Conference on Mediation

March 29, 1996, Geneva, Switzerland


The Use of Commercial Mediation in Europe
by Karl Mackie ,
Director, Centre for Dispute Resolution (CEDR)
(London, United Kingdom)


I will concentrate today on what I am sure will be of most interest to participants at this conference, namely practical experience in commercial mediation in Europe. What I have to say will largely reflect UK and CEDR experience. This is not solely a question of anglocentrism or organisational claims but simply because the UK and CEDR have been the most active in this field in Europe. We know this from our various contacts and European networks and from having conducted a survey on behalf of the European Commission a few years ago. I should also state by way of introduction that I will refer generally to Alternative Dispute Resolution (‘ADR’) or mediation as interchangeable. Mediation is the most commonly used technique in ADR, including within European experience. I will not discuss other ADR approaches such as the Executive Tribunal (‘mini-trial’) or Early Neutral Evaluation in this paper.

The last five years have seen a remarkable transformation in attitudes in the UK to mediation use, a transformation that is steadily working its way into practice and into legal procedures. I believe we will see similar developments across mainland Europe over the next five to ten years, indeed we are already watching the birth of these developments not least through the work of WIPO.

By way of introduction let me say a few words on CEDR and on our experience of typical objections to the concept of mediating business disputes. I touch on these objections because they are at the present time an important feature of practical resistance to mediation development in Europe. I describe them not to dismiss them but to say that they are only part of the broader picture of developments in dispute resolution in Europe and globally. The impact of this global development of formal mediation practice, and the gradual evolution in our understanding of where and how mediation is best used, will mean in my view that much of the initial resistance and scepticism will be overcome to ensure that mediation becomes more of a mainstream European professional practice.



CEDR was launched in 1990 in order to promote Alternative Dispute Resolution in Europe. We are a non-profit organisation which not only promotes ADR but also which trains mediators and provides mediation and other ADR services for business and public sector disputes. Our launch was supported by the Confederation of British Industry and our members new number over 300 major firms, including most of the leading law and accountancy firms as well as business and public sector organisations. Since our launch we have been referred over 1000 cases to a claims value of over £2bn, from many sectors including the intellectual property sector. Finally we have been increasingly included in commercial contracts or other industry schemes as a mediation stage appointment authority. We have also been active in seminars and training workshops not only in the UK but in continental Europe and beyond.

CEDR is of course not the only organisation active in commercial mediation in the UK or in Europe. The success of mediation in the UK is leading to growth of interest in mediation services and in specialist sector services. In continental Europe, there was the launch of a Netherlands Mediation Institute in 1993, and mini-trial rules have also been promulgated by the Netherlands Arbitration Institute, the Dutch software industry and Zurich Chamber of Commerce. The International Chamber of Commerce of course has had long-standing Conciliation rules and has made recent efforts to streamline its disputes procedures. The ICC Research Institute and the French Committee of the ICC have in the meantime been helping to ensure that debate takes place on the nature of ADR and commercial mediation practice. Finally there have also been changes to civil courts procedure in France and Greece in 1995 encouraging court-annexed mediation although I believe limited practical experience to date.

Outside Europe mediation practice around the globe is developing rapidly including Hong Kong, South America and India, although outside the UK it is probably most pronounced in the USA, Australia and Canada.

I would identify two major undercurrents leading to this global growth. The first relates to dissatisfaction with the costs, delays and uncertain outcomes of litigation systems (and to a lesser extent their traditional alternative, arbitration). The second relates to a deeper social transformation involving our search for systems which can adequately match the speed, responsiveness, customer orientation and globalisation of business and technological change. Businesses are more likely than ever to need rapid decisions and disputes procedures which support rather than undermine business and customer relationships. Commercial mediation is becoming popular because it appears to answer this business need as well as offset some of the defects of the traditional systems.



Let me touch however on the principal points of resistance to European ADR growth.

