Features
How smart is it to litigate to be proven right?
By Dhara Wijayatilake
(Continued from yesterday)
The CCC- ICLP International ADR Centre of Sri Lanka (IADRC)
In 2018, the Ceylon Chamber of Commerce (CCC) and the Institute for the Development of Commercial Law and Practice (ICLP) in a joint venture, incorporated a not for profit company and established a new Centre, the CCC-ICLP International ADR Centre (IADRC) to provide ADR services. It was a response to the need of the business community for more efficient dispute resolution. The novelty of the new Centre is that it offers mediation services in addition to arbitration.
Both Institutions were aware of the global trends that favored ADR and the successes of Regional Centes. The Hong Kong International Arbitration Center (HKIAC) established in 1985, the Singapore Mediation Centre (SMC) launched in 1997, the Indian Institute of Arbitration and Mediation (IIAM) established in 2001, the International ADR Centre of the Indian Merchants Chamber (IIMC) established in 2015 and the Malaysian Mediation Center (MMC) established in 1999 under the auspices of the Bar Council of Malaysia, offered inspiration. These centres offered services that included Arbitration and Mediation. The Singapore Mediation Centre states that, as at Feb 2022, it has mediated 5,200 matters worth over $10 billion since its launch. The rate of successful mediations is stated to be 70% with 90% of those having been settled in one day! The high rate of success can be attributed to the skill and competence and the professionalism of the Mediators. Compliance with the mediation process and using the special skills and techniques are key to achieving good outcomes and hence the absolute need for training.
The IADRC launched its Arbitration and Mediation Rules in April 2021 and has trained Mediators and Arbitrators who are available to provide services. The Arbitration Rules of the Center seek to eliminate some of the common causes for delay. It’s the only Centre that offers institutionalised Mediation for commercial dispute resolution. Arbitration and Mediation services can be administered in compliance with these Rules of the Centre, or the UNCITRAL Rules, or any others that may be adopted on an ad hoc basis.
The Mediation Rules of the IADRC
To commence the Mediation, an application (a “Request for Mediation”) must be made to the Center either by one party or jointly by all disputing parties, requesting Mediation services for the settlement of the dispute.
After completing preliminary administrative steps, such as obtaining, where appropriate, the consent of all parties to pursue Mediation, the parties are required to sign the “Agreement to Mediate”. This Agreement includes an obligation to “abide by and comply with the Mediation Rules of the Centre or other Rules that have been agreed to.”
The language of the Mediation will be as agreed to, by the parties.
The next step is to appoint a Mediator or a panel of Mediators. The disputing parties have the discretion to nominate a Mediator from among those accredited by the Centre or from outside of that list. Usually, a Mediation will be handled by a single Mediator. However, a panel could be appointed if so desired, where there are complex issues in a dispute.
Importantly, the Mediator has to be independent, impartial and neutral throughout the process. Several safeguards are included to ensure compliance with this principle.
The Mediation sessions then commence. The Mediator manages the process and will, for this purpose convene sessions on dates and times agreed to by the parties, at a neutral venue.
The process will commence with a joint session where all parties are present. The Mediator will explain the principles that apply and explain the process. Thereafter the Mediator will decide when to have joint sessions with all parties, and individual sessions (called a “caucus”) with each party.
At these sessions, the parties have the opportunity to discuss the matters, in dispute, from their own perspective. The statements, disclosures and proposals made at a Mediation are maintained in absolute confidence and are made without prejudice. This principle provides the confidence to disputing parties that nothing said can be used in any other dispute resolution process or other forum. The Mediator and the parties cannot be compelled to give evidence as to any matters disclosed at the Mediation in a court of law.
The Rules set out the obligations of the parties – attendance at the sessions in person and in the case of corporate entities attendance through a representative who is given full authority to sign off on a Settlement Agreement; compliance with the rule on confidentiality; full and honest disclosure of matters material to the dispute.
Parties are not entitled to legal representation at the sessions but may call in a Lawyer for the sole purpose of obtaining advice. However, a Lawyer who is a full time employee of a corporate is not excluded from participating at the sessions on behalf of a corporate entity.
During these sessions, a Mediator will not give directions or instructions on how to settle the dispute. The Mediator will however question the parties in a non coercive manner to help them reach a new understanding of the issues in dispute and of the concerns of the other party.
A Mediation is terminated either with an agreement to settle or with an agreement that no settlement is possible.
Where there is an agreement to settle, the Mediator is required to explain to the parties the terms and conditions of the settlement and the obligations that each party is assuming under the agreement. A settlement Agreement will be set in writing and signed by the parties and the Mediator. This is an agreement that binds the parties as any other agreement, and each party has a legal obligation to honour its terms and conditions.
Where the Mediator determines that continuing the Mediation is futile since it’s unlikely to result in a settlement considering the progress of the Mediation, or where a party informs that it wishes to withdraw from a Mediation, the Mediation will be terminated.
In either event, all the documents submitted to the Centre by each party will be returned.
In normal circumstances a mediated agreement should stand the test of time since many steps have been taken to ensure it’s sustainability. However, the Rules provide for an application to be made to revise or revoke an Agreement on very limited grounds, ie. On the grounds that a) the terms were agreed to, without a proper appreciation of the obligations; or b) circumstances have arisen that prevent a party honouring the obligations; or c) that there was bias on the part of the Mediator. The last ground is most unlikely given the several steps that are required to be taken to ensure impartiality. However, this ground is included as a principle of good governance since it’s a vital feature of Mediation. An application to revise or revoke will be inquired into by the Centre and a settlement will be attempted in compliance with the same principles that apply to a Mediation.
Mediation is not an expensive process. However there are fees to be paid. The Fees for a Mediation include Administration fees as well as fees for the Mediator/s. The fees are prescribed by the Centre in a Fee Schedule and will be a predetermined sum which will be made known to the parties prior to the commencement of the Mediation. There will be no surprises.
Conclusion
Mediation is not the most appropriate method of dispute resolution for all categories of disputes. That’s accepted. Even with the twin evils of delay and expense certain causes of action need to be determined by a court of law. Mediation, however, has gained global recognition as the better method for many kinds of disputes ranging from family and workplace disputes, to construction and commercial disputes.
Given the potential to be speedy and cost effective, and the high level of user satisfaction, the services provided by the CCC-ICLP IADR Center will no doubt improve the commercial dispute resolution landscape in Sri Lanka. It will also contribute to improve Sri Lanka’s performance in the contract enforcement indicator in the Doing Business rankings.
The enactment of domestic legislation to enable the enforcement of international mediated settlement agreements in line with the Singapore Convention will also certainly enhance Sri Lanka’s efforts to attract foreign investors. The slogan “Mediate, don’t litigate” is gaining in popularity given the reality that it’s not always smart to litigate to be right.
(Concluded)