THE PRIVATE INTERNATIONAL LAW OF COMMERCIAL MEDIATION

1 Most writings on mediation focus on the actual mediation process and the techniques that the mediator and the parties are to follow for settlement to be reached. In particular, such books tend to mainly focus on the mediator’s techniques and the lawyers’ “change of hat” from advocates to negotiators. And this is for good reason, as mediation is mostly a non-legal dispute resolution method. At the same time, the analysis of the law of mediation should not (and generally does not) go unnoticed, albeit usually as a peripheral matter. As stressed in this book, the law is indeed relevant, and in some respects even pivotal, to mediation. In this sense, it comes as no surprise that there also exists a good number of writings on the law of mediation, few of them however focusing on the international/comparative dimension of the law of mediation.

2 Nevertheless, to date, private international law in its traditional form, namely jurisdiction (or venue), applicable law and recognition/enforcement has not, to our knowledge, been examined in relation to commercial mediation, in a single book, under this particular structure and format. Analysing commercial mediation from a private international law angle is the theme and aim of this book. The central idea (and originality) of this book is to use the standard private international law textbook diagram set out above, adjusted to the needs of commercial mediation, and discuss the phenomenon of commercial mediation in this context. In this sense, this book consists of a general and a special part, or rather a macro-view and a micro-view chapter, the former aiming at setting the ground regarding the nature of mediation and its current international legal framework(s) and the latter discussing venue, applicable law and enforcement (just like any standard private international law hornbook). Both the general (macro-view) and the special (micro-view) parts are adjusted to the needs of commercial mediation and analyse its private international law aspects.

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3 More precisely, the macro-view part traces the roots of mediation, defines modern mediation, presents certain fundamental non-legal aspects of mediation (barriers to mediation and the role of the mediator). It then analyses the main legal aspects of mediation by introducing the theory of the ‘legal shell’ of mediation, presenting the relationship between mediation and Justice and introducing the theory of the special character of mediation as a dispute resolution method, and the correlated theory of the ‘hybrid’ legal nature of the mediated settlement agreement (‘MSA’). It further discusses the use of AI in mediation. Then it passes on to presenting the international legal framework of mediation and its international regulation by UNCITRAL and regional organisations, such as the EU and OHADA (Organisation pour l’ harmonisation en Afrique du droit des affaires). As a matter of a general disclaimer, it should be noted that much of what is said in the general part of this book is also applicable to other fields of mediation, beyond commercial.

4 The micro-view part starts with the discussion of venue and process of the mediation. It passes on to the acknowledgement of the fact that no forum exists in mediation and to the repercussions of this reality. It then explains in which ways mediation may commence, compulsory mediation included, it goes on with analysing the suspension of prescription times and then introduces the theory of the principles or directions of the mediation process (‘lex mediationis’) – and not mediation ‘proceedings’, a term that could be used if hard procedural rules were in place. It continues by studying the UNCITRAL initiatives regarding venue and process, namely the relevant model law and mediation rules. The second chapter of the special part focuses on the applicable law in the various contracts that constitute what we call the ‘legal shell’ of mediation. The third chapter is the one on enforcement, offering an extensive analysis of the theory behind enforcing MSAs internationally, a clear distinction between direct and cross-border enforcement and a thorough discussion of the Singapore Mediation Convention (the ‘Singapore Convention’). This chapter finishes with a presentation of the European Union model of cross-border enforcement, which is very interesting given its particularity and special character, and it concludes with a short review of the potential enforcement of MSAs under the New York Convention.

5 The idea of this book was born gradually, following the publication of three articles on aspects of international mediation with leading international law reviews. At some point, a (previously unexpected, but definitely joyful)

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6 Given the above and the fact that the international community is trying to boost mediation, both globally through the adoption of a model law and a convention that shall regulate international enforcement and regionally through similar initiatives, and also given that mediation gives rise to a series of interesting private international law issues, the answer to the question “why this book?” ultimately becomes all the more clear.

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7 Mediation is a very popular ADR method, being the oldest yet also newest form of dispute resolution. Indeed, its roots can be traced back to civilisations which developed in different places and times, such as the Greek, the Chinese and the A-

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8 Currently, in the Western world and starting from the US, where it is commonplace that mediation – in its modern version – was first used in relation

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9 The development of modern conflict theory which, as said “is derived, in the first instance, from Cold War theories of conflict, while assumptions of scarcity, bilateralism, competition, strategic (non-direct) communication and adversarial decision-making” gave a further boost and a particular character to modern mediation. Interestingly, from a legal practice standpoint, during the first years of its modern re-genesis, mediation was considered to be primarily auxiliary to arbitration, rather than a standalone dispute resolution method. In mediation,

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10 Of course, the US/western model of mediation is not the only one in the world. It must be reminded that in many non-Western societies, self-determination is

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11 As is well documented by many authors, mediation in its western model is an obvious expression of party autonomy and self-determination. This is also obvious in the context of cross-border dispute resolution where, as is rightly said, “Cross-border dispute resolution has been growing in diversity, driven in no small part by the parties’ increasing desire to exercise self-determination in resolving conflicts”. Indeed, self-determination is a central element both in the Singapore Convention and the UNCITRAL Model Law even though self-determination and the limits thereof are treated in a non-unitary way in the various legal traditions. What should be kept in mind at this point is that in mediation, party autonomy is expressed through the self-limiting right to participate in the mediation process and reach a self-binding agreement, an approach that goes well-beyond self-determination in contract law and is different to self-determination in international arbitration where the outcome is one of juridical dispute resolution and not of amicable settlement as it is in mediation.

