Is mediation a viable option for resolving international disputes?

TABLE OF CONTENT

LIST OF ABBREVIATIONS

LIST OF TABLES, GRAPHS AND CHARTS

CHAPTER 1
1.1 INTRODUCTION

CHAPTER 2 PRACTICE OF MEDIATION
2.1 MEANING OF MEDIATION
2.2 THE ROLE OF THE MEDIATOR

CHAPTER 3 HOW DOES MEDIATION WORK?
3.1 COMMENCING THE MEDIATION PROCESS
3.2 DEFINING ISSUES AND SETTING THE AGENDA
3.3 UNCOVERING HIDDEN INTERESTS OF THE DISPUTING PARTIES
3.4 GENERATING OPTIONS FOR SETTLEMENT
3.5 ASSESSING OPTIONS FOR SETTLEMENT
3.6 FINAL BARGAINING AND SETTLEMENT

CHAPTER 4 PROS AND CONS OF MEDIATION
4.1 MEDIATION COMPARED TO ARBITRATION
4.2 LIMITATIONS OF MEDIATION

CHAPTER 5 CONCLUSION

REFERENCES
PRIMARY SOURCES
1.1 International Decisions
SECONDARY SOURCES
2.1 Books
2.2 Articles
IN A PERIODICAL
2.3 OTHER

LIST OF ABBREVIATIONS

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LIST OF TABLES, GRAPHS AND CHARTS

FIGURE 1: CASES MEDIATED BY CEDR... page 17

FIGURE 2: STATISTICS OF CASES MEDIATED BY CEDR.page 17

CHAPTER 1

1.1 INTRODUCTION

In everyday business relations, conflicts are bound to arise as a result of disagreements, misunderstanding and breaches of contract. The way and manner by which conflicts are managed remains a crucial issue in any organisation.

In every country, there are a substantial number of foreign investors who have made significant capital commitments and have entered into several contracts with local companies and government agencies. When disputes arise, managers of organisations want such disagreements dealt with in an effective and timely fashion with the least possible risk and cost implications for the organisation.

Normally, contracts provide for a cooling-off period in the event of disputes arising as well as provisions for negotiation, mediation and eventually the more legal means of arbitration and litigation can be pursued to settle disputes. Arbitration, being a dispute settlement mechanism that is more like litigation is adversarial, costly and likely to disrupt or affect long term business relations^[1].

This brings us to the issue of mediation. Is mediation, a dispute settlement mechanism which involves a neutral third party intervening to help the parties voluntarily reach an amicable settlement^[2] a viable option for conflict management? In national judicial systems, mediation is recently gaining prominence with ADR centres being established alongside local courts. In the international sphere, the understanding and exploration of mediation as a strategy for resolving disputes can bring about an enhancement of stability in commercial and investment relations as shall be discussed in this paper.

This paper will also discuss the mediation process by exploring the stages involved in the process as well as the role of the mediator. It shall be argued that mediation, if explored, is a more effective means of settling disputes in comparison to arbitration or litigation.^[3]

The process of mediation involves the parties themselves, as active participants sitting down together, in a friendly atmosphere, under the guidance of the mediator to attempt to reach a settlement. The mediator also engages in separate caucusing with the parties to gain more information (in confidence) from the parties which they might not want to disclose to each other^[4]. As shall be discussed, therefore, mediation is a more thorough system of understanding disputes. The whole mediation process is voluntary and if a settlement is reached, it will be based on the parties’ terms, not one imposed by a judge or a panel of arbiters.

It must, however, be noted that not all cases are best suited for mediation. It is also worth noting that disputes that are resolved through mediation are not normally published; accurate statistics regarding the success or otherwise of mediation practice cannot be said to be readily available.

