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Citation: 9 Disp. Resol. Mag. 10 2002-2003

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 SEuropean ADR
Commission's"Green Paper"promotes discussion,harmonization
7 - By Christian Duve
= iTRATO A A
HILE EUROPEAN POLICY.MAK-
ers do not always follow
the U.S. example in foreign
policy, there is widespread admira-
tion within the European Union (EU)
for the broad variety of American
Alternative Dispute Resolution (ADR)
practices.
Three years ago, the ministers
of justice of the EU member states'
invited the European Commission 2 to
analyze and evaluate how EU member
states are currently using ADR to
resolve disputes governed by civil and
commercial law. Based on this infor-
mation, on April 19, 2002, the Com-
mission presented its "Green Paper,"
which was designed to initiate a broad
consultation regarding future ADR
practices in the EU.3
The Green Paper has been the
subject of more than 160 comments
by states, professional organizations
and other interested parties. In Feb-
ruary 2003, the Commission also held
a public hearing on ADR. It is now
in the process of working on a draft
directive regarding the use of media-
tion in the EU.
European approaches to ADR
Beginning its report with an
impressive appraisal of current ADR
use in Europe, the Commission has
compiled a wealth of information
about the currently existing ADR
approaches among member states. For
example, some countries have been
promoting ADR through sector-spe-
cific initiatives by creating consultative
Christian Duve, M.P.A., isapartner in the law
firm of Freshfields Bruckhaus Deringer in Frankfurt
am Main, Germany, and chairman of the Com-
mittee for Alternative Dispute Resolution inthe
German Bar Association. He can be reached at
christian.duve@freshlields.com.
Dispute Resolution MagazineSummer
Resolution Magazine
DR
authorities on ADR, providing financ-
ing, implementing training programs
and disseminating information to the
general public.
Court-connected ADR proceed-
ings are the subject of general or draft
regulations in most member states.
These regulations create ADR envi-
ronments that range from the possibil-
The European Commission supports augmenting
ADR use as a means to improve access
to justice and to accelerate development of
the information society.
ity of recourse to ADR (e.g., Belgium
and France) to its encouragement
(e.g., Spain, Italy, Sweden, England
and Wales) and even the prior obliga-
tion to have recourse to ADR under
the law or by judicial decision for cer-
tain categories of cases (e.g., Germany,
Belgium and Greece).
On a pan-European level, major
projects have been undertaken in
recent years in the field of consumer
disputes (both domestic and cross-
border, connected with the Internet
and otherwise) in an effort to provide
consumers with better access to jus-
tice. In particular, the Commission has
adopted two recommendations estab-
lishing ADR principles and proce-
dures. In addition, a European claim
form for consumers has been pub-
lished.
In 2001, the Commission estab-
lished two European networks that
allow consumers access to ADR in
cross-border disputes where the ADR
provider is located in a member state
other than the disputants' member
state of residence. The two networks
HeinOnline -- 9 Disp. Resol. Mag. 10 2002-2003
pursue the same objective, but operate
differently.
The European Extra-Judicial Net-
work "EEJ-Net" is a consumer support
and information structure consisting
of national contact points, or clearing
houses, located in each member state
and in Iceland and Norway. Each of
the contact points relays information to
the 400 bodies that the member states
consider as having met the Commis-
sion's standards and principles appli-
cable to consumer-dispute ADR.
"FIN-NET" (FINancial Services
complaints NETwork) is a network
of national ADR bodies that meet
the requirements of the first Commis-
sion recommendation. By February
22, 2002, there were 37 such bodies.
FIN-NET provides consumers who
have problems related to financial ser-
vices (e.g., banks, insurance compa-
nies, investment services) with direct
access to an ADR facility.
Commission objectives
Looking to the future, the Euro-
pean Commission supports augment-
ing ADR use in order to improve
access to justice and accelerate devel-
opment of the information society.
The Commission believes that the
duration of legal proceedings, rising
costs and the complexity of legal issues
are making it increasingly difficult for
consumers to preserve their rights,
even though, pursuant to Art. 6 of
2 003
Summer 2003
the European Convention on the Pro-
tection of Human Rights, everyone is
entitled to access to justice as a basic
right. These problems are heightened
in cross-border disputes.
However flexible the approach of
the Commission may appear at first
glance, it actually is rather formal: If
the goal is to help citizens to realize
their rights in terms of access to jus-
tice, the ADR process most likely will
be subject to the due process require-
ments of adjudicatory proceedings.
This is at least the approach taken by
the Commission's first ADR recom-
mendation in 1998. But if due pro-
cess prerequisites were to be generally
observed in civil and commercial dis-
putes, the parties' right of self-deter-
mination and contractual freedom in
their negotiations would be narrowed
rather than extended.
