MEDIATION SETTLEMENTS AND THEIR ENFORCEMENT IN THE EU

FIASCO? STATUS QUO? SUCCESS?

OAMI/OHIM (ALICANTE), 30.5.2014

PROF. DR. CARLOS ESPLUGUES LLM (HARVARD), MSc (EDINBURGH) UNIVERSITY OF VALENCIA (SPAIN)

MODERN SOCIETIES ARE VERY MUCH LINKED TO THE IDEA OF LITIGATION: “LITIGATION EXPLOSION” … MAINLY REFERRED TO STATE COURTS.

• VOLUME OF DISPUTES BROUGHT BEFORE STATE COURTS INCREASES STEADELY!

• PROCEEDINGS MORE AND MORE LENGTHY!

• COSTS INCURRED BY THE PARTIES AUGMENT!

THIS CREATES GREAT DISSATISFACTION AMONG CITIZENS IN EUROPE…

© Carlos Esplugues

THE GOAL TO TACKLE IT AND TO MAKE CIVIL PROCEDURE MORE EFFICIENT AND AFFORDABLE FOR PARTIES STANDS ON MANY CIVIL PROCEDURE REFORMS UNDERTAKEN…

… AND ALSO UPHOLDS GROWING RESOURCE TO ADR DEVICES: NEGOTIATION, CONCILIATION, ARBITRATION… AND

MEDIATION!

THIS SITUATION PUTS THE JUDICIARY UNDER PRESSURE AND CAN IMPAIR FULL IMPLEMENTATION OF THE PRINCIPLE OF ACCESS TO JUSTICE… EVEN FURTHER IN AN INTEGRATED AREA WHERE CROSS BORDER DISPUTES ARE USUAL(U.E.)

• BUT AS STATED… DESPITE ITS POTENTIAL BENEFITS… RARELY USED IN A SYSTEMATIC WAY IN PRACTICE IN THE EU…

• MEDIATION IS CONSIDERED A FLEXIBLE AND EASY TAILORED WAY FOR THE PARTIES TO WORK OUT SOLUTIONS TO THEIR DISPUTES FAVORING AT THE SAME TIME CONTINUANCE OF THEIR RELATIONSHIPS

DIRECTIVE 2008/52/EC AIMS TO CHANGE THIS SITUATION…

-The percentage of disputes referred to mediation by businesses is between 0,5% and 2% -Cross border mediation stand for less than 0.05% of European B2B conflicts. -About 25% of disputes are left unsolved by SMEs because they refuse to litigate. (V. Tilman, Lessons learnt from the implementation of the EU Mediation Directive: the business perspective, Brussels, 2011, p. 4)

BY DISPUTANTS AND LAWYERS

DIRECTIVE AIMS TO OVERCOME EXISTING DIFFERENCES AS REGARDS SCOPE OF ACCEPTANCE AND CONCEPTUAL UNCERTAINTIES BY CONFIGURATING A COMMON NOTION AND A COMMON MINIMAL LEGAL SYSTEM FOR MEDIATION IN THE E.U…. WHICH ENHANCE RESOURCE TO MEDIATION IN EUROPE.

FLEXIBLE, AFFORDABLE, RELIABLE, PREDICTABLE, TIMELY, FULLY ENFORCEABLE…

Which stresses active role assigned to the parties in reaching a settlement by themselves with the support of a third person called mediator

DIRECTIVE 2008/52/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 21.5.2008

ON CERTAIN ASPECTS OF MEDIATION IN CIVIL AND COMMERCIAL MATTERS

… COMMON MINIMUM STANDARD AS REGARDS BOTH PURELY DOMESTIC AND CROSS-BORDER MEDIATION…

DIRECTIVE 2008/52/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 21.5.2008

ON CERTAIN ASPECTS OF MEDIATION IN CIVIL AND COMMERCIAL MATTERS

… IS THIS ACHIEVED??? SOME CONCERNS REMAIN…

… FOSTERING RESOURCE TO MEDIATION!!!