CHAPTER 2
PRACTICE OF MEDIATION

2.1 MEANING OF MEDIATION

Mediation is the intervention into a dispute by an impartial and neutral third party (with the consent of the parties involved in a dispute) who has no authority to decide on the issues in dispute but to assist the parties in voluntarily reaching a mutually acceptable settlement.^[5]

Where parties to a dispute are unable to resolve disagreements through negotiations, a third party neutral, either by invitation of one or more of the parties, or through his or her own initiative, may step in to act with both parties in an attempt to reach an amicable settlement.^[6] Where the third party neutral only acts to encourage the parties to come to the negotiating table, he is said to be utilising his or her good offices in an attempt to help the parties resolve a dispute. Good offices, quite like mediation is, therefore, a branch of negotiation, the difference being that the mediator plays a more active role of suggesting proposals to the parties for possible settlement.^[7]

Mediation gives the parties the option to either accept or reject the settlement proposals at the end of the process which is an advantage to disputing parties as they are granted control over the process.^[8] The parties also have a choice of reaching a negotiated settlement even before the mediation process is concluded. Most importantly, however, is the fact that mediation is confidential and thus not open to public scrutiny. The parties are thus assured of the discreetness of information disclosed and discussed during the mediation process.

The mediator may be an individual, a state or even an international organisation.^[9] The Iran/USA hostage dispute for example was resolved through mediation pursued by Algeria, a move that might have averted a potential war.^[10]

2.2 THE ROLE OF THE MEDIATOR

The assistance of third parties to resolve commercial and investment disputes is well recognised as in other arenas of conflicts such as family and labour related disputes. In many national judicial systems, judges may request parties to mediate on certain cases where such cases are suited for mediation. In international commerce, however, arbitration seems to be the favoured means of resolving disputes. Since mediation is a very well established avenue for resolving domestic disputes in modern times, can parties to an international conflicts transfer this success to their disputes.

The arbitration process is quite similar to the court process. The arbitrator takes submissions from the parties and issues an award based on the merits of the counsels’ submissions. The mediator on the other hand plays a more pro-active role. He looks to the parties interests, finds out and explains to parties each other’s point of argument. The mediator is not restricted by any constraints, as he can attempt to understand the parties’ prejudices, go behind an organisation’s internal politics (where the organisation is a party to a dispute) and examine cultural biases.^[11]

A highly skill mediator will encourage the parties to open up during caucusing and explain their side of the story thoroughly and even indicate areas which they feel they can make compromises. In arbitration, none of the parties is really interested in saying what exactly happened leading to a dispute, but in mediation, the mediator can make the parties feel comfortable to disclose information which they will otherwise be reluctant to discuss.^[12]

[...]

^[1] Frank, S.D., Integrating Investment Treaty Conflict and Dispute Systems Design, 92(1), Minn. Law Rev., p 161- 230 (2007).

^[2] Christopher, W., Moore, The Mediation Process, p 14 (1st ed), ( Boulder, Colorado, USA: Jossey-Bass Inc. Publishing, 1986).

^[3] Walde, T.W., Mediation/Alternative Dispute Resolution in the Oil, Gas and Energy Transactions: Superior to Arbitration/ Litigation from a Commercial and Management Perspective, 2, OGEL (2003) www.ogel.org. ( last visited on 3/1/2009 ).

^[4] Savun, B., Information, Bias, and Mediation Success, 52(1), Int. Stud. Quart., p25-47 (2008).

^[5] Supra at note 2.

^[6] Jacob, B., Resolving International Conflicts: Theory and Practice of Mediation ( Boulder, Colorado, USA: Lynne Riener publications, 1996).

^[7] Merrills, G., International Dispute Settlement , p 27 (3rd ed) (Cambridge, UK: Cambridge University Press, 2002).

^[8] Ibid at p 28.

^[9] Lawrence, F., Signals of War. The Falklands Conflict of 1982 (Princeton, New Jersey, USA: Princeton University Press, 1991)

^[10] Supra at note 7.

^[11] Walde, T.W., Pro-active Mediation of International Business and Investment Disputes Involving Long-term Contracts: From Zero-Sum Litigation to efficient Dispute Management, vol . 4, OGEL (2003), www.ogel.org. (last visited on 4/1/2009).

^[12] Ibid.