Commercial mediation – a comparative review - 2013
This is a review of the availability and process of mediation in 21 jurisdictions across the Americas, Asia-Pacific and Europe.
Welcome to the second edition of Commercial Mediation – a comparative review, in which we look at the place of mediation across the globe. We are delighted to include, in this edition, new chapters on mediation in Australia, Indonesia and Vietnam, contributed by our associates in Australia, Allens.
Since the first edition of this review was published last January, a number of jurisdictions have taken steps to confirm the importance of mediation in their dispute resolution process. New legislation has been enacted in France, Germany, Luxembourg, Spain and Hong Kong, bringing into effect the EU Mediation Directive where relevant and dealing with specific aspects of domestic mediation procedure, such as confidentiality, and draft proposals are under consideration in Portugal. We have updated the review to include these new initiatives and report on how the practice of mediation is developing and growing in importance world-wide.
Mediation, in which a neutral third party assists parties to work towards a negotiated settlement, is an increasingly popular and accepted method of resolving disagreements across the international business world. It is principally used by parties locked in a dispute which must otherwise be fought out in litigation. Building on the effectiveness of the process, commercial contracts now often include an obligation on parties to attempt to solve any disputes by mediation before launching court or arbitration proceedings. Indeed, mediation is increasingly adopted during long term contracts, particularly in international infrastructure and construction contracts, where nominated mediators are brought in at short notice to help the parties move round problems which would otherwise delay or destabilise the project. As this indicates, mediation can be particularly useful where the parties wish to continue a business relationship which could be damaged by aggressive court or arbitral proceedings.
In most jurisdictions, the choice to engage in mediation remains entirely that of the parties – on the whole, courts do not have the power to force parties to enter into settlement negotiations. Some argue that the success of mediation relies on the willingness of parties to compromise their positions, so it would run contrary to the spirit of the process for unwilling disputants to be forced to enter into such discussions. Others disagree, and some studies indicate the settlement rate of enforced mediation is comparable to that of purely voluntary mediation. Judges are taking the view that parties should at least have attempted to settle their differences before resorting to court proceedings and courts are increasingly inviting parties to mediate before trial or appeal. Parties who refuse unreasonably may suffer costs sanctions.
In general, the terms of any settlement reached through mediation will be recorded in a written contractual agreement, enforceable as any other contract would be. That position has been enhanced recently for member states of the European Union under a new Directive. This enables a mediation settlement that complies with certain conditions to be treated in the same way as a court order for enforcement purposes. This new initiative may result in mediation becoming even more attractive, particularly for EU disputes.
Mediation is recognised throughout the commercial world, but there remain differences in how the process is operated in different jurisdictions and, in particular, in how far the legislature or court system will go to compel parties to mediate. This comparative review considers how mediation works across 21 jurisdictions. It asks, for each jurisdiction, the following questions:
- What is the position of mediation in this jurisdiction?
- How is a mediation conducted?
- Is there any obligation on litigants to mediate?
- Does the court have powers to support a mediation?
- Does failure to mediate attract adverse cost consequences?
- Are mediations confidential?
- How are settlement agreements enforced?
- Is there a system of accreditation and/or regulatory body for mediators?
This comparative review is intended to highlight issues rather than to provide comprehensive advice. If you have any particular questions about mediation, please contact the Linklaters lawyers with whom you work, or me. Linklaters has a strong interest in mediation and we consider using mediation and its techniques to assist our clients. I hope you find this review helpful – we are keen to spread the word that mediation is a cost effective and commercial approach to resolving disputes.
For more information please contact Katie Bradford, or your usual Linklaters contact.