It is not always inadmissible to bring an action despite a conflicting mediation clause. This was decided by the Higher Regional Court of Saarbrücken in a partial judgment on April 29, 2015 (case no. 2 U 31/14). The ruling was based on the following facts:
The parties to the legal dispute had concluded a franchise agreement which contained, among other things, a mediation clause with the following content:
“Any dispute, controversy or claim arising out of or in connection with this Agreement (including the creation, validity, binding effect, interpretation, performance, breach or termination of the Agreement as well as non-contractual claims) shall be resolved by mediation. Accordingly, both parties undertake to first reach a solution by way of mediation prior to any legal dispute. The mediation rules of the German Franchise Association, which are included as Annex 5 to the contract, apply to this mediation procedure. If no agreement is reached between the parties in the mediation procedure within a period of three months from the start of the mediation or if the mediator determines that the mediation has failed, legal recourse to the ordinary courts shall only be available from this point in time.
Excluded from this preliminary mediation procedure are all measures of a competition law nature which are to be asserted by way of interim legal protection due to the need for urgency or by way of an injunction, as well as undisputed payment claims of the franchisor.”
A dispute subsequently arose between the parties and the franchisor filed a lawsuit. The franchisee raised the objection of inadmissibility of the action before the case was heard and justified this with the mediation clause.
The OLG ruled that a corresponding mediation or arbitration clause could, in principle, prevent an action being brought and ultimately lead to an action being inadmissible. However, this does not apply if the defendants are excluded from raising the defense of the mediation clause “in accordance with the general principle of good faith that governs all civil law (Section 242 BGB).” In this case, the parties were involved in long and intensive settlement negotiations before the court, which ultimately failed.
The OLG argued as follows:
“Against the backdrop of these ultimately failed settlement negotiations, it is also not even remotely recognizable that the prerequisites for a promising mediation procedure, which requires cooperation based on mutual trust and the mutual will for an amicable settlement of the dispute, were still met with regard to the present proceedings – which incidentally followed the proceedings 8HKO 47/13 (= 2 U 30/14) in terms of time. Therefore, contrary to the view expressed by the first defendant, the plaintiff could not reasonably be expected to engage in pre-litigation mediation proceedings prior to the initiation of the present proceedings, also in view of the arguments last presented in the written submission of April 10, 2015, which was received after the oral hearing.”
Practical tip:
If the parties have agreed a mediation or arbitration clause and settlement negotiations are already taking place, mediation or arbitration proceedings should be initiated in good time under the direction of a neutral third party, before direct settlement negotiations between the parties threaten to fail.
Another option is for the parties to expressly state that mediation proceedings are not dispensable even if direct settlement negotiations fail, but that mediation proceedings must still be conducted as an (additional) prerequisite for the process.
You can find sample clauses here.
