The Enforcement of International Mediation Settlement Agreements

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The Enforcement of International Mediation Settlement Agreements

The data from the GPC commercial dispute resolution survey so far has revealed a widespread belief that a better enforcement system is required in international mediation. This begs the question - what's wrong with the system we have today?

When asked which area of commercial dispute resolution had the most room for improvement the delegates participating in the survey voted decidedly in favour of legislation and conventions to promote enforcement of mediation settlement agreements.

 

GPC Mediation Survey

Second and third place went to cost sanctions and protocols to promote ADR. This result can probably be explained by the fact that many nations around the world have already introduced such measures to varying degrees. International enforcement, on the other hand, remains largely neglected. 

 

The Current Patchwork System 

The current system involves a patchwork of national measures and litigious enforcement, which often requires complex contractual arrangements to escape.

In the absence of regulation, a typical international mediation settlement agreement will have to be enforced through the normal court system, or through arbitration. This brings with it further costs and hassle.

One of the key benefits of mediation is the efficiency and cost-savings that result from the parties avoiding such adversarial measures.  Of course, in many cases the parties will voluntarily comply with a mediated agreement. However, when one party decides not to fulfil it's obligations,  more time and costs are wasted. 

To get around this, some states have introduced measures that allow for expedited enforcement. For example, Switzerland allows for the parties to apply for the court to 'approve' their agreement so that it becomes enforceable like a court judgment. In Italy, mediated settlement agreements can become immediatley enforceable as a court judgment if certain requirements are met (e.g. the mediator is officially registered with the Italian Ministry of Justice). 

These are limited in scope, however, and will all turn on the precise terms of the varying national rules. 

 

Arbitration and Consent Awards

Unlike mediation, arbitration does have a system of expedited enforcement in place under the New York Convention. The Convention requires signatory states to enforce an arbitration award as if it were a judgment handed down by its own courts, subject to only very limited exceptions.  At the time of writing, the New York Convention has been signed by 157 states, meaning it applies in virtually every significant jurisdiction. 

In order to take advantage of this, it is common practice in international mediation to have an arbitrator confirm the terms of the settlement in a 'consent award', which is then generally enforceable under the New York Convention as implemented in most national legislation. 

Although this can help resolve the problem, it is unnecessarily complicated. For example, under an ordinary reading of the New York Convention, there must be a 'difference' between the parties for the arbitration to commence. If you have already settled your dispute through mediation, there is no longer a difference, and so you cannot simply convert your mediated settlement agreement into an arbitration award. 

It is therefore generally necessary to commence the arbitration first. You can then immediatley adjourn the arbitration, mediate the dispute, and then go back to arbitration for the consent award. This is known as arb-med-arb, and is as unnecessarily complicated as it sounds. 

  

Towards a New York Convention on Mediation

UNCITRAL has been working on a similar convention for the enforcement of international medation settlement agreements for several years now. As yet, no draft of any kind has been produced, and it is unclear what form this convention will take. Although to most mediators this idea may seem eminently sensible, some stakeholders are opposed to the idea. 

One reason given is that a mediated settlement is little different to a negotiated settlement. Why should mediation be afforded special status? Perhaps part of the problem is the relative lack of mediation regulation.

Greater rigour in mediation standards could help justify such a convention, as it would help ensure that due process has been done and that nothing in the agreement is immoral or otherwise contrary to public policy. This would distinguish it from a regular negotiated settlement.

Whether we shall see a New York Convention on Mediation any time soon remains uncertain, but the results of the GPC survey suggests that demand for such a measure is growing. In the meantime, international dispute resolution professionals will have to make do!

 

Multi-Tiered Dispute Resolution Online Course

To learn more about arb-med-arb and other forms of multi-tiered dispute resolution (MDR), click the big green button and you'll be transported to Mediator Academy's online CPD course delivered by none other than Professor Nadja Alexander. It takes only an hour to complete and includes video tutorials, transcriptions and a multiple choice quiz to test your knowledge.

The course is suitable for Mediators and other conflict professionals and delves into some legislative provisions, some case law from different parts of the world, and finally covers some principles for designing multi-tiered dispute resolution procedures.

After completing the course you will:

1. Be introduced to key features and examples of MDR processes

2. Learn when different combinations are suitable for a dispute

3. Understand how regulation impacts MDR choices

4. Appreciate the opportunities and risks involved in MDR

5. Begin to be able to design your own MDR processes.

 

Learn all about Multi-Tiered Dispute Resolution

 

Topics: International Mediation

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