Mediationclausule bindend in B2B-relaties?

05 August 2024

Blogs Marc Janssen Corporate M&A

Introduction

On July 12, 2024, the Supreme Court, the highest court relating to civil cases, issued a very important ruling on the enforceability of a mediation clause. A purchase agreement under which PPSB sold shares in a subsidiary to CSW included an arbitration clause. The arbitration clause means that any disputes arising from the purchase agreement will initially be resolved through mediation. If such disputes cannot be resolved through mediation, they will be submitted to arbitration to the exclusion of the ordinary courts, unless there is an urgent interest. After a disagreement arose between the parties, including over a deferred tax claim, PPSB initiates arbitration proceedings. In the arbitration proceedings, CSW invokes the mediation clause in the arbitration clause and requests the arbitrator to either decline jurisdiction or stay the proceedings now that the parties have not yet tried mediation. The arbitrator denied both requests. On appeal, the court of appeals ruled that PPSB was entitled to understand the arbitration clause as not containing a binding obligation to mediation and rejected CSW's claims. In cassation, the judgment of the court of appeals is challenged. At issue is whether an agreement between professional parties to first engage in mediation before initiating proceedings before an arbitrator or judge is legally binding. If a party fails to comply with such a mediation clause and the other party raises a defense on this point, should the arbitrator or judge stay the proceedings until the parties have complied with the mediation clause?

Forms of dispute resolution

There are several ways to resolve disputes. For example, one can go to the ordinary courts. In addition to the courts, there is arbitration. This is an alternative form of dispute resolution in which a neutral third party, the arbitrator, evaluates the case and makes a binding decision. One or three arbitrator(s) can be chosen. Binding advice is another option for resolving a dispute. Often seen in financial disputes, an independent expert makes a binding determination of the amount in dispute between the parties. Finally, mediation. Mediation is a form of alternative dispute resolution in which a neutral third party, the mediator, helps involved parties reach a voluntary and joint resolution of the dispute. The goal of mediation is to resolve conflicts through negotiation and communication, with the mediator acting as an independent and impartial mediator. He or she can record agreements the parties make between them, which are then binding. Advantages include speed and confidentiality.

The Supreme Court ruling

The clause at issue in this case was as follows: ""(...) Any disputes between the parties arising out of this agreement shall be resolved by the parties initially through mediation. Should the parties be unable to resolve such disputes in this manner, they shall be submitted to arbitration (by a single arbitrator) to the exclusion of the ordinary courts, unless the interim relief judge in the event of an urgent interest." The Supreme Court states first, that mediation can be defined as a form of mediation to resolve a dispute, in which a neutral mediation expert, the mediator, guides negotiations between the parties that are aimed at a mutually supported outcome taking into account the interests of the parties. The parties may agree that they will attempt to resolve an existing or future dispute in connection with a legal relationship existing between them through mediation before commencing proceedings or continuing a pending proceeding. According to the Supreme Court, the content of a mediation clause must be determined by its interpretation. This depends on the sense which the parties, under the given circumstances, could reasonably attribute to the mediation clause and what they could reasonably expect from each other in this respect (the so-called "Haviltex standard"). A mediation clause may have a non-mandatory character. It is also possible for a mediation clause to oblige parties to try mediation before commencing legal (or arbitration) proceedings. The nature of mediation does not prevent such an interpretation, according to the Supreme Court. The circumstances that a mediation clause has been agreed upon between professional parties (B2B) and that the agreement and the resulting dispute have a commercial character may play a role in the interpretation, but, in the Supreme Court's opinion, do not automatically imply that the mediation clause must be interpreted in such a way that it obliges the parties to try mediation before they initiate legal (or arbitration) proceedings. According to the Supreme Court, if a mediation clause imposes an obligation to try mediation, the scope of that obligation and thus the question of when a party who wishes to do so may terminate its cooperation in the mediation process is also a matter of interpretation of the mediation clause. A mediation clause may not be applied if its application would result in unacceptable interference with the parties' right of access to the courts. If a mediation clause stipulates that the parties are obliged to try mediation before commencing legal (or arbitration) proceedings, and a party commences proceedings without having fulfilled that obligation, the judge (or arbitrator) may, at the request of the other party, stay the proceedings in order to give the parties the opportunity to still fulfill their obligations under the mediation clause. He is not obliged to do so. The court may decide not to stay the proceedings, for example because the case is too urgent to do so or because there is no point in trying mediation. In its opinion that the mediation clause in question does not contain a binding obligation to mediation, the court of appeal did not only consider the text, but also considered important the generally voluntary nature of mediation and the fact that the arbitration clause was not drafted by the parties jointly, but by CSW. The court's opinion does not imply that mediation cannot be compulsorily agreed upon. Nor does it show that the court assumed that CSW and PPSB are not professional parties or that it did not include the capacity of the parties and the nature of their dispute in its assessment. Therefore, according to the Supreme Court, the court's judgment is neither incorrect nor incomprehensible.

Conclusion

A well-formulated mediation clause can therefore be enforceable (also) in B2B relations. Again, a well-drafted agreement in B2B relations can prevent problems or at least resolve disputes in the sense the party or parties intended. Do you have questions as a result of this blog or do you have other corporate law questions? Then please feel free to contact Marc Janssen or any of the other members of the corporate law section / practice group litigation.

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