Does mediation clause prevent initiation of lawsuit?

Does mediation clause prevent initiation of lawsuit?

The Supreme Court commented yesterday on whether a mediation clause in a agreement parties are required to actually attempt mediation first, before a procedure is initiated. According to the Supreme Court, mediation may indeed be mandatory. This may result in the judge before whom a case is brought staying the proceedings in order to give the parties the opportunity to enter into mediation with each other after all. Trial lawyer Robert van Ewijk explains when this is the case.

Mediation agreed upon in contract

Sometimes an agreement states that mediation is mandatory in the event of a dispute. Such a clause may prevent them from going to court before mediation has actually taken place. Whether that is so depends on how the mediation clause should be interpreted, the Supreme Court said. The so-called Haviltex measure must be applied in the process.

Mediation not mandatory but voluntary in principle

The basic principle is that mediation is voluntary. Moreover, everyone has the right of access to justice (Article 6 ECHR). However, the mediation clause in an agreement may have been formulated in such a way that there is a legally enforceable obligation to (seriously) try a mediation process. In the case before the Supreme Court, this was not the case.

Mediation mandatory: obligation of effort or obligation of result?

In fact, the agreement in question did not state a duty to try to resolve the dispute through mediation. It said that they ‘would’ resolve it through mediation, and if that failed that an arbitrator would be appointed. So there was an obligation of result (will resolve) and the clause provides an alternative in case that fails. This means that if it is clear in advance that mediation is pointless, then no mediation process needs to be initiated. It can be deduced from the judgment that if a best-efforts obligation has been agreed upon, there may be a legally enforceable obligation to give mediation a serious try.

Judge may stay proceedings over mediation clause

The Supreme Court further considered that if the mediation clause does have a mandatory character, the judge to whom a dispute is submitted can stay the proceedings. The court can do that if one of the parties requests it. That stay then gives the parties the opportunity to still try mediation. However, the judge is not obliged to stay the proceedings. He can decide not to stay the case. For example, in the case of a urgent interest Or if mediation would be futile.

Obligation to mediation still non-binding?

However, when mediation is then futile and who determines it, the Supreme Court does not tell in its ruling. Moreover, it is often difficult or impossible to assess in advance whether mediation is actually pointless. Indeed, practice shows that even parties who do not feel anything about mediation are in many cases positive about it after a first (few) session(s). On the other hand, there are also disputes that do not lend themselves to mediation.

Advice on mediation clause in agreement

Many (model) agreements contain a standard mediation clause. Its consequences should not be considered lightly. The Supreme Court shows this in its recent ruling. Indeed, this clause need not be as non-committal as is often thought. It can actually prevent a party from going to court before mediation has been attempted. Under circumstances, mandatory mediation may be desirable, but sometimes it is not.

Lawyer contract law at mediation clause

Therefore, be well advised by a specialized lawyer contract law when entering into an agreement. In doing so, also pay attention to whether or not a mediation clause should be included. And if so: how it should be worded.