effects of the agreement reached by the parties through mediation or conciliation and its enforceability are not specifically regulated, but they are governed by the general rules of national contract law and procedural law, which are not necessarily uniform throughout Member States.
• The quality of ADR is an issue that must be addressed at the Community level in order to avoid inconsistencies among the standards required by Member States. It is of paramount importance that the European Union take action so as to ensure that ADR procedures adopted by each Member State abide by ‘minimum quality guarantees’ such as independence, impartiality, transparency, confidentiality, and effectiveness.

In the years following 2002, the European Union adopted many other initiatives to promote ADR, and most of all mediation. It is worth pointing out that in the same turn of years mediation was also one of the core issues on the agenda of several international organizations as well. Just to mention some of the most significant documents, one can recall at least the four Recommendations issued by the Council of Europe on family mediation[7]; on mediation in penal matters[8]; on alternatives to litigation between administrative authorities and private parties[9]; and on mediation in civil matters[10], as well as the Model Law on International Commercial Conciliation adopted in 2002 by the United Nations Commission on International Trade Law (UNCITRAL)[11].

3. The EU Directive on Mediation.

The state-of-the-art of European regulatory instruments on ADR methods is the Directive 2008/52/EC of the European Parliament and of the Council on certain aspects of mediation in civil and commercial matters (hereafter, the Directive) enacted in 2008[12]. The Directive is a complex document, and the purpose of this essay does not allow an analysis of its content in depth[13]. It is important, though, to sketch the basics of the Directive, starting from the goals it is intended to pursue. These goals are:

• Offering better access to justice, most of all to claims in which the amount at stake is low.
• Establishing better coordination between mediation and court procedures.
• Setting common standards for better and more professional training of mediators.
• Guaranteeing a high level of confidentiality in the mediation process.
• Ensuring that agreements reached by the parties through mediation can be made enforceable.
• Granting that applicable statutes of limitations are lifted while the mediation process takes place.

The preamble of the Directive emphasizes the importance attached to ADR by European institutions: “the objective of securing better access to justice [the Directive reads] should encompass access to judicial as well as extrajudicial dispute resolution methods”. Therefore, ADR should not be regarded as a poorer alternative to litigation. Mediation, in particular, should be preferred to litigation since it provides “‘a cost-effective and quick extrajudicial resolution of disputes … through processes tailored to the needs of the parties. Agreements resulting from mediation are more likely to be complied with voluntarily and are more likely to preserve an amicable and sustainable relationship between the parties”.

For the purpose of the Directive, mediation is “a structured process, however named or referred to, whereby two or more parties … attempt by themselves, on a voluntary base, to reach an agreement on the settlement of their dispute with the assistance of a mediator”. Mediation can (1) be initiated by the parties; (2) be suggested or ordered by a court; or (3) be prescribed by the law of a Member State. Therefore, as a rule mediation must be chosen by the parties on a voluntary basis; however, two exceptions to this rule are allowed, namely, when mediation is suggested or ordered by a judge, or when national legislation makes mediation mandatory for the parties as a step they are bound to take before starting litigation, provided that the parties’ right of access to the judicial system is not infringed or nullified.

According to the Directive, the mediator is “any third person who is asked to conduct a mediation in an effective, impartial and competent way”. The Directive does not list any specific requirements mediators must meet, even though Article 4 is devoted to ‘Ensuring the quality of mediation’: the Directive leaves the Member States free to regulate the matter of the training of mediators so as to provide that they can perform their role “in an effective, impartial, and competent way”, as well as the procedures by which mediators are recruited and appointed[14].

No rules can be found in the Directive regulating the mediation process, since mediation is, by definition, an informal and flexible process in which a neutral third party assists the disputing parties in exchanging the information necessary to conduct a successful bargaining with the goal of helping them to arrive at a fair agreement. Therefore, it could be useless and even dangerous to impose a formal procedure or a standardized one; the only fixed principles laid down by the Directive concern the confidentiality of mediation. Confidentiality is essential to the success of mediation. Confidentiality helps the mediator to build trust and develop a constructive relationship with the parties; confidentiality also makes it safe for the parties to disclose information they would otherwise be inclined not to reveal. According to the Directive, Member States must ensure, through appropriate regulations, that, in principle, ‘unless the parties agree otherwise, neither mediators nor those involved in the administration of the mediation process shall be compelled to give evidence in civil and commercial judicial proceedings or arbitration regarding information arising out of or in connection with a mediation process’.

The Directive also dictates rules on the enforceability of agreements reached by the parties through mediation. Member States must ensure that agreements of this kind can be made enforceable “by a court or other competent authority in a judgment or decision or in an authentic instrument in accordance with the law of the Member State where the request is made”. It is clear that if the enforcement of the agreement were left to the will of the parties, there would be no advantages in choosing mediation instead of litigation; while if the agreement can be made enforceable as a court judgment, for instance, the parties to a dispute could easily see the benefits of mediation.