The Commission also hopes to
strengthen the confidence of consum-
ers and small and medium-sized com-
panies in electronic commerce. For
this reason, the Green Paper devotes
particular attention to Online Dispute
Resolution (ODR). Although ODR's
significance is generally negligible
in Europe today, the situation may
change since there are numerous inter-
esting providers, most of which are
located in the United States, 4 and a
plethora of ideas for further develop-
ment.
Threat of overregulation
In its Green Paper, the Commis-
sion defines alternative methods of
dispute resolution as "out-of-court dis-
pute resolution processes conducted
by a neutral third party excluding arbi-
tration proper," thus excluding purely
adjudicatory proceedings.
The Paper distinguishes between
proceedings that are concluded with-
out a binding decision and those
in which a third party takes a final
decision or makes a recommenda-
tion. However, it does not distinguish
among various other ADR proce-
dures, raising the possibility that any
rules promulgated by the Commission
would apply uniformly across quite
different ADR methods.
For example, although the Green
Dispute Resolution Magazine
Resolution Magazine
Paper acknowledges the existence of
ADR procedures such as mini-trial,
ombudsman and nonbinding arbitra-
tion, it does not distinguish more
closely among these procedures, their
possibilities of application or poten-
tial. Indeed, many respondents to the
Green Paper suggested that the subse-
quent debate and initiatives should be
confined only to mediation. Accord-
ingly, the Commission's work on a
draft directive appears to focus exclu-
sively on mediation.
Appropriately, the Green Paper
raises more questions than answers.
Within the scope of its stocktaking, the
Appropriately, the 4Green Paper raises
more questions than answers.
Commission posed 21 questions that
are of major significance for the fur-
ther development of ADR.
Several amendments suggested by
the Commission threaten the parties'
autonomy (e.g., by imposing a manda-
tory waiver of action when an ADR
process is initiated or by providing for
a statutory withdrawal period). Other
Commission proposals, such as har-
monizing ethical rules and training
of criteria, may be useful as policy
initiatives lead toward overregulation.
Still other initiatives, such as legal aid
for mediation costs, are very unlikely
to be realized given scarce financial
resources.
Harmonizing European rules
The Green Paper constructively
addresses several areas in which better
and more extensive rulemaking would
be helpful. Primarily, European ADR
might benefit from uniform rules
regarding the confidentiality and sub-
sequent admissibility of information
disclosed during ADR procedures.
In addition, it might be beneficial
to harmonize member states' legal
provisions regarding enforcement of
ADR settlements and suspension of
statutes of limitations. As a Europe-
wide innovation, the member states
may also wish to consider implement-
ing mandatory assessment of lawsuits
HeinOnline -- 9 Disp. Resol. Mag. 11 2002-2003
to determine their appropriateness for
ADR.
First, confidentiality is a key reason
that parties seek ADR. In principle,
information revealed in a mediation
must be safeguarded against disclosure
by the neutral, the parties or other per-
sons involved in the proceedings, such
as experts or witnesses.
However, there are far-reaching
conceptual differences between the
English Common law system, to which
the Scandinavian countries in part
adhere, and the systems of Roman
law in use in other member states.
Whereas confidentiality in Common
Law countries relies on the notion of
privilege, in Civil Law countries it is
tied to the professional-secrecy obliga-
tion of certain professionals and statu-
tory duties.
To guarantee implementation of
confidentiality agreements within the
European Union, a uniform confiden-
tiality rule may be helpful. At the
same time, any legislative activity in
this respect ought to be limited to stat-
ing the admissibility and the scope of
the confidentiality protection.
Second, the Commission suggests
that statutes of limitations should be
suspended while parties participate
in ADR, because recourse to ADR
should not impair the right of access
to a court. This is a reasonable
suggestion, since no party wishes to
expose itself to the risk of forfeiting
its legal claims because the statute of
limitations expired while it unsuccess-
fully attempted to resolve the dispute
through ADR.
Third, as the Commission has
observed, negotiated or mediated out-
of-court settlements do not have the
same legal force in all member states.
From the point of view of international
enforceability, the so-called "arbitra-
tors' award with an agreed wording"
shows the greatest advantages, because
its execution is virtually secured world-
wide via the New York Convention.