MANY DIFFERENCES REMAIN AS REGARDS … ENFORCEMENT OF THE SETTLEMENT REACHED… SPECIAL DIFFICULTIES ARISE IN RELATION TO CROSS-BORDER MEDIATIONS…

THE VOLUNTARY BASIS OF MEDIATION = VOLUNTARY FULFILLMENT OF SETTLEMENTS … AS THE NUMBER OF MEDIATIONS GROWS THE AMOUNT OF LITIGATION THAT ARISES OF MEDIATION INCREASES…

COMMON MINIMAL FRAMEWORK FOR MEDIATION IN THE E.U.?

IN A PURELY IDEAL SCENARIO … NO REFERENCE TO ANY LAW OR IPL RULE WOULD BE NECESSARY… THE SETTLEMENT REACHED BY THE PARTIES WOULD BE HONOURED ON A VOLUNTARY BASIS THE DIRECTIVE MORE REALISTIC AND SOUND THAN THAT… … MEDIATION IS NOT A SECOND CLASS JUSTICE DEVICE AND IT IS NECESSSARY TO ENSURE THE ENFORCEMENT OF THE SETTLEMENT REACHED… THIS IS SPECIALLY RELEVANT IN RELATION TO CROSS-BORDER MEDIATIONS… (Rec. 19, Directive)

FOR MEDIATION TO BE FULLY EFFECTIVE, THE SETTLEMENT REACHED BY THE PARTIES MUST BE ENSURED ENFORCEABILITY!!!

CHIAROSCURO… - MANY ISSUES REMAIN OPEN AS REGARDS MEDIATION AND CROSS-BORDER MEDIATION… - THE DIRECTIVE IS FOCUSED ON ENSURING THE ENFORCEMENT OF SETTLEMENTS REACHED IN DOMESTIC AND INTERNATIONAL MEDIATION… BUT RULES PROVIDED ARE VERY LIMITED… BASICALLY ART. 6 DIRECTIVE.

“Article 6. Enforceability of agreements resulting from mediation 1. Member States shall ensure that it is possible for the parties, or for one of them with the explicit consent of the others, to request that the content of a written agreement resulting from mediation be made enforceable. The content of such an agreement shall be made enforceable unless, in the case in question, either the content of that agreement is contrary to the law of the Member State where the request is made or the law of that Member State does not provide for its enforceability. 2. The content of the agreement may 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. 3. Member States shall inform the Commission of the courts or other authorities competent to receive requests in accordance with paragraphs 1 and 2”

FOUR IDEAS AS REGARDS ENFORCEABILITY… 1) SETTLEMENT IS EXPECTED TO BE VOLUNTARILY HONOURED

2) OTHERWISE… THE SETTLEMENT IS GENERALLY CONSIDERED TO BE A CONTRACT BINDING ON THE PARTIES AND ENFORCEMENT IS TO BE ENSURED THROUGH COURT ACTIONS.

a. COURT-ANNEXED MEDIATION = “INMEDIATELY CONFIRMED” = PENDING JUDICIAL PROCEEDING CEASE AT ONCE = LEADS TO A JUDGMENT / JUDICIAL TRANSACTION … b. OUT-OF-COURT MEDIATION …

3) NO DIRECT ENFORCEABILITY IS SOUGHT AS A GENERAL RULE IN THE EU MEMBER STATES.

4) AS A GENERAL RULE FOR THE SETTLEMENT REACHED TO BE FULLY ENFORCEABLE A CERTAIN LEVEL OF HOMOLOGATION BY A PUBLIC AUTHORITY IS NECESSARY (COURT-ANNEXED / OUT-OF-COURT MEDIATION)

HOMOLOGATION ENTAILS PUBLICITY OF THE SETTLEMENT REACHED… … CONFIDENTIALITY???

SOME VERY ISOLATED EXCEPTIONS TO THIS GENERAL RULE… 1) HUNGARY: SETTLEMENTS REACHED DURING MEDICAL MEDIATION ARE ENFORCEABLE WITHOUT THE REQUIREMENT OF NOTARISATION…

2) CROATIA: DIRECT ENFORCEABILITY SEEKED IN CERTAIN LIMITED CASES RELATED TO CONSUMER CREDITS MEDIATION AND WHEN THE AGREEMENT DETERMINES A DEFINITE OBLIGATION ON PERFORMANCE WHICH IS PERMITTED AND IF IT CONTAINS A DECLARATION OF THE PROMISE THAT HE/SHE AGREES UPON DIRECT ENFORCEMENT.

