Mediation is a form of alternative dispute resolution in which parties, guided by an independent person, known as a mediator, identify and assess options and negotiate an agreement to resolve their dispute. This differs from most other forms of dispute resolution, where the parties relinquish control over the outcome of their dispute to a third party in a position of authority, such as a court judge or an arbitrator.
Mediation is characterised by three key principles:
- Autonomy meaning that the parties make decisions about the dispute freely and independently.
- Voluntariness ensuring that no party can be compelled to participate in or continue the mediation process against their will.
- Confidentiality allowing parties to speak openly with one another without that what is shared will be disclosed outside the mediation process.
Mediation has gained significant traction across the Netherlands and other jurisdictions in Europe. With its emphasis on collaboration and efficiency, mediation offers a compelling alternative to traditional litigation and arbitration. In the Netherlands, a recent Supreme Court ruling has introduced pivotal clarity on the enforceability of mediation clauses, signalling a potential shift toward making mediation a more obligatory step in resolving disputes. This development reflects broader international trends, where mediation is being integrated more deeply into legal frameworks. This article addresses the mentioned recent judgment of the Dutch Supreme Court, its implications for Dutch mediation, and the wider context of mediation in an international perspective.
Dutch Supreme court: binding nature of a mediation clause?
On 12 July 2024, the Dutch Supreme Court rendered decision ECLI:NL:HR:2024:1078 (the Judgment) addressing a key question: how binding is a mediation clause that is agreed in a contractual agreement? The case involved two professional parties, CSW and PPSB, who had agreed that any disputes would first be resolved through mediation and, if unsuccessful, through arbitration.
When a dispute arose between the parties in 2018, PPSB initiated arbitration proceedings without attempting mediation. CSW invoked the mediation clause and requested the arbitrator to either declare themselves incompetent or stay the proceedings. The arbitrator rejected both requests and proceeded to adjudicate the dispute.
Following the arbitration, CSW petitioned the Dutch Court of Appeal to annul the arbitral awards, arguing that a valid arbitration agreement was lacking since the parties had not first attempted mediation as stipulated. The Dutch Court of Appeal held that PPSB was justified in interpreting the arbitration clause as not imposing a binding obligation to mediate. Consequently, it rejected CSW’s claims. CSW then appealed to the Dutch Supreme Court, which was tasked with determining whether a mediation clause could obligate parties to mediate before initiating legal or arbitral proceedings. Given the parties' decision to opt for (international) arbitration, this question is also relevant from an international perspective and in case of cross-border disputes.
Interpretation and enforceability of mediation clauses under Dutch law
The Judgment clarifies that mediation clauses in contracts must be interpreted using the so-called Haviltex standard, a cornerstone of Dutch contract law, which was established by the Dutch Supreme Court in 1981 (ECLI:NL:HR:1981:AG4158 (Ermes c.s./Haviltex)). When interpreting an agreement using the Haviltex standard, one must not only consider the linguistic meaning of the text but also the reasonable expectations and mutual intentions of the parties at the time the agreement was entered into. For professional and commercial entities, these expectations are shaped by their expertise and the specific context of the contract’s negotiation.
The Judgment states that the enforceability and scope of a mediation clause depends heavily on its interpretation. The meaning of the clause is determined by the reasonable expectations and intentions of the parties under their specific circumstances. Mediation clauses may range from being non-binding to imposing an enforceable obligation to mediate before initiating legal or arbitral proceedings. The inherent non-binding nature of mediation itself does not preclude the possibility of creating such an obligation.
The Judgment established that a mediation clause can impose a binding obligation on parties to attempt mediation before pursuing litigation or arbitration. This marks a significant departure from the traditional view of mediation as a purely voluntary process. By recognising the enforceability of such clauses, the ruling reflects the Dutch legal system’s growing emphasis on alternative dispute resolution as a mechanism to resolve disputes collaboratively and efficiently.
The Judgment emphasised that mediation is fundamentally a process focused on effort rather than outcome. While parties are required to participate in good faith, they cannot be compelled to achieve a resolution due to the voluntary nature of mediation. This distinction highlights mediation as a non-binding, cooperative approach, distinct from adjudicative processes such as arbitration or court proceedings.
Balancing enforceability and judicial access
A critical aspect of the Judgment is its reconciliation of enforceable mediation clauses with the right of access to the courts, as guaranteed by Article 6 of the European Convention on Human Rights (ECHR). If a mediation clause is interpreted as requiring mandatory mediation before initiating legal or arbitral proceedings, and one party bypasses mediation, the court (or arbitrator) may, at the request of the other party, stay the proceedings to allow the mediation obligation to be fulfilled. However, courts and arbitrators are not required to stay proceedings. They may decide to proceed if, for instance, the case is urgent or if mediation would be futile. This nuanced approach ensures that mediation does not become an unreasonable barrier to judicial recourse.
Another issue addressed by the Supreme Court in the Judgment was when a party may unilaterally end their participation in mediation. This question also depends on the interpretation of the mediation clause. The Supreme Court emphasised that the application of a mediation clause must not infringe on parties’ right to judicial access in an unacceptable manner, as protected under Article 6 ECHR.
The specific case and its outcome
In the case at hand, the Court of Appeal had interpreted the mediation clause as not imposing a binding obligation to mediate. The Supreme Court upheld this interpretation, finding it legally sound and factually grounded. Consequently, the Supreme Court rejected the appeal, leaving the arbitrator’s decision on the underlying dispute intact.
The Judgment highlights the Dutch legal system’s careful balancing act between promoting mediation and safeguarding access to justice. By framing mediation as a complementary, rather than compulsory, step, the ruling strengthens its role as a practical and efficient alternative to traditional dispute resolution. At the same time, it ensures that fundamental principles of justice and accessibility are upheld.
An important question arises regarding the potential consequences of failing to comply with a mediation clause. Non-compliance might result in the annulment of an arbitrator's decision if mediation has not been attempted. For example, in the case under consideration, CSW initiated proceedings to annul the arbitrator's decision. However, this attempt was rejected by the Court of Appeal, and the decision was later upheld by the Supreme Court. Additionally, it is plausible that failure to comply with a mediation clause could give rise to liability for damages, although this issue was not addressed in the Judgment. Considering the growing prevalence of mediation, along with an increase in mediation clauses and related disputes, it is reasonable to expect a future Dutch ruling addressing the consequences of non-compliance with such clauses.
Mediation in other jurisdictions: a shift toward mandatory mediation?
The opinion issued by the Advocate General (Conclusion Advocate-General R.H. De Bock, ECLI:NL:PHR:2024:103, for Dutch Supreme Court 12 July 2024, ECLI:NL:HR:2024:1078) – who in the Netherlands advises the Supreme Court on pending cases – offers compelling insights into international perspectives on mediation clauses. In this opinion, the Advocate General elaborated on the lack of consensus regarding the enforceability of mediation clauses beyond Dutch borders. Under English law, however, mediation clauses in arbitration agreements are generally deemed enforceable, and German case law firmly holds that professional parties may be bound by mandatory mediation clauses they have agreed upon. Similarly, French law recognises the enforceability of mediation clauses as legally binding. In Belgium, mediation clauses are even enshrined in statutory law, which explicitly provides that if a mediation clause exists, the court, upon the parties' request, must suspend proceedings until the parties confirm that the mediation process has concluded.
Based on these findings, the Advocate General concluded that there are no principled objections to the premise that a mediation clause can carry binding force. The Supreme Court reached the same conclusion. This decision signals an emerging trend within the Dutch legal framework toward embracing mandatory mediation, aligning with developments in other jurisdictions.
