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End of transition period guidance: alternative dispute resolution
This guidance sets out the implications for UK lawyers advising clients considering cross-border alternative dispute resolution (ADR) after the end of the Brexit transition period (31 December 2020).
- for UK lawyers advising clients in cross-border civil and commercial disputes involving parties from EU member states
- regardless of whether the UK and EU reach a future relationship agreement
After the end of the transition period, Directive 2008/52/EC (the EU Mediation Directive) applying to cross-border civil and commercial disputes involving parties from EU member states will not be applicable between the UK and the EU member states.
In addition, businesses and consumers in the UK will no longer be able to use the Online Dispute Resolution (ODR) platform which links consumers with ADR providers in the EU.
The purpose of the EU Mediation Directive was harmonisation through the imposition of minimum standards and rules across a range of matters.
However, only a small number of changes to UK legislation were needed due to mediation law and culture being well established in the UK already.
On this basis, in practical terms at least, the legislative changes are unlikely to have a huge effect on the way cross-border mediations are conducted in the UK.
Solicitors involved in a cross-border mediation which takes place in an EU/EFTA country will be subject to the rules of that country on foreign lawyers’ practice.
The Mediation Directive
The EU Mediation Directive came into force in 2008, applying to cross-border civil and commercial disputes involving parties from EU member states.
The definition of a cross-border dispute is, subject to some exceptions, a dispute where at least one party is domiciled in a member state.
On 20 May 2011, England and Wales enacted legislation (Cross-Border Mediation (EU Directive) Regulations 2011) (the 2011 Regulations) to ensure compliance with the EU Mediation Directive around the areas of confidentiality, enforceability and limitation. Issues concerning court intervention and quality were dealt with through existing legislation.
The 2011 Regulations resulted in the following rule changes to cross-border mediations taking place in the UK:
- confidentiality – confirmation within the 2011 Regulations (and via changes to the Civil Procedure Rules) that a mediator has the right (subject to some exemptions) to withhold mediation evidence in court proceedings and arbitrations
- enforcement – a procedure was inserted into part 78 of the Civil Procedure Rules for the enforcement of cross-border mediation settlements (Mediation Settlement Enforcement Orders). The provisions allow parties (by consent) to have cross-border mediated settlement agreements converted to a court order, to aid enforcement
- limitation – extensions of limitation periods where mediation is agreed in cross-border disputes (through amendment of pre-existing legislation)
What will change?
Brexit will affect laws around confidentiality, enforceability and limitation periods, as the UK government brought forward a statutory instrument repealing the 2011 Regulations that implemented the EU Mediation Directive.
The Cross-Border Mediation (EU Directive) (EU Exit) Regulations 2019 were made on 1 March 2019 and will come into effect on 1 January 2021.
Article 69 of the Withdrawal Agreement sets out the circumstances in which EU law will apply in the case of ongoing procedures (with mediation covered within this).
On 1 January 2021, the 2011 Regulations and associated changes to the Civil Procedure Rules, listed above, will be repealed.
As a result, the provisions of the EU Mediation Directive (relating to confidentiality, enforcement and limitation highlighted above) will no longer apply to cross-border mediations taking place in the UK.
The only exceptions to this occur where (before the end of the transition period) the court invites or orders the parties to use mediation or the parties agree to mediation.
The UN Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention on Mediation) came into force on 12 September 2020. Neither the UK nor the EU are signatories, so Brexit will have no effect in this area.
The European Online Dispute Resolution (ODR) platform
Regulation (EU) 524/2013 (Online Dispute Resolution Regulation) led to the establishment of a free online platform (available in all languages of the EU) by which traders and consumers in member states can attempt to settle disputes relating to online sales or service contracts and access ADR providers in the EU.
All traders within the EU that engage in online sales, service contracts, and online marketplaces are required to provide a link on their website to the ODR platform.
The Online Dispute Resolution Regulation is revoked by the Consumer Protection (Amendment etc.) (EU Exit) Regulations 2018.
From 1 January 2021, businesses and consumers in the UK will no longer be able to use the ODR platform.
However, UK consumers will still be able to access ADR entities in EU countries, just not through the ODR.
In addition, online traders selling in the UK will no longer be obliged to provide consumers with information about the EU's ODR platform on their websites.
EU Directive 2013/11/EU (the ADR Directive)
The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 implemented the provisions of the ADR Directive (as amended by the Consumer Protection (Amendment etc.) (EU Exit) Regulations 2018).
From 1 January 2021, the UK secretary of state will have responsibility for the publication of the list of ADR entities and will no longer be required to send this list and report to the European Commission.
There will no longer be a requirement for UK-based ADR entities to offer cross-border services to consumers residing in EU member states.
Traders will no longer be able to offer consumers EU alternatives to UK-based ADR entities.
After the end of the transition period, the following will continue to apply to UK traders:
- if the trader is obliged (by law, contract or trade association membership) to use the services of an ADR entity it must include the name and address of an ADR entity on its website or sales terms
- if the trader has exhausted its internal complaint handling procedure following the initiation of a dispute, it must inform the consumer of the name and website address of an ADR entity that would be competent to deal with the complaint (albeit the trader does not need to engage with such ADR)
Arbitration is not regulated by the EU and is unaffected by Brexit.
Arbitration proceedings will continue to be regulated within the jurisdictions of:
- England and Wales and Northern Ireland by the Arbitration Act 1996
- Scotland by the Arbitration (Scotland) Act 2010
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) will continue to govern the enforcement of international arbitral awards.
The New York Convention is a United Nations convention and therefore not affected by Brexit.
The UK and all EU member states are included within the 161 nations which are signatories to the New York Convention.
The impact on how businesses enforce arbitral awards internationally after the end of the transition period will be relatively limited.
For more information, see the UK government guidance on ADR and ODR after the end of the transition period.