3) PORTUGAL: ARTICLE 46, C) CPC RECOGNIZES ENFORCEABLE NATURE TO ALL DOCUMENTS, EVEN PRIVATE, SIGNED BY THE DEBTOR IF THEY CONSTITUTE OR RECOGNIZE PECUNIARY OBLIGATIONS, WHOSE VALUE IS DETERMINED OR IS DETERMINABLE BY A SIMPLE ARITHMETIC CALCULUS, OR IF THEY RECOGNIZE AN OBLIGATION OF DELIVERY OF A THING OR A FACERE OBLIGATION

GENERAL RULE…

1) WRITTEN SETTLEMENT REACHED BY THE PARTIES (BOTH IN OUT-OF-COURT AND COURT ANNEXED MEDIATION)…

2) ON RIGHTS AND OBLIGATIONS AT THE PARTIES DISPOSAL…

3) HOMOLOGATION BY PUBLIC AUTHORITIES…

A) BY THE COMPETENT COURT…

B) BY A NOTARY…

C) COMPETENT COURT OR NOTARY…

HOMOLOGATION BY THE COURT… 1) ONCE HOMOLOGATED IT BECOMES FULLY ENFORCEABLE

2) USUALLY CERTAIN LEVEL OF CONTROL … - LEGALITY AND RESPECT OF CONTRADICTION (POLAND) - IT IS NOT AGAINST PUBLIC POLICY OR THE INTEREST OF MINOR, OR IN CASE THE OBJECT OF THE DISPUTE IS NOT REFERABLE TO MEDIATION OR THE AGREEMENT REACHED IS NOT CAPABLE OF BEING ENFORCED (LUXEMBOURG). - VIABILITY AND LEGALITY (CYPRUS) - IF IT DOES NOT CONTRADICT THE LAW OR MORALITY (BULGARIA) - IF IT DOES NOT AFFECT RIGHTS AND OBLIGATIONS WHICH ARE NOT AT THE PARTIES’ DISPOSAL (FRANCE) -IF IT IS CONTRARY TO LAW, OR CLEARLY UNFAIR OR IF IT VIOLATES THE RIGHTS OF A THIRD PARTY (FINLAND)

HOMOLOGATION BY COURTS OR PUBLIC NOTARIES… (AUSTRIA, ESTONIA, SCOTLAND, SLOVAKIA, ROMANIA, GERMANY or SPAIN)

1) ONCE HOMOLOGATED IT BECOMES FULLY ENFORCEABLE

2) AS REGARDS NOTARIES… CAPABILITY TO CONTROL THE CONTENT OF THE SETTLEMENT REACHED BY THE PARTIES?

- IT PRESCRIBES AN OBLIGATION OF THE DEBTOR TO BE SUBJECT TO IMMEDIATE COMPULSORY ENFORCEMENT FOR THE SATISFACTION OF THE CLAIM… (ESTONIA)

- CONDITIONS REQUESTED BY THE ACT ARE FULFILLED AND … ITS CONTENT IS NOT AGAINST THE LAW (SPAIN)

SPECIAL SITUATIONS …

1) BELGIUM: DIFFERENCES BETWEEN MEDIATION CONDUCTED BY REGISTERED AND NON-REGISTERED MEDIATORS… -REGISTERED: THE COURT MAY HOMOLOGATE THEM… -NON-REGISTERED: CLAIMED BEFORE A COURT FOR ENFORCEMENT OR DOCUMENTED IN A NOTARIAL DEED WHICH WILL BE ENFORCEABLE.

2) CROATIA: THE PARTIES MAY AUTHORIZE THE MEDIATOR TO ISSUE AN AWARD ON THE SETTLEMENT AGREED ON BY THEM ACTING AS A SOLE ARBITRATOR, THE AWARD RENDERED IS THEN FULLY ENFORCEABLE IN ACCORDANCE WITH THE CROATIAN RULES ON ARBITRATION.

