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An Act To Amend The Laws Relating To Arbitration And Mediation (Bill No. 41)

A BILL

entitled

AN ACT to amend the Laws relating to arbitration and mediation matters.

BE IT ENACTED by the President, by and with the advice and consent of the House of Representatives, in this present Parliament assembled, and by the authority of the same, as follows:-

Short title. 1. The short title of this Act is the Laws (Arbitration and

Mediation Matters) (Amendment) Act, 2009.

Amendment of the Arbitration Act.

Cap. 387.

Amendment of article 4 of the principal Act.

PART I

2. (1) This Part amends the Arbitration Act, and it shall be read and construed as one with the Arbitration Act, hereinafter in this Part referred to as ''the principal Act''.

(2) The provisions of this Part shall come into force on such date as the Minister responsible for justice may by notice in the Gazette appoint, and different dates may be so appointed for different provisions and different purposes thereof.

3. Sub-articles (2) and (3) of article 4 of the principal Act shall be substituted by the following sub-articles:

''(2) The Board shall consist of not less than three and not more than five members, appointed by the President of Malta acting on the advice of the Prime Minister, one of whom shall be designated by the Prime Minister as chairman. The Prime Minister shall also designate another member as deputy chairman and such member shall have all the powers and
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perform all the functions of the chairman during his absence, or until a new chairman has been appointed following the resignation, termination of appointment, or death of the chairman.
(3) The Prime Minister shall select the members of the Board from among persons who appear to him to be qualified to be so selected.''.

4. In the proviso to sub-article (1) and in sub-article (2) of article 6 of the principal Act, for the word ''Minister'', wherever it occurs, there shall be substituted the words ''Prime Minister''.

5. In sub-article (1) of article 8 of the principal Act, for the words ''to the Minister'' there shall be substituted the words ''to the Prime Minister''.

6. Sub-article (6) of article 10 of the principal Act shall be substituted by the following sub-article:

(6) (a) A person who, in the opinion of the Centre, does not fulfil his duties or functions in arbitration proceedings shall be admonished by the Registrar in order to fulfil those duties or functions, and if that person in the opinion of the Centre persists in not fulfilling his said duties or functions the Centre shall refer the case to a board to be composed of three arbitrators which shall, after considering the case, decide whether there is failure to fulfil duties or functions in arbitration proceedings and, where it finds that there is such failure, the board shall issue such directives as it may deem appropriate so that the said person will fulfil his said duties or functions. It the said person further persists in not fulfilling his duties or functions in arbitration proceedings the board so appointed shall, after considering the case, recommend to the Centre that the said person be either removed from the arbitration proceedings in which he persisted in failing to fulfil his duties or functions or be removed from the group of arbitrators.
(b) A person may at any time resign by letter addressed to the Registrar.
(c) A removal or resignation as referred to in paragraphs (a) and (b) shall not be deemed to include the removal or resignation of the person concerned from any arbitration proceedings in which he may have already been appointed before his removal or resignation except as may be expressly provided in a decision of the Centre taken upon the recommendation of the board referred to in paragraph (a) or in

Amendment of article 6 of the principal Act.

Amendment of article 8 of the principal Act.

Amendment of article 10 of the principal Act.

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Amendment of article 20 of the principal Act.

Amendment of the article 15 of the principal Act.

the letter of resignation itself.".

7. Sub-article (3) of article 20 of the principal Act shall be substituted by the following sub-article:

"(3) The chairman shall, at the request of one of the parties, appoint the sole arbitrator as promptly as possible and for this purpose he shall call a meeting between the parties for the purpose of attempting to select the arbitrator together with the parties and after he has called the said meeting the chairman shall proceed to appoint the sole arbitrator and his decision shall be final and binding.".

8. Immediately after sub-article (11) of article 15 of the principal Act there shall be added the following new sub-article:

''(11A) Notwithstanding any other provision of this Act, all parties to a mandatory arbitration shall, unless they have expressly agreed otherwise in writing, have a right of appeal from the arbiter award both on points of law and on points of fact to the Court of Appeal as constituted in terms of

Cap. 12.

article 41(6) of the Code of Organization and Civil Procedure, and the provisions of the Code of Organization and Civil Procedure with regard to appeals from judgments of the Court of Magistrates (Malta) and the Court of Magistrates (Gozo) shall mutatis mutandis apply to such appeals.''.

Amendment of Fourth Schedule to the principal Act.

Amendment of rule 72 of the Arbitration Rules.

S.L. 387.01

Amendment of the Mediation Act.

Cap. 474.