The Directive was supposed to be implemented by the legislatures of Member States by May 21, 2011. Many countries did not comply with this deadline; in fact, in July 2011 the Commission took the first steps of an infringement procedure against nine Member States, since they had failed to comply with the duty to inform the Commission about the measures adopted with the view to implementing the Directive[15]. Member States such as France, Spain, and Germany transposed the Directive well after the deadline. As far as France is concerned, a possible explanation for the delayed implementation of the Directive is the fact that the French legal tradition has a long and successful history of “règlement amicable des conflits” (friendly resolution of conflicts), and that different types of mediation and conciliation of civil and commercial disputes have been in place for many years[16]. Eventually, France implemented the Directive between the end of 2011 and the beginning of 2012, and a new book was added to the Code of Civil Procedure, that is, the Fifth Book, entirely devoted to “The amicable resolution of disputes” (“La résolution amiable des différends”)[17]. In Spain, the national statute transposing the Directive was enacted in July 2012[18], and in the same month also the German Bundestag was able to reach consensus on the German Mediation Act, overcoming some political disagreements that had hindered the approval of the initial draft legislation[19].

Even among the Member States that duly implemented the Directive noticeable differences exist, for instance, in the type of training mediators are expected to acquire or in the way by which mediation agreements can be made enforceable. Therefore, one may say that at least for now the goal of the Directive, namely, the achievement of a harmonious system of mediation throughout the European Union, has failed. From a different standpoint, it has been emphasized that most Member States experience a “mediation paradox”[20]: when the parties to a dispute resort to mediation, the success rate of the mediation process is high, that is, a settlement is reached in a noteworthy percentage of cases, but the problem is that mediation (unless it is mandatory) is rarely used by disputants and their attorneys on a voluntary basis.

One cannot overlook the fact that the attitude of Member States toward mediation and ADR varies, first of all, according to the cultural background peculiar to each country. Some societies are more litigious than others: Italians, for instance, are inclined to think that to fight in court for their rights is a matter of principle, and dislike the idea of bargaining with their opponents since an agreement, if ever reached through mediation, would anyway be perceived as a defeat. Leaving aside cultural concerns, at the institutional level Member States are more or less interested in strengthening mediation according to the level of efficiency their judicial systems show. Countries whose courts function well are not particularly eager to foster mediation and ADR at large since that could undermine the authority of the courts; countries whose justice system is slow and cumbersome, on the contrary, jump at the chance to widen the availability of ADR in an attempt to solve the problem of the congestion in the courts. Countries in which mediation had been in place for many years and had produced good results, in the eyes of both the administration of justice and the satisfaction of its users, were cautious in the implementation of the Directive, fearing that the necessary changes brought to the laws in force could alter the balance achieved. As has already been mentioned, France, where a solid tradition of amicable dispute resolution exists, opted for a minimal implementation of the Directive because a statute on mediation, in force since 1995, already authorized the court to direct the parties to experiment with out-of-court mediation over a maximum period of time of six months. If the parties reached an agreement, they would go back to court to have their agreement made enforceable. If no agreement was reached and the litigation was resumed, neither the mediator nor the parties could be compelled to give evidence in that proceeding or in any other judicial procedures involving the same parties[21].

In a resolution issued in September 2011, the European Parliament emphasized the different ways in which Members States have implemented the Directive, calling for a more uniform approach[22]: it is not clear, though, how uniformity could be achieved in the future. On the contrary, what is clear is that mediation is here to stay: whether or not they believe it is a better, quicker, and less expensive way to justice, from now on Europeans must look at mediation as an essential feature of the European Union’s landscape of dispute resolution methods. This trend is documented by some recent initiatives taken by the Commission in the field of strengthening consumer protection through better regulation of ADR and ODR (Online Dispute Resolution) as cornerstones of a strategy aimed at establishing effective redress systems in the European “single market”[23].

4. Mediation in Italy.

Italy is the paradigm example of a Member State that implemented the Directive with the view to resolving the problems of a defective system of civil justice. It is well known that the average duration of Italian civil cases is the longest in Europe; at the beginning of 2012 more than 5,000,000 civil cases were crowding Italian courts, waiting to be decided. The ‘technical’ government that is presently running the country has enacted new sets of reforms affecting civil procedure, courts’ organization, and attorneys’ fees, but the benefits of these reforms, if any, cannot be expected in the short run.