• SOME COUNTRIES CONSIDERED THAT NO TRANSPOSITION WAS NECESSARY: BELGIUM, … IRELAND IS STILL IN THE PROCESS… • OTHERS (MOST) HAVE DONE IT… BUT DIFFERENT OUTCOMES EXIST: -MAJORITARY MONISTIC APPROACH (DOMESTIC & CROSS-BORDER -IN SOME COUNTRIES NO CROSS-BORDER REGULATION IS DEVELOPED (FINLAND) -IN SOME COUNTRIES ONLY CROSS-BORDER (ENGLAND, SCOTLAND, THE NETHERLANDS…) -ALSO … LEGAL SOLUTIONS DO NOT ALWAYS COINCIDE

WHAT HAPPENS AS REGARDS CROSS-BORDER MEDIATION?

WHAT HAPPENS AS REGARDS CROSS-BORDER MEDIATION?

IRRESPECTIVE OF THE MONISTIC/DUALISTIC APPROACH UNDERTAKEN… -SOME EU MEMBER STATES INCLUDE RULES SPECIFICALLY DESIGNED FOR GOVERNING CROSS-BORDER MEDIATIONS: e.g. UK, THE NETHERLANDS –DUALISTIC- or GREECE, SPAIN –MONISTIC-. -MANY DO NOT DESIGN SPECIFIC RULES… THE GENERAL REGIME FOR DOMESTIC MEDIATION IS MADE APPLICABLE TO BOTH DOMESTIC AND CROSS-BORDER MEDIATION… -IN ANY CASE IN SOME COUNTRIES SOLUTIONS ARE REFERRED ONLY TO EU CROSS-BORDER MEDIATIONS (BULGARIA, FINLAND, ITALY…) OR TO EU AND TRULY INTERNATIONAL MEDIATIONS (BALTIC COUNTRIES, HUNGARY, SLOVENIA, SPAIN…)

THAT MEANS… WHAT HAPPENS AS REGARDS CROSS-BORDER MEDIATION? … HAS BEEN HARMONIZATION FULLY ACHIEVED?

LEGAL EU INSTRUMENTS ON RECOGNITION AND ENFORCEMENT?

LIMITED SCOPE NOT SPECIALLY FLEXIBLE AND ADAPTED TO MEDIATION: e.g. OBLIGATIONS TO DO AND TO STOP DOING…

1) AMONG THEM ONLY A SITUATION OF DIRECT ENFORCEABILITY: ARTS. 46 & 55(e) REGULATION 2201/2003 IN RELATION TO THE COOPERATION BETWEEN CENTRAL AUTHORITIES IN MATTERS OF PARENTAL RESPONSIBILITY.

2) FACILITATIVE POSITION TOWARDS SETTLEMENTS (NOT NECESSARILY REACHED VIA MEDIATION) IS FOUND IN OTHER EU REGULATIONS:

ARTS. 51(2) & 45 (a) Regulation 4/2009 of 18.12.2008 (MAINTENANCE OBLS.) ART. 8 Regulation 650/12 of 4.7.2012 (SUCCESSIONS)

ENFORCEMENT OF FOREIGN SETTLEMENTS IN THE EU…

SITUATION 1: RECOGNITION AND ENFORCEMENT OF A SETTLEMENT REACHED IN AN EU MS IN ANOTHER MS:

ENFORCEMENT OF FOREIGN SETTLEMENTS IN THE EU…

SITUATION 1: RECOGNITION AND ENFORCEMENT OF A SETTLEMENT REACHED IN AN EU MS IN ANOTHER MS:

GENERAL RULE: 1) NO DIRECT ENFORCEABILITY… 2) ISOLATED EXCEPTION FOUND IN PORTUGAL: ART. 9(4) of Act 29/2013 (LM) ADMITS DIRECT ENFORCEABILITY OF FOREIGN EU MEDIATION SETTLEMENTS IN CERTAIN CASES

“ART. 9... (4) — TEM IGUALMENTE FORÇA EXECUTIVA O ACORDO DE MEDIAÇÃO OBTIDO POR VIA DE MEDIAÇÃO REALIZADA NOUTRO ESTADO MEMBRO DA UNIÃO EUROPEIA QUE RESPEITE O DISPOSTO NAS ALÍNEAS A) E D) DO N.º 1, SE O ORDENAMENTO JURÍDICO DESSE ESTADO TAMBÉM LHE ATRIBUIR FORÇA EXECUTIVA”