9. In paragraph 4 of Part B of the Fourth Schedule to the principal Act the words "as provided by the Act" shall be substituted by the words "as provided in sub-article (11A) of article 15"."

10. Paragraph (b) of sub-rule (6) of rule 72 of the Arbitration

Rules shall be repealed.

PART II

11. (1) This Part amends the Mediation Act, and it shall be read and construed as one with the Mediation Act, hereinafter in this Part referred to as ''the principal Act''.

(2) The provisions of this Part shall come into force on such date as the Minister responsible for justice may by notice in the Gazette appoint, and different dates may be so appointed for different provisions and different purposes thereof.
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12. Article 2 of the principal Act shall be amended as follows:

(a) immediately after the definition "financial period", there shall be inserted the following definition:
" "international mediation" shall include cross- border disputes of a civil and commercial nature except as regards rights and obligations which are not at the parties’ disposal under the relevant applicable law, and other disputes which national legislation may provide from time to time. It shall not extend, in particular, to revenue, customs or administrative matters or to the liability of the State for acts and omissions in the exercise of State authority (acta iure imperii);";
(b) for the definition "mediation", there shall be substituted the following definition:
" "mediation" means a structured process, however named or referred to, whereby two or more parties to a dispute attempt by themselves to reach a voluntary agreement regarding their dispute with the assistance of a mediator. This process may be initiated by the parties or suggested or ordered by a court or prescribed by national legislation;";
(c) for the definition "mediator", there shall be substituted the following definition:
" "mediator" means any third person who is asked to conduct a mediation in an effective, impartial and competent way, regardless of the denomination or profession of that third person in the Member State concerned and of the way in which the third person has been appointed or requested to conduct the mediation;"; and
(d) immediately after the definition "mediator", there shall be inserted the following definition:
" "Member State" means any one of the Member States of the European Union with the exception of Denmark;".

13. Paragraph (j) of article 5 of the principal Act shall be substituted by the following paragraph:

"(j) to encourage, by any means which it considers

Amendment of article 2 of the principal Act.

Amendment of article 5 of the principal Act.

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Amendment of article 6 of the principal Act.

Amendment of article 15 of the principal Act.

Addition of new articles to the principal Act.

appropriate, the development of, and adherence to, voluntary codes of conduct by mediators and organizations providing mediation services, as well as other effective quality control mechanisms concerning the provision of mediation services; moreover it shall encourage the initial and further training of mediators in order to ensure that the mediation is conducted in an effective, impartial and competent way in relation to the parties;".

14. Article 6 of the principal Act shall be amended as follows: (a) the present article shall be re-numbered as sub-

article (1) thereof; and
(b) immediately after sub-article (1) thereof, as re- numbered, there shall be added the following new sub-article:
"(2) The Board shall not act unless a quorum consisting of not less than three members is present.".

15. Immediately after sub-article (2) of article 15 of the principal Act, there shall be added the following new sub-article:

"(3) The Centre shall be exempted from any liability for the payment of income tax and duty on documents under any law for the time being in force.".

16. Immediately after article 17 of the principal Act there shall be added the following new articles:

"Cross-border dispute.
17A. (1) A cross-border dispute shall be one in which at least one of the parties is domiciled or habitually resident in Malta and the other party is domiciled or habitually resident in another Member State on the date on which:
(a) the parties agree to use mediation after the dispute has arisen;
(b) mediation is ordered by the court;
(c) an obligation to use mediation arises under national law; or
(d) for the purposes of article
17(b) a decree or order by a court or other adjudicating authority is made to the parties.
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Enforceability of agreements resulting from mediation.

Cap. 12.

(2) Notwithstanding the provisions of sub-article (1), for the purposes of confidentiality and limitation and prescription periods, a cross-border dispute shall also be one in which judicial proceedings or arbitration following mediation between the parties are initiated in Malta or another Member State other than the Member State in which the parties were domiciled or habitually resident on the date referred in sub-article (1)(a), (b) or (c).
(3) For the purposes of sub-articles (1) and (2), domicile shall be determined in accordance with Articles 59 and 60 of Council Regulation (EC) No 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
17B.(1) (a) The parties, or one of them with the explicit consent of the other, may request that the content of a written agreement resulting from mediation be made enforceable subject to the provisions of the Code of Organization and Civil Procedure.
(b) The content of such an agreement shall be enforceable unless, in the case in question, the content of that agreement is contrary to national law.
(2) The content of the agreement may be made enforceable by a court or other competent authority in a judgment or decision or in an authentic instrument in accordance with the law of the Member State where the request is made.
(3) Nothing in this article shall affect the rules applicable to the recognition and enforcement in another Member State of an agreement made enforceable in accordance with sub-article (1).".