Summer 2003
Summer 2003
 Pursuant to the so-called Brussels Green Paper will help promote limitations during ADR procedures
regulation, court settlements and European ADR would be desirable, as would increased
instruments established by a public The Green Paper will help achieve enforceability of lawyer-assisted nego-
authority enjoy facilitated execution the European Commission's goals of tiated or mediated out-of-court settle-
5 both improving ADR use and further ments. Promotion of court-connected
within the European Union. The
execution of the so-called lawyers' set- developing access to justice in an infor- ADR pilot projects would be wel-
tlement, a settlement negotiated by mation society. To further these goals, comed, as would promotion of in-com-
lawyers, though supported by special- the European Commission ought to pany Dispute System Design schemes
ists, is nonetheless still surrounded by highlight private autonomy. For exam- through the European Union. The
uncertainty. Settlements or "transac- ple, it should provide exceptions that Commission might also consider the
tions" negotiated in ADR proceedings
are therefore only easily enforceable
as arbitrators' awards and in the Euro- By requiring an ADR suitability assessment,
pean Union as authentic instruments the Commission could boost ADR strongly.
or settlements in court.
As parties generally wish to be
able to enforce their agreements, a protect consumers and workers in con- introduction of an ADR examination
Europe-wide rule ensuring enforce- sumer disputes and labor law conflicts, obligation similar to the one that is in
ability would be welcomed. The without curtailing private autonomy existence in Great Britain, in which
European Parliament has already sub- for parties with general civil and com- the parties must consider the suitabil-
mitted a proposal to this end.6 A rule mercial disputes. ity of their dispute, at each stage, for
based on the lawyers' settlement could In the majority of the issues settlement via ADR.
be included pan passu in addition to addressed by the Commission, there Through the Green Paper, the
public deeds and settlements in court is no need for regulation. This applies European Commission has demon-
into the Brussels Convention. for the waiver of claims just as for strated how much ADR's importance
Facilitating the enforceability of the period of reflection or the right of has grown in Europe. And discussion
settlements that have been negotiated retraction, training, liability, co-ordi- of its proposal for a draft directive
or mediated with lawyer assistance nation of ethical rules of professional regarding mediation use will further
would be in line with other EU proj- conduct or legal aid. heighten the attention paid to ADR
ects aspired to at present. For exam- However, some regulation of by politicians, businesspeople and the
ple, a proposal recently accepted by European ADR practices may be ben- general public.
the Commission would make it pos- eficial. Harmonized rules that protect
sible for creditors who have obtained confidentiality and suspend statutes of
an enforceable decision on a receiv-
able that is not contested by the debtor
to render direct execution in another Endnotes
member state. In this way, the free
circulation of decisions, settlements in
1 The EU member states currently are Austria, 4 Prominent ODR providers include
court and authentic instruments could Belgium, Denmark, Finland, France, Germany, www.clicknsettle.com, www.cybersettle.com,
7
be secured in all member states. The Greece, Ireland, Italy, Luxembourg, Netherlands, www.squaretrade.com and
assurance that ADR settlements are Portugal, Spain, Sweden and the United King- www.ourdivorceagreement.com.
enforceable could greatly improve the dom. I Art. 57 resp.58 of the directive (EU) No.44/
acceptance of ADR in general. 2 The European Commission embodies and 2001 (EuGWO).
Fourth, if the Commission were upholds the general interest of the European
6 Green Paper, margin note 18 with reference
to limit its activities solely to requir- Union.The Commission's president and mem-
bers are appointed by the member states after to OJ. C 146 of 17. Maiy 2001, R94 as well as
ing from the parties an ADR suitability reaction of the Commission of 26. October 2000,
they have been approved by the European Par-
assessment, it could boost ADR liament. The Commission has the right to initiate KOM (2000) 689 final.
strongly. In Great Britain since the draft legislation and therefore presents legisla-
7 Conclusions of the European Council in Tam-
Woolf Reform, for example, the par- tive proposals to parliament and the council.
As the EU's executive body, the Commission is pere - Bull. 10-1999, Item. 1.10 Directive (EU) No.
ties are obliged throughout their law- 44/2001 of the Council - OJ. L 12 of 16.1.2001
responsible for implementing the European leg-
suit-to examine the suitability of their islation, budget and programs adopted by par- and Bull. 12-2000, Ziff. 1.4.7., accepted by the
dispute for ADR. Courts may even liament and the council. Commission.
impose costs of the lawsuit on the suc-
cessful party if it has not seriously car- I The Green Paper on alternative dispute resolu-
tion in civil and commercial law, KOM(2002) 196,
ried out ADR. can be found at www.europa.eu.int/eur-lex/de/
com/gpr/de.gpr-month_2002_04.html.

Summer 2003
Resolution Magazine
Dispute Resolution Magazine Summer 2003
HeinOnline -- 9 Disp. Resol. Mag. 12 2002-2003