ENFORCEMENT OF FOREIGN SETTLEMENTS IN THE EU…

SITUATION 1: RECOGNITION AND ENFORCEMENT OF A SETTLEMENT REACHED IN AN EU MS IN ANOTHER MS:

OPTION A. EXISTENCE OF AN EU LEGAL INSTRUMENT:

THE SETTLEMENT REACHED BY THE PARTIES ON A TOPIC COVERED BY THE EXISTING EU LEGAL INSTRUMENTS ON RECOGNITION AND ENFORCEMENT OF JUDGMENTS WHICH IS EMBODIED IN A JUDGMENT, AN AUTHENTIC INSTRUMENT –E.G. A NOTARIAL DEED- OR A COURT-SETTLEMENT WHICH ARE ENFORCEABLE IN ACCORDANCE TO THE LAW OF THE COUNTRY WHERE THESE INSTRUMENTS HAVE BEEN RENDERED WILL BE SUBJECT TO THE FLEXIBLE SYSTEM DESIGNED BY THE EU IN THIS AREA…

THESE INSTRUMENTS ARE BASICALLY… -Regulation 44/2001 (Regulation 1215/2012) -Regulation 2201/2003 of 27.11.2003 (matrimonial matters and Parental Responsibility) -Regulation 805/2004 of 21.4.2004 (European Enforcement Order for uncontested claims) -Regulation 4/2009 of 18.12.2008 (maintenance obligations) -Regulation 650/2012 of 4.7.2012 (successions) -Regulation 1346/2000 of 29.5.2000 (insolvency proceedings) -Regulation 207/2009 of 26.2.2009 (trade mark, Recital 16 & Art. 94)

IF THE SETTLEMENT REACHED BY THE PARTIES IS FULLY OR PARTIALLY COVERED BY ANY OF THESE EU TEXTS OR ANY OTHER THAT COULD BE ENACTED BY THE EU, THEY WILL BE APPLIED AND A FULL OR PARTIAL RECOGNITION OF THE SETTLEMENT WILL BE GRANTED.

THE GENERAL FRAMEWORK CREATED BY THESE INSTRUMENTS WOULD SATISFY THE MANDATE OF ARTICLE 6 OF THE 2008 DIRECTIVE… IN FACT, THE ENFORCEABILITY WOULD BE SEEMINGLY GRANTED IN MORE FLEXIBLE AND BROADER TERMS THAN THOSE FORESEEN IN ART. 6… IN SO FAR THEY COMBINE A GENERAL REFERENCE TO THE MANIFEST CONTRADICTION WITH “PUBLIC POLICY” WITH A RULE PROHIBITING REVIEW ON THE SUBSTANCE…

“Article 6. Enforceability of agreements resulting from mediation 1. Member States shall ensure that it is possible for the parties, or for one of them with the explicit consent of the others, to request that the content of a written agreement resulting from mediation be made enforceable. The content of such an agreement shall be made enforceable unless, in the case in question, either the content of that agreement is contrary to the law of the Member State where the request is made or the law of that Member State does not provide for its enforceability. 2. The content of the agreement may 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. 3. Member States shall inform the Commission of the courts or other authorities competent to receive requests in accordance with paragraphs 1 and 2”

OPTION B. ABSENCE OF AN EU LEGAL INSTRUMENT:

-INTERNATIONAL CONVENTIONS AND NATIONAL RULES ON RECOGNITION AND ENFORCEMENT OF FOREIGN JUDGMENTS AND DECREES EXISTING IN EVERY EU MS WOULD BE APPLICABLE. -IN MOST CASES NOT ONLY JUDGMENTS BUT ALSO OTHER AUTHENTIC DOCUMENTS ARE COVERED BY THESE PROVISIONS

-T.H. CONVENTION OF 19.10.1996 ON JURISDICTION, APPLICABLE LAW, RECOGNITION, ENFORCEMENT AND CO-OPERATION IN RESPECT OF PARENTAL RESPONSIBILITY AND MEASURES FOR THE PROTECTION OF CHILDREN (ART. 31(b)) …

