Posted by Stewart Wilkinson, Partner
Mediation pre-condition to litigation
Following on from the introduction of the EC ADR (Alternative Dispute Resolution) Directive in 2015 (which in the UK designates the Financial Ombudsman (FOS) as the appropriate mediator for financial services disputes), the European Court of Justice has held that it is possible for national legislation to require a consumer to attempt to mediate a dispute before allowing a court claim to proceed.
The case concerned a consumer dispute against an Italian Bank. National legislation in Italy required consumers to attempt to resolve the dispute through the ADR Directive appointed channel in the first instance. The consumer challenged the national legislation but, following the Opinion of the Advocate General, the ECJ confirmed that the requirement was compatible with the objectives of the ADR Directive.
Currently, the Courts of England and Wales do not impose a requirement that mediation be attempted before a claim is issued, but the Practice Direction on Pre-Action Conduct and the general practice of the Courts leads to their expectation that the parties will do all that is reasonable to attempt to resolve the dispute before a claim is issued, and will penalise a party who does not do so in costs. Mediation is heavily favoured by the Courts and there has for some time been a movement by judges and Government towards making it compulsory. This judgment would reinforce that trend by clarifying that it is not incompatible with EC law.
For more information on The European Court of Justice's ruling, please contact Ashok Patel in our Dispute Resolution team on:
020 7842 1520 Email us
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