Mediation 2018: Trends & Conclusions

This year mediation built upon its popularity as an ADR mechanism in jurisdictions where arbitration and litigation have become less cost-effective alternatives. In these jurisdictions, practitioners are becoming ever more sophisticated and have taken on increasingly complex disputes. However, mediation is not ubiquitous: in some jurisdictions, it is yet to feature as heavily in the legal arena as a prominent dispute resolution tool.

The state of mediation

Mediation has solidified its position as an ADR mechanism for commercial conflicts in several jurisdictions, thanks partly to the now “indescribably expensive” fees associated with litigation and arbitration globally. Furthermore, practitioners in more established centres of mediation, such as the US, the UK and Singapore, report that the increased sophistication and specialisation of mediators has convinced businesses of its viability as an avenue for dispute resolution. However, the uptake of mediation as an ADR mechanism has not been uniform across jurisdictions.

In England and Wales mediation is “alive and well” and is arguably the most developed market in Europe in terms of number of practitioners and areas of expertise. The predominance of the English language in the commercial world, and the reputation of mediators in England and Wales, have ensured that it remains a popular jurisdiction for dispute resolution among commercial entities. Practitioners have highlighted the “intense” competition in the market for a small number of cases with those who do not come from a legal background also holding a strong position in the mediation market. According to CEDR’s Eighth Mediation Audit in 2018, 51 per cent of mediators interviewed were trained in other fields. In Scotland, there is less affinity for mediation in commercial contexts than in England and Wales, but practitioners have emphasised that it is a “healthy scene” for mediators to practise in, and that mediation is now “part of the fabric” of dispute resolution strategies.

The growth of mediation across the rest of Europe has been markedly more staid and compartmentalised than in the UK. In Spain for example, mediators are described as thin on the ground. There appear to be many reasons for this – the principal one being that practitioners are viewed as lacking enough expertise as mediators to effectively resolve complex commercial disputes, and therefore clients feel that mediation is more of a risk. Furthermore, it seems that clients “do not believe” in the power of mediation itself to bind parties to settlements. Portugal sees a similarly slow uptake of mediation, with the added barrier of a bar that is unconvinced of mediation’s viability as a dispute resolution mechanism. This is not to say that mediation in Europe is stagnant in terms of growth. The International Chamber of Commerce has continued its strong efforts to promote mediation in Europe, with the International Mediation Competition particularly active in 2018.

It is a similar story in Asia, regarding the growth of mediation. Our research shows that Singapore continues to distinguish itself as the centre for mediation, thanks no doubt to its status as an international business hub. Many practitioners emphasise the cutting-edge nature of mediation in Singapore in this respect, and the growing sophistication and complexity of cases and mediation techniques. In Hong Kong mediation is also gaining ground as a form of ADR, although it lacks the level of institutional support and popularity it has in Singapore. In India, mediation has gained particular traction in the High Courts of Bangalore and Delhi due to active members at the bar and the high courts themselves pushing for dispute resolution through mediation to relieve pressure on the court system.

The US is a jurisdiction where the practice continues to thrive. Yet, as in Europe and Asia, the use of mediation is by no means homogenous: it seems that state-by-state variation has produced a market that is highly granular when analysed. As such it is challenging to identify more universal trends, and makes for “a fascinating time” for mediation in the US. Practitioners note that mediator supply exceeds demand to greater and lesser degrees across different states. Consequently, competition for mediation work is particularly cut-throat in states with an abundance of mediators, such as California. One reason for this saturation in the market appears to be the nature of practitioners themselves. There is a combination of professional mediators and legal professionals who use mediation as a secondary source of revenue while practising law. Nonetheless, practitioners are seeing dispute settlement rates as high as 80 per cent for a year, and a growing sophistication in the use of mediation – consistent with jurisdictions where mediation has been established for a considerable amount of time. As a result, some state practitioners are seeing considerable growth in the use of mediation, especially in the fields of construction and engineering disputes where legal procedures are notoriously costly. Practitioners also pointed to the increased specialisation of mediators, a future shift away from personal injury cases for mediators, and a higher density of neutral mediation roles. Our research shows that Canada boasts a high number of highly regarded mediators and an active mediation market. It seems that the broad trends of increased uptake and improved sophistication among practitioners apply to this jurisdiction where mediation has been well established for a number of years.

The formalisation of mediation

In jurisdictions that have developed a critical mass of mediators with experience and expertise, there appears to be a trend towards the formalisation of mediation as a dispute resolution mechanism. The evidence par excellence for this development comes from two separate jurisdictions with developed international mediation markets: Singapore and Ireland. Each has achieved formalisation in two distinct ways. The Irish Mediation Act of 2017, which came into force on 1 January 2018, has affected mediation in a number of ways. Most significantly, the act makes it a statutory obligation for barristers and solicitors to advise their clients to pursue mediation as an alternative to civil proceedings. It also provides a code of practice for mediators to follow. This places Ireland ahead of many jurisdictions with more extensive mediation markets in the formalisation process. Singapore has achieved this formalisation in a different way. Part three of Singapore’s Mediation Act of 2017 allows for the recording of a mediated settlement as an order of the court. Consequently, mediation settlements in Singapore may now have statutory and court backing.

The trend towards formalising mediation appears to be nascent among other jurisdictions yet to make the leap: in Scotland there is a push for mediation protocols to be drawn up by the Scottish government as the value of mediation and its cost effectiveness become more apparent. In Hong Kong there is widespread hope among practitioners that the new chief executive Carrie Lam will build on the 2009 Civil Justice Reform and push mediation to the fore as a dispute resolution tool enshrined within the legal system.

The big unknowns in the formalisation question are the other two international centres for mediation: the UK and the US. With calls for more formal protocols for mediation coming from Scottish practitioners, and the rising costs of court proceedings allied to pressure on court systems in England, Wales and the US, formalisation seems to loom large over these jurisdictions. EU Directive 2008/54/EC (the Mediation Directive) does apply to the UK for now, but falls short of the steps taken by Singapore and Ireland. Furthermore, with Brexit on the way it seems that mediation faces a period of legislative uncertainty. With two models in Ireland and Singapore to look to, these two jurisdictions have the opportunity to formalise mediation and simultaneously solve the issue of enforcement regarding mediation settlements. However, there is some trepidation among practitioners in Hong Kong that mediation will also go the way of arbitration in that jurisdiction, where it is “very formalised” to the point of being restrictive. Going forward, legislative efforts to formalise mediation must be wary of removing the flexible nature of mediation proceedings and their settlements, as this is one of the benefits of the mechanism that people seek.

The popularity and development of mediation around the world continues to vary from jurisdiction to jurisdiction. In some countries where it has been long established, mediation has been formalised thus crystallising its position as an effective dispute resolution mechanism. In other international commercial hubs such as the UK, the US, and Hong Kong, mediation has further entrenched itself as an ADR tool and remains a popular form of resolving commercial disputes. However in some European and South East Asian countries, the efficacy of mediation is still weighed down by scepticism from legal practitioners and clients alike. Going forward, it will be interesting to observe where mediation makes its next breakthrough, and whether the international hubs of the US, the UK and Hong Kong will follow in the footsteps of Singapore and Ireland.

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