OPTION A. NATIONAL RULES ON CROSS-BORDER MEDIATION APPLY TO EU AND PURELY INTERNATIONAL MEDIATIONS: SPAIN

SITUATION 2: RECOGNITION AND ENFORCEMENT OF A SETTLEMENT REACHED OUTSIDE THE EU IN AN EU MS:

RECOGNITION AND ENFORCEMENT OF SETTLEMENTS REACHED OUTSIDE THE EU THAT FALL OUTSIDE THE SCOPE OF APPLICATION OF THE LUGANO CONVENTION OF 2007, WOULD BE GOVERNED BY THE INTERNATIONAL OR NATIONAL LEGISLATION APPLICABLE IN EVERY MS IN THE SPECIFIC AREA OF LAW AT STAKE

OPTION B. NATIONAL RULES ON CROSS-BORDER MEDIATION APPLY SOLELY TO EU MEDIATIONS: THE GENERAL RULES ON RECOGNITION AND ENFORCEMENT APPLICABLE IN THE COUNTRY WHERE ENFORCEMENT IS SOUGHT WILL APPLY.

SITUATION 3: THE SPECIAL SITUATION OF SETTLEMENTS LACKING ENFORCEABILITY IN THEIR COUNTRIES OF ORIGIN

THE SETTLEMENT REACHED BY THE PARTIES IS CONSIDERED TO BE A CONTRACT THAT IS BINDING ON THEM. IN THE EVENT OF LACK OF FULFILLMENT OF A SETTLEMENT REACHED IN CROSS-BORDER MEDIATION (CARRIED OUT WITHIN OR OUTSIDE THE EU), ANY OF THE PARTIES MAY AT ANY TIME LODGE A CLAIM FOR BREACH OF CONTRACT BEFORE THE COMPETENT COURT OF ANY EU MS AND ASK FOR ITS COMPULSORY ENFORCEMENT (JURISDICTION DETERMINED IN ACCORDANCE WITH THE EXISTING EU REGULATIONS, OR, AS THE CASE MAY BE, FOLLOWING NATIONAL RULES) OTHER CASES MAY EXIST IN WHICH THE PARTIES WANT TO ENFORCE IN ONE MS AN AGREEMENT ENTERED INTO IN ANOTHER MS, OR OUTSIDE THE EU, THAT HAS NOT BEEN HOMOLOGATED BY ANY PUBLIC AUTHORITY AND THAT CONSEQUENTLY LACKS ENFORCEABILITY

1) SOME EU MS APPROACH THIS MATTER EXPLICITLY (E) 2) MOST EXTRAPOLATE THE APPROACH IN PURELY DOMESTIC DISPUTES TO CROSS-BORDER SITUATIONS.

THE SETTLEMENT SHOULD GAIN ENFORCEABILITY IN THE COUNTRY WHERE ENFORCEMENT IS SOUGHT THIS SHOULD GENERALLY BE ACHIEVED EITHER BY WAY OF HAVING THE SETTLEMENT NOTARISED OR BY HAVING IT EMBODIED IN A JUDICIAL RESOLUTION IN ACCORDANCE WITH THE LAW OF THE PLACE WHERE THIS IS DONE.

SITUATION 4: SETTLEMENTS EMBODIED IN AN ARBITRATION AWARD

-APPLICATION OF THE NEW YORK CONVENTION ON THE RECOGNITION AND ENFORCEMENT OF FOREIGN ARBITRATION AWARDS OR, -IN ACCORDANCE WITH ARTICLE VII OF THE CONVENTION, ANY OTHER CONVENTION THAT MAY BE MORE FAVOURABLE TO THE RECOGNITION OF FOREIGN ARBITRATION AWARDS, WILL BE APPLICABLE

MIXED FEELINGS!!! = CHIAROSCURO…

NEW LEGAL SCENARIO = INCREASING RESOURCE TO MEDIATION IN THE EU MS…???

THE DIRECTIVE = REAL IMPACT ON SOCIETY… A REAL NEW SITUATION USEFUL FOR CITIZENS???

SUPPORTING MEDIATION = REDUCTION OF INVESTMENT IN THE JUDICIARY BY EU MS???

TIME FOR “REBOOTING” THE DIRECTIVE… OR FOR MEASURES OF SUPPORT / PUBLICITY ???

THANK YOU!!! GRACIAS!!!

Carlos.esplugues@uv.es