17. Article 20 of the principal Act shall be amended as follows:

(a) in sub-article (1) thereof, for the words "may apply to the registrar" there shall be substituted the words "shall apply to the registrar"; and

Amendment of article 20 of the principal Act.

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(b) immediately after sub-article (2) thereof, there shall be8added the following new sub-article:

Amendment of article 21 of the principal Act.

"(3) If a mediator declines a request he shall notify the registrar accordingly within fifteen days from the date of the request.".

18. Article 21 of the principal Act shall be amended as follows:

(a) sub-article (2) thereof shall be substituted by the following new sub-article:
"(2) If a mediator becomes aware of any fact described under sub-article (1)(a) after accepting a mediation, the mediator shall disclose it to the parties as quickly as practicable."; and
(b) immediately after sub-article (2) thereof, there shall be added the following new sub-articles:
"(3) After the disclosure of any fact under sub- articles (1) or (2), a mediator shall decline to mediate unless all the parties give him their express consent to proceed with the mediation.
(4) Where a mediator deems that there is a conflict of interest giving rise to the slightest reasonable doubt as to the integrity of the process, the mediator shall decline to proceed regardless of the consent of the parties to the contrary.

Amendment of article 22 of the principal Act.

(5) If a mediator declines to mediate, a new or substitute mediator shall be appointed or chosen pursuant to the procedure provided for in article 20.".

19. Article 22 of the principal Act shall be amended as follows:

(a) in sub-article (1) thereof, for the words "Any mediator may be challenged" there shall be substituted the words "A mediator may be challenged by any mediation party"; and

Amendment of article 23 of the principal Act.

(b) sub-article (4) thereof shall be deleted.

20. Article 23 of the principal Act shall be amended as follows:

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(a) in sub-article (1) thereof for the words “article 21”
there shall be substituted the words “articles 21 or 22(2)”; and
(b) in sub-article (4) thereof, for the words "the challenged mediator" there shall be substituted the words "a mediator in substitution of the challenged mediator".

21. In article 24 of the principal Act, for the words "article 21" there shall be substituted the words "article 20".

22. In sub-article (1) of article 27 of the principal Act, for the words "and may not be compelled in any proceedings." there shall be substituted the words "and may not be compelled in any proceedings:", and immediately thereafter there shall be added the following proviso:

"Provided that disclosure of the content of the agreement resulting from mediation shall be permitted -
(a) where this is necessary for overriding considerations of public policy of the Member State concerned, in particular when required to ensure the protection of the best interests of children or to prevent harm to the physical or psychological integrity of a person; or
(b) where such disclosure is necessary in order to implement or enforce that agreement.".

23. Immediately after article 27 of the principal Act there shall be added the following new article:

Amendment of article 24 of the principal Act.

Amendment of article 27 of the principal Act.

Addition of new article to the principal Act.

"Effect of mediation on limitation and prescription periods.
27A. (1) The parties who choose mediation in an attempt to settle a dispute shall not subsequently be prevented from initiating judicial proceedings or arbitration in relation to that dispute by the expiry of limitation or prescription periods during the mediation process.
(2) The provisions of sub-article (1) shall be without prejudice to provisions on limitation or prescription periods in international agreements to which Malta and the other Member State concerned may be party.".
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Amendment of the Code of Organization and Civil Procedure.

Cap. 12.

Amendment of article 253 of the Code.

PART III

24. (1) This Part amends the Code of Organization and Civil Procedure, and it shall be read and construed as one with the Code of Organization and Civil Procedure, hereinafter in this Part referred to as ''the Code''.

(2) The provisions of this Part shall come into force on such date as the Minister responsible for justice may by notice in the Gazette appoint, and different dates may be so appointed for different provisions and different purposes thereof.

25. In paragraph (e) of article 253 of the Code, for the words "the right given to him by this proviso." there shall be substituted the words "the right given to him by this proviso;", and immediately thereafter there shall be added the following new paragraph:

"(f) mediation agreements made enforceable by the parties thereto in accordance with the provisions of the Mediation Act.".

Objects and Reasons

The objects of this Bill are to update the provisions of the Arbitration Act, to allow for the removal of arbitrators and the right of appeal in mandatory arbitrations, to update the provisions of the Mediation Act, to allow for more transparency in the mediation process, and to transpose into national legislation the provisions of Council Directive 2008/52/EC of 21 May 2008 regarding mediation in cross-border civil and commercial matters.