Mediation, do you want to know the latest status?

Introduction

On 06/02/2019, I participated to an event organized by the Young Members Group of CIArb named “Arbitration & Mediation at a Crossroads”. The event was very interesting, especially to reflect on the positioning of mediation within the spectrum of dispute resolution methods. Thanks to the organizers and the panel members.

The presenters and panel members came from nicely distribution origins, both on professional background (institutions, companies, law firms) and countries of origin (reflecting different practices in Europe – notably France, UK, Greece, Germany).

The panel members were:

• Alina Leoveanu – Manager, International Centre for ADR, ICC
• Eugenia Saridou – Partner, K. Konnidas & Associates; Partner, Dialogos – Family & Commercial Mediation
• Diana Bowman – Legal Manager at VINCI Energies International & Systems
• Martin Hauser – Partner, BMH Avocats
• Peter Rosher – Partner, Reed Smith

The moderators were:

• Athina Fouchard Papefstratiou, MCIArb – Counsel, Eversheds Sutherland
• Alexander G. Leventhal, ACIArb – Senior Associate, Quinn Emanuel

Here are my main take-away’s that could be useful for the readers of this blog.

Shift in society impacting mediation

According to the panel, companies are – more and more – motivated to stay out of litigation and arbitration. In general, society is moving from a hierarchical decision-making process, a few decades ago, to a negotiation environment, pushed by flatter organizations. Companies prefer nowadays to resolve – as much as possible – their disputes through negotiation. This is especially true when parties wish to maintain relationships and keep their disagreement out of the limelight. When direct negotiations are not successful, a mediator will be called in.

Optimal timing of mediation

In that context, some brainstorming was done around the optimal timing of mediation. Rather upfront of any arbitration, during the establishment of the arbitral tribunal or as suspension period within arbitration proceedings. ICC provides the relevant model clauses to be considered together with their Mediation Rules. 

As an outcome of this panel discussion, I consider that mediation should best be performed relatively early in the process. Before the dispute becomes too sour and the parties cannot properly communicate anymore. This is especially true because a mediation can:

• Have the parties really reflect on the dispute. Within a continuous flow of negotiations, hold-points, to reflect on the situation, are often missing;
• Remove any misunderstandings. As per the experience of some panel members, sometimes the dispute is purely around cultural misunderstanding;
• Enable the parties to acknowledge, early in the process, the other party’s strength of their case;
• Give an opportunity to the mediator (with the help of caucuses) to understand that an agreement is achievable and then motivate the parties to find common ground and settle.

Why should we use mediation when we can negotiate?

The panel also reflected on why not to leave out the mediator altogether, if he has no decision power, and stick to direct negotiations between the parties. Enough arguments where tabled to keep mediation as a credible ADR mechanism. To mention some:

• Parties, even with the best intentions, can get stuck. Having a neutral, third party at the table, really helps.
• The mediation meeting is a formal opportunity to have the people at-the-hart-of-the-conflict, from both sides, around the table. Prior to this event, they may not participate very actively in the discussions. And, further on in the dispute process, participation is very controlled anyway. The presence of such key people, looking together and exclusively at the problem, is one of the success factors for reaching settlements through mediation.

Should lawyers be present during mediation?

On the subject of whether the parties should be accompanied by their lawyers during mediation, the following was mentioned:

• British experience is that parties are looking to save costs and are willing to handle the mediation without (external) legal counsel. This is a view of mediation as assisted negotiation. It is especially the case for small and medium enterprises, who are best served by mediation.
• From the privileged viewpoint of ICC, mainly parties that recurrently rely on mediation are doing it without external legal counsel. This thanks to their accumulated experience.
• Lawyers can be useful for a mediator to confront the disputing parties with their BATNA, i.e. the cost estimation of not settling during mediation while hoping for a better outcome with litigation or arbitration.
• However, Lawyers should not take an active role during mediation, should not plead and should only preserve the rights and protect the interests of the party they are representing. Situations where a lawyer takes too much control over the process, were mentioned as cases not settling through mediation.

Singapore Mediation Convention

Expectations

Mediators, and most people favorable to this form of ADR, expect that the Singapore Mediation Convention will reinforce the interest in mediation. Currently, the number of cases has been growing each year but not as much as other forms of ADR and as could be expected from the above cited advantages. Because a mediation settlement is actually a mutual agreement, the chances of its implementation are high. However, companies seem to require some argument to provide for a mediation step. And, the overall dispute resolution process would be longer if no settlement is reached within this additional step. In that context, it is a much better argument for companies’ legal counsel that the (potential) outcome (i.e. the settlement agreement) will be enforceable rather than to just have to rely on the goodwill of the other party.

Objectives

The objective of the Singapore Mediation Convention is to facilitate the enforcement of international commercial settlement agreements resulting from mediation. On 26 June 2018, the final drafts of the Convention on the Enforcement of International Settlement Agreements and the corresponding Model Law were approved. The Convention will come into force after ratification by at least three member states. A signing ceremony is expected in Singapore later this year.

For the convention to apply, certain criteria have to be fulfilled. The party that wants to enforce a settlement agreement shall supply (i) the signed settlement agreement and (ii) evidence that the settlement resulted from mediation to the competent authority of the country where relief is sought. If you are interested, you can find more details by clicking here.

Other side topics

• One participant made the case for “standing mediation” in projects (similar to a standing DAB) referring to the CEDR Project Mediation Protocol. He did however not encounter much enthusiasm from the other panel members (joking that “we will re-discuss this topic in ten years”).
• What about compulsory mediation? It had some good results in Australia. The feeling is that, as long as the outcome is voluntary, it doesn’t matter that the process is mandatory.
• The pro’s and con’s of mediations through video conference were debated. The increased possibility to connect and temporarily disconnect parties and the mediator can bring some added value. When in the same room, parties are hesitant to caucus too frequently.

Some conclusions

Mediation, as an opportunity to settle quickly with the help of a third party and with low procedural costs, definitely has its place in the framework of dispute resolution measures. The future of mediation is likely to be bright with better enforcement of settlements (thanks to the Singapore Mediation Convention) while remaining in tune with a changing of society (with the shift to a “negotiation society”) and benefiting form new technology (for example, sophisticated video conferencing).

Click here to read other articles on dispute resolution on this blog.