Following our "Mediation Masterclass" session for in-house lawyers, in conjunction with CEDR co-founders and seasoned mediators, Eileen Carroll and Karl Mackie in January 2020, a number of the themes explored in relation to mediation past, present and future are reflected in the 2020 updates to CEDR's model documents, which follow four key themes:
- The Singapore Convention;
- Triggering ADR clauses;
- The standards expected of mediators; and
- Best practice post-mediation.
The Singapore Convention
CEDR have published a note that considers the impact of the, as yet unratified, Singapore Convention.
The Convention creates a framework whereby mediation agreements will be capable of cross-border enforcement in signatory countries. This could be significant for commercial parties as it may introduce a level of reassurance not previously enjoyed – especially in jurisdictions where mediation is in its structural infancy.
In preparation for the operation of the Convention (set to be six months after the ratification by three states) CEDR has identified two potential pit falls arising from the Convention's requirement for evidence that a settlement agreement originates from mediation, for example by signature on or attestation to the settlement agreement:
- the fact that a mediator must remain independent from the settlement agreement so should avoid any implied endorsement of its terms; and
- that settlements are often achieved outside of the mediation days, so a mediator may not be present or even aware of the settlement.
CEDR are working on practical proposals to overcome these difficulties, and we look forward to reviewing these with interest.
The question remains of how useful (and used) the Convention will be in practice. In our experience, non-compliance with the terms of a mediated settlement agreement is rare – the parties having built up enough goodwill to settle a matter, the terms are usually followed through, and contractual protections such as making payment a condition precedent to settlement strongly incentivise compliance.
Where a settlement compromises court proceedings in England a consent order can be used to bring the proceedings to a close, save for the purposes of enforcing the settlement agreement. However, not all legal systems contain such mechanisms, and the efficiency of enforcing a contractual agreement can vary depending on the jurisdiction clause incorporated, on the one hand, and the place where the assets are located, on the other.
The processes which local courts will adopt to enforce mediation agreements under the Convention, and its speed and efficacy compared with other enforcement methods remains to be seen, but at the least, it should provide some measure of comfort to parties entering into a compromise where enforcement may be an issue.
Triggering ADR clauses
Recently, the courts have seen examples of parties questioning the enforceability of carefully drafted dispute resolution clauses (for example, Ohpen Operations UK Ltd v Incesco Fund Managers Ltd  EWHC 2246 (TCC)]). In the Ohpen case, the parties had contracted to refer any disputes to mediation once they had reached a certain stage. The drafted clause specifically stated that the mediation process to be used was that of the CEDR Model Mediation Procedure. Citing "a clear and strong public policy in favour of enforcing alternative dispute resolution provisions and in encouraging parties to attempt to resolve disputes prior to litigation", the court found that the court proceedings should be stayed until mediation had been attempted, in line with the clear and enforceable escalation clause.
Whilst it is common for parties to apply escalation clauses rigorously in the context of arbitration, as otherwise this may be used as a means of challenge to the jurisdiction of an arbitral tribunal, this is a welcome reminder that escalation clauses providing for court proceedings as a last resort following mediation are equally enforceable, and will be enforced by the court where sufficiently clear.
CEDR now requires that any person conducting CEDR Commercial Mediation as mediator or as another neutral third party use the Model Mediation Procedure as well as the Code of Conduct for Third Party Neutrals.
This update aims to enlarge the frame of reference around the mediator's role, and increase procedural uniformity which should provide greater predictability for mediation as a method of ADR.
The Model Mediation Procedure includes provision for co-mediators, a model which is growing in popularity, in particular for complex, cross-border disputes, the resolution of which can be aided by a more varied understanding of cultural nuances, and where one mediator may just have too many issues to get to grips with unaided. It has also been discussed as a potential means of allowing less experienced mediators to gain greater exposure to more complex and challenging disputes, thereby potentially increasing diversity in the profession. 1
The Code of Conduct for Third Party Neutrals has been drafted to align with the, voluntary, European Code of Conduct for Mediators. There are some areas in which CEDR's Code imposes a higher obligation on mediators:
- compliance is mandatory for any mediators or third party neutrals (Neutrals) acting under the CEDR procedure;
- more emphasis is placed on the need to prepare properly for the mediation process;
- Neutrals must take out adequate professional indemnity insurance;
- a mediation must be undertaken in a manner consistent with CEDR's Model Mediation Procedure; and
- specified, and exhaustive, examples of when a mediator either can or should withdraw from the process are given.
The guidance on preparation and clarity of communications before, and during the process, which are additional to the European Code of Conduct are particularly to be welcomed. In our experience, a properly prepared mediator is best placed to explain to the parties what is expected of them at a forthcoming mediation, and facilitates earlier and more constructive discussion at the mediation itself.
Best practice post-mediation
Settlement is frequently not reached during the actual process of mediation, but in the days afterwards. The procedure for such extra-mediation negotiation has not previously been expressly set out, but is now codified into the Model Mediation Procedure.
The provisions now expressly permit contact with a mediator during this time, if agreed, and provide that the terms of the mediation agreement should continue to apply.
Our top tips for mediating parties
- Think about the possibility of a dispute arising right at the beginning of a relationship – build appropriate dispute resolution mechanisms into your contract, and make sure the business understand the processes, and why these have been chosen;
- Dialogue is a continuing process – don't wait until a "formal" dispute has arisen to air issues and reach agreements – a mediation does not have to be a "set-piece" affair, and can be equally if not more effective when facilitated dialogue is planned into a relationship between contractual parties from the outset, and on a regular basis; and
- Be creative – the mediation process offers the possibility of a whole range of outcomes which could not be imposed by a court or arbitration tribunal – take advantage of this to try to achieve a "win win".
CEDR's updated documents are available here and include:
- ADR Contract Clauses
- ADR Notice
- Mediation Procedure
- Mediation Agreement
- Settlement Agreement
- Tomlin Order
- Code of Conduct for Third Party Neutrals
1 DLA Piper are engaging with CEDR on their initiative to improve diversity and inclusion in civil and commercial mediation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.