That monumental backlog of Italian courts was the main reason that persuaded the Italian legislature to implement the Directive well beyond its mandate. The Legislative Decree No. 28 of 2010 transposed the Directive into national law, applicable to both domestic and cross-border disputes. The main feature of the Legislative Decree is the mandatory character of mediation: in approximately ninety percent of civil and commercial cases mediation must be attempted by the parties as an inescapable pre-condition of access to the courts. A multi-level system of financial incentives to promote mediation is provided for, as well as a system of financial penalties if the parties fail to appear before the mediator or fail to reach a mediated agreement and engage in litigation[24].

Mandatory mediation has not been well received by Italian society as a whole. As everybody knows, making an attempt at mediation mandatory does not mean that the mediation will be successful: sometimes parties do not show up in front of the mediator so that when the maximum time (four months) allowed for the completion of the mediation procedure expires, litigation begins anyway; other times the parties show up, but they declare openly that they have no interest in reaching an agreement. In practice, being forced to make an attempt at mediation before being entitled to go to court is nothing but a waste of time and money. One cannot create an environment suitable for mediation and ADR coveting the illusion that making mediation mandatory will change cultural attitudes that are deeply rooted. This statement is supported by the latest statistical data available[25]: between March 2011 and March 2012 in sixty-five out of one hundred cases mediation failed because one of the parties refused to engage in the process and did not even appear before the mediator, in spite of the mandatory character of mediation. As far as voluntary mediation is concerned, parties resorted to it only in nineteen cases out of one hundred.

The introduction of mandatory mediation has been strongly opposed by lawyers, since parties can appear in front of mediators even without legal representation. Lawyers are in favor of other ADR methods that would imply their direct involvement in the process by which parties can reach an agreement. For instance, they support a new ADR method adopted by France: in France, the parties to a controversy can sign a special contract (called ‘convention de procédure partecipative’, that can be roughly translated into ‘agreement to engage in collaborative process’) by which they agree to engage over a certain period of time (not more than four months) in a negotiation assisted by their lawyers, acting in good faith with the view to helping the parties reach an agreement. While the assisted negotiation is taking place, no judicial proceedings can be commenced. If an agreement is reached, the parties’ lawyers can jointly apply to the court so as to have the agreement made enforceable. Parties who have engaged in an assisted negotiation shall have no duty to attempt mediation if they have not been able to reach an agreement and must turn to the judicial system in order to have their dispute resolved. The same rule applies in favor of the party who invited his opponent to sign a contract for assisted negotiation, but had his invitation rejected[26].

At present, the fate of mandatory mediation in Italy is up in the air, so to speak. The Constitutional Court is expected to decide toward the end of October 2012 whether the statute making mediation mandatory is consistent with the Italian Constitution and the principle laid down by its Article 24, according to which “Anyone may bring cases before a court of law in order to protect their rights under civil and administrative law”. The case has been pending before the Court since April 2011: rumor has it that the issue of mandatory mediation is the typical “hot potato” the Court is not inclined to handle, fearing that a judgment repealing the statute insofar as it makes mediation mandatory would bring about an institutional crisis between the Court itself and the Government, which is staking a lot on the virtues of mediation as a means to reducing the backlogs of the courts.

Meanwhile, on the same issue (that is, the mandatory character of Italian mediation) several requests for a preliminary ruling are pending before the European Court of Justice. In a case decided in 2010 and concerning an Italian statute making out-of-court conciliation mandatory in disputes between consumers and telephone service providers (the Alassini case[27]), the Court said that mandatory conciliation and mediation are consistent with European legislation, and – most of all – are not at odds with the principle of effective judicial protection, enshrined by Article 47 of the Charter of Fundamental Rights of the European Union insofar as they do not make it too difficult for the parties (time-wise as well as cost-wise) to exercise their right of access to the courts: will the Court reaffirm this principle as regards the Italian statute making mediation mandatory across-the-board, and not simply for a sector-specific type of disputes? It is hard to make any predictions: that said, attention must be drawn to the fact that the written observations submitted to the Court by the Commission acting as amicus curiae[28] pin down some aspects of the Italian rules on mediation that allegedly are not consistent with European legislation, insofar as they provide for monetary sanctions that are bound to curb the freedom of the parties to stop the mediation process at any time, and therefore can affect the parties’ right of access to justice.

In conclusion, what will happen with Italian mandatory mediation? Only time will tell. Personally, I do believe that people cannot be forced to reach an agreement just because the law compels them to participate in a mediation process: absent a real ‘ADR culture’, being forced to appear in front of a mediator will always be perceived, at best, as a waste of time and money. That seems to be the concept which surfaced in a remark made by the European Parliament in the Resolution issued in September 2011 on the implementation of the Directive:[29] commenting on the Italian situation and the choice made by the Italian legislature in favor of mandatory mediation, the Resolution reads that even though the goal of relieving the congestion of Italian courts is a legitimate one, “nevertheless … mediation should be promoted as a viable, low-cost and quicker alternative form of justice rather than a compulsory aspect of the judicial procedure”.

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