In cross-border cases it is very important to determine the law applicable to the agreement to mediate (lex contractus), as it will regulate the rights and obligations of parties and mediator in the procedure and will provide regulation to issues not explicitly stipulated in the agreement to mediate. (e.g. mediator’s professional liability, suspension of limitation periods during mediation, exceptions from confidentiality, etc.).
The instrument of international private law that helps determine the applicable law in contractual relations is Regulation (EC) No. 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations, also known as Rome I Regulation (hereinafter referred to as RIR).
Determining the applicable law in cross border mediation is based on the Rome I Regulation.
- Mediation between business entities
- If the agreement to mediate does not contain a choice-of-law clause, the applicable law would be the law of the country where the service provider has its habitual residence (Article 4.1 RIR), i.e. the Mediator or the Mediation Organization. When it is clear from all the circumstances of the case that the contract is manifestly more closely connected with another country, the law of that other country shall apply. (Article 4.3 RIR).
- Mediation between individuals having the same habitual residence
- If the agreement to mediate meets the requirements for a consumer contract under the RIR, the law of the habitual residence of the consumers (Article 6.1 RIR) will be applied
- If the agreement to mediate cannot be considered a consumer contract, the general rule of Article 4.1 b RIR will apply, i.e. the applicable law will be the law of the country where the service provider has its habitual residence, i.e. the Mediator or the Mediation Organization.
- Mediation between individuals having different habitual residence
Two spouses who are from Greece and Germany and who lived together in Greece separated 2 years ago. Currently the wife, who is a German national, lives in Germany and the husband, who is a Greek national – in Greece. They refer their case to a mediation team of a Greek and German mediator.
As said above, if the agreement to mediate is a consumer contract, the habitual residence of the parties would determine the applicable law.
Having in mind the complications associated with cases where consumers do not have a joint habitual residence, it would be recommendable for such parties to make a choice of law between the laws of the countries where they have their habitual residence.
If the agreement to mediate cannot be treated as a consumer contract, the applicable law will be the law of the country where the provider of the services (i.e. the mediator) has his/her habitual residence (Article 4.1 b) RIR. If the two mediators have habitual residence in different countries, the applicable law would be the law of the country with which the contract is most closely connected (Article 4.4 RIR).
If the whole mediation is held in a single country (for instance, Germany) the law of this country will apply.
However, if mediation is conducted using video or teleconferencing, or communication via Internet, or in case of indirect (‘shuttle’) mediation with spouses in their respective states, it would be very difficult to determine the ‘most closely connected’ law. Therefore, in such cases it is strongly recommendable to include a choice-of-law clause in the agreement to mediate.