1. "We do it anyway". Many professional advisers will say that they or their legal systems already accommodate to business needs or that the professionals in the system or arbitration procedures already encourage efforts at conciliation. Certainly there are variations within Europe in litigation efficiency and effectiveness, but few countries where one could say that businesses have no problems with the system. Also whatever the strengths of domestic systems, national litigation systems do not usually deal as effectively with cross-border disputes. In my experience the statement that ‘we do it anyway’ usually rests on some lack of knowledge or experience of how a structured mediation adds value to current negotiation or judicial settlement efforts. However it is true that already much informal conciliation occurs in the civil law countries particularly. This is generally not as structured or institutionalised as in recent common law developments. (Non-commercial mediation in family, community and labour disputes is often more structured.)

2. "Mediation is a solution to problems specific to US/Common Law Systems".

It is, many feel, hardly surprising that the formal roots of ADR sprang up in the USA which has a highly litigious culture and a highly elaborate litigation process. Similarly the UK and other English common law jurisdictions are said to have inherent problems of cost and delay because of their traditions of oral argument and evidence together with the process of discovery against the background of an adversarial system. These observations have some validity, but again our experience suggests that businesses in most countries are facing increased risks of litigation or cross-border litigation, and incur unwanted costs, delay, complexity and disruption to relations once they enter litigation or arbitration proceedings. Also, unless mandatory public law requirements are involved, the civil law systems like the English common law support consensual settlements so would support the objectives of mediation.

3. Complexity of Europe. There are significant variations in language, culture and legal systems across Europe. Forging a common interest and common practice in mediation is therefore inherently difficult. Each national system has to find its own accommodation with the concepts and practice of ADR. Developing ADR concepts and practice requires resources, promotional activity, training and an infrastructure of ADR organisations which is still lacking in most national systems. I do not think this will halt the development of commercial mediation but it may slow its growth rate compared to the English-speaking world. More specifically there are likely to be variations within European legal systems in terms of the legal impact of mediation contract clauses, and in terms of the exact legal impact of typical provisions in mediation agreements which for example seek to impose confidentiality on the parties and mediator or to prevent the mediator being called as a witness in subsequent proceedings. These differences may be more theoretical than real in many cases but they need to be acknowledged.



Despite these points of resistance, interest and practice in mediation is growing in European commercial and legal practice. Let me highlight some of the developments with which CEDR has been involved as examples of where mediation is being applied.


Court-Annexed Mediation

Rules of Court in the English High Court and Commercial Court - the latter used by many overseas litigants - now require advisers to consider every case for its ADR suitability, with clients and with the other side. This falls short of the mandatory referrals imposed in some US, Australian and Canadian courts, but it is a step in that direction. The London County Court and Patents County Court are also in the process of exploring ADR schemes on a voluntary basis, giving litigants the opportunity to opt for mediation or ADR at an early stage. In a recent major review of the English system, Lord Woolf has proposed further support for ADR in giving judges a greater role in referring cases to ADR or making costs orders for unreasonable refusal to try ADR. I have already mentioned recent French and Greek legislation also encouraging mediation in relation to civil court procedures.


Industry and Public Sector Schemes

ADR contract clauses, requiring mediation use before a dispute is referred to arbitration or litigation, are becoming much more commonplace in domestic and international contracts. In the public sector conciliation has been approved in the EC Procurements Directive. The UK government’s procurement office has issued guidelines promoting the use of mediation in government department contracts. The UK Department of Health has begun a pilot scheme using mediation to resolve litigation claims by patients against doctors or health authorities.

A number of major insurance and financial services companies in the UK have begun pilot schemes on mediation with CEDR. Perhaps of greatest interest to this audience, the Institute of Grocery Distribution has devised with CEDR a mediation scheme covering disputes between members concerning imitation trade dress or packaging - so-called ‘lookalike’ - disputes, which have become more frequent in recent years as competition intensifies in the retail trade.


