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Alternative Dispute Resolution does the trick

Courts ache under their workloads across Europe. For example, 5.4 million cases are pending in Italy- not a good sign for swift repair of damage suffered by consumers or companies. But there is a remedy: Alternative Dispute Resolution.

Alternative Dispute Resolution (ADR) is an out-of-court mechanism that comes in various formats, but generally ensures swift and effective repair at reasonable cost to the parties. Countries across Europe have discovered the huge potential of ADR instruments to enable broader access to justice while lowering transaction costs for the public sector.

Testing the waters

In the UK, a year-long Court of Appeal mediation pilot was launched in early 2012. Under this pilot, unless a judge directs otherwise, every personal injury, clinical negligence and contractual claim worth GBP 100,000 (USD 162,000) or less, and in which permission to appeal has been granted, will automatically be recommended for mediation to the Centre for Effective Dispute Resolution (CEDR), a neutral, non-profit organisation established to help cut civil court costs.

If the parties agree to mediate, a panel of accredited mediators will be nominated by CEDR. The selected mediator will bring the parties together to try to reach a settlement. If this is achieved, the case will not go back to the Court of Appeal.

Two steps forward on the Continent

In July 2012, Germany enacted a federal law on mediation and ADR (Gesetz zur Förderung der Mediation und anderer Verfahren der aussergerichtlichen Konfliktbeilegung). The new bill allows court-annexed mediation with judges acting as mediators and a conciliation judge.

The Czech Republic put into force its Mediation Act in September 2012. Mediation is not yet widely used in the country and the new Act aims to establish a clear legal framework to significantly increase the number of cases settled through mediation. The Act is aligned with the EU Mediation Directive

Even though the Italian Constitutional Court ruled certain provisions of Legislative Decree No 28 unconstitutional, the Justice Ministry confirmed that mediation would still be part of the legal system. The Decree, enacted in March 2010, contained mediation rules for civil and commercial disputes.  Its goal was to ease the overwhelming caseload – 5.4 million cases to be exact - in the Italian courts by making mediation mandatory for certain disputes, including insurance matters.  In October 2012, the Court found mandatory mediation provisions unconstitutional because they, according to the judicial body, denied access to justice.

Mediation: a cost-effective alternative

Finally, Spain implemented a law in March 2012 on civil and commercial mediation. The aim was to stimulate the use of mediation as a means of voluntary, flexible and cost-effective dispute resolution, thus reducing the close to 2 million legal proceedings per year brought before the ordinary Spanish civil courts and, in turn, lowering the costs currently faced by the Spanish judicial system.

In October 2012, a collaboration agreement between Spanish judges and the Chambers of Commerce in the country was signed to foster mediation as an alternative to formal dispute resolution. As a result of the agreement, commercial courts and first instance courts can refer cases to the Chambers of Commerce for mediation.

Swiss Re, together with other re/insurers, has been a long-time advocate of a balanced approach to collective redress. Swift resolution lowers transaction costs for all parties involved. This is good for both companies and consumers. These recent developments show that ADR works and creates real win-win situations for both parties by an efficient and timely out-of-court procedure that enable access to justice and redress for damage suffered at a reasonable cost for the parties.

Published 19 December 2012

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