Training, Seminars, Mediation Infrastructure

Not least a sign of the growing interest in mediation in Europe are the increasing range of seminars, initiatives and training programmes available on mediation. While presentations have taken place in most European countries, Holland and Ireland have been next most active to the UK in the search to find a formula for organisations which will deliver mediation training and services. There have also been initiatives in specialist sectors in the computer and telecommunications industries and in the work of WIPO’s Arbitration Centre. Along with a number of Chambers of Commerce in Europe, CEDR has helped launch a European Dispute Resolution Network to further promote the field, and has organised training programmes for potential European and international mediators and users of mediation. We are also increasingly being asked to provide training for specialist sector mediators and are organising a programme soon for intellectual property specialists. WIPO has already begun this process. US bodies such as the CPR Institute of Dispute Resolution have also recently been active in organising European training and conferences.


Mediation Casework

Perhaps the most telling aspect of all these developments is the fact that reasonable numbers of commercial mediations are now beginning to taking place in the UK and elsewhere in Europe, and with results that tend to support the theory behind the practice. Cases do settle in mediation that were previously deadlocked, and settle often with less cost and management time than alternative processes. CEDR’s clients last year reported average cost-savings of £44,500 per case. Cases have been handled from a broad range of commercial and public sectors - commercial contracts, construction, intellectual property, telecommunications, information technology and software, employment, family business, educational institutions, professional negligence, partnerships and voluntary associations.

It is often assumed that such cases will come from contexts where mediation could be said a priori to be especially suitable - where parties are in long-term relationships or where the business remedies sought could not be made available from a court. While these undoubtedly are signals that a case is especially appropriate for ADR, the majority of CEDR cases involve parties who may not wish to do business again with the other side and are seeking damages in compensation for allegedly defective equipment or services. Mediation around questions of liability or legal rights, is also therefore applicable as much as mediation to explore interests. In a majority of CEDR cases, the parties opt for mediation voluntarily at some stage of litigation or arbitration proceedings (because few cases at present derive from contract clauses), including the occasional case that is en route to an appeal court hearing. Legal advisers are present at most mediations to represent the parties, and potential expert or lay ‘witnesses’ may be present not to give evidence as such but to help inform and persuade in the negotiations that take place within the mediation. Cases handled have covered values of claims from a few thousand pounds to the hundreds of millions.

Mediators in CEDR are drawn from a range of professions although our stress is on the importance of the mediator having high quality mediation process skills and training rather than technical specialisation alone. We are building up our panels from specialist sectors but we have also used effectively the model of co-mediators or a mediator working with a technical expert agreed by the parties who reports to the mediator during intense mediation sessions. Cases typically take between 1-3 days - even in high value cases (although for international cases we tend to work with 4-5 days). The costs of the mediation are usually related to the size of the claim and range from a few hundred pounds to £2000 per party per day.

Our international cases are now into double figures and have involved mediations in Sri Lanka, Africa, Middle East, and Asia as well as our other cases involving US and other international companies operating in the UK or Europe. Last year we had our first case conducted in French in Brussels involving French, Belgium and Russian companies. We also hear of other international Mediations in Europe being conducted by individuals although there is little information on these.

A growing body of knowledge and case experience, together with growing official support, is increasingly leading clients and advisers to feel more comfortable with using mediation. Not only are there often benefits for the parties in cost and time-saving, the process can act as a catalyst to speed up discussions on settlement and can help in some cases mend and renew business relationships or business situations.


Future Use of Mediation in Europe

It has been obvious to me observing the ADR scene before and since CEDR’s launch, that there is a growing interest in commercial mediation in continental Europe which will ultimately convert to practical use, particularly at the level of cross-border disputes. Its practical development will be however piecemeal and is dependent on how quickly dispute specialists and governments begin to explore the potential of, and resources for, this third-party driven structured negotiation process of mediation. I have little doubt in saying from CEDR’s experience to date that the potential is there. It is more a question now of the challenge to our imagination and resources of how to awaken this ‘sleeping giant’ of the dispute resolution spectrum for the benefit of European business and public sector organisations.



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