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12 Both quantitative and qualitative benefits are said to arise from the use of mediation. In quantitative terms, mediation offers a cheaper, quicker and more efficient alternative to juridical resolution, while in qualitative terms it ensures an improved communication between the parties and in this sense, it offers the parties the opportunity to reorient themselves towards each other and to change the way they view their relationship. In this context, the mediator can use multiple tools and techniques that are suitable to the different structures and forms a conflict may take. Conflict theory includes considerations of political theory (how conflicts have been used for both social control and social change), economics, decision science, game theory, planning theory and practice, and anthropology and cultural analysis, while conflict professionals must have some rudimentary training in psychology, communication, management and the facilitative “arts”. Of course, the legal aspects of mediation also call for legal training of the mediator. A relevant element of central importance in mediation is the ethics of mediation which includes conflicts of interest, malpractice and competence, responsibility for unequal bargaining power, relations to those not at the table, responsibility (legal or moral) for outcomes reached, cross-cultural mediation issues, confidentiality, witnessing and evidence provision, as well as agreement drafting responsibility.

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13 Research shows that while the inefficiencies of the justice systems may push mediation, it is the advantages of time and money that offer the main boost to mediation. Also, mediation ensures more party involvement in the running of the dispute resolution process, it addresses more than one issue, and offers a rather holistic approach to the disputed matters. Mediation is an informal and flexible process which can be tailored to accommodate the cultural, structural and commercial differences that may emerge in international dispute resolution, not to mention that privacy and confidentiality are better ensured in mediation in comparison to most litigation procedures. In terms of the actual outcome of mediation, the benefits are even more striking: it can create a situation with joint gains that parties can achieve together, it can satisfy the underlying interests of the parties and it can assist parties to avoid win-lose outcomes that are akin to juridical resolution. As discussed in Anna Howard’s book, which is based on a recent survey on cross-border mediation in the EU, the major advantages of mediation for the legal advisors of parties to it are (a) the preservation of relationship of the parties, (b) cost and time savings, (c) the overall satisfaction

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14 Seen from a different perspective and not from a purely juridical angle, mediation is an alternative to negotiation, not to courts. Mediation is generally accepted to assist parties to tell their story and contribute to determining the outcome of the dispute in question. Everyone can benefit from mediation in that it allows for the elaboration of a unique solution, often a ‘custom-made’ rather than a predefined one, based on purely legal premises. In this context, it should be noted that the majority of studies have indeed shown that mediated cases have a higher settlement rate than non-mediated ones. Notwithstanding the above, mediation is not free of risks and limitations, especially in the international scene. The lack of finality and the uncertainty in relation to enforceability are identified as its main shortcomings, although the latter is gradually mitigated by the introduction of international legal instruments regarding enforcement of MSAs, such as the Singapore Convention. Looking forward, the three factors that are most likely to make parties use international commercial mediation are: better information about the effectiveness of the procedure; better information about the conduct of the procedure; and better information about the cost of the procedure.

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15 In his lecture at the Hague Academy already in 1980, A T Von Mehren presented two major principles in international adjudication, that is, correctness and repose, the former aiming at ensuring a fair solution and the latter aiming at ensuring that the judicial systems are not overburdened unjustifiably. Or, where he presented the distinction between ideal and practical justice, the former seeking rules and principles that are correct in some ultimate philosophical or ethical sense and the latter focusing on administration and reduced transaction costs, sometimes having the result of accepting solutions based on incomplete or misapprehended facts. Noteworthy in the same context are the remarks of K D Kerameus in his own Hague Academy lecture, where he argues that modern Justice is mostly in pursuit of limiting the time spent, rather than in pursuit of the correctness of the results.

16 Clearly, mediation is not adjudication, and the mediator does not perform any judicial role. Nevertheless, it is a dispute resolution mechanism with some ‘finality’, not in relation to the satisfaction of a certain right, but in relation to the final and conclusive resolution of a dispute based on the assent of the parties to it. On top, the fact that such agreements can be enforced, both under the Singapore Convention of 2019 on the enforcement of mediated settlement agreements as well as under other regional arrangements, like the ones of the EU and the OHADA, grants them an even stronger element of finality (with the – significant – exception

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17 A particular type of mediation is the so-called court-annexed mediation, which is generally directed and/or organised and/or followed by a court, and its outcome in principle takes the form of a domestic judgment decision. Court-annexed mediation may have different dynamics than mediation prior to court. This is the

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18 If one were to try and define mediation, the definition used in Art 3(a) of the EU Mediation Directive seems to be a broad, all-encompassing and for that matter adequate and convincing one: “A structured process, however named or referred to, whereby two or more persons to a dispute attempt by themselves on a voluntary basis, to reach an agreement on the settlement of their dispute with the assistance of a mediator.” The same is true for the definition given in the UNCITRAL Model Law, according to which “For the purposes of this Law, ‘mediation’ means a process, whether referred to by the expression mediation, conciliation or an expression of similar import, whereby parties request a third person or persons (‘the mediator’) to assist them in their attempt to reach an amicable settlement of their dispute arising out of or relating to a contractual or other legal relationship”. For its part, Art 3(4) of the Singapore Convention stipulates that “‘Mediation’ means a process, regardless of the expression used

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19 Of course, these definitions do not address the question of ‘who can act as a mediator’. This is addressed in Art 3(b) of the Mediation Directive, which provides that “Mediator means any third person who is asked to conduct a mediation in an effective, impartial and competent way, regardless of the denomination or profession of that third party in the EU Member State concerned and of the way in which the third person has been appointed or requested to conduct the mediation”. Another helpful definition is the one resulting from the deliberations of the UNCITRAL working group on mediation, according to which mediation is an ADR method that involves “a person or panel of persons assisting the parties in an independent and impartial manner in their attempt to reach an amicable settlement of the dispute”.

20 Although there is a substantial volume of literature on the differences between mediation and conciliation, the UNCITRAL Working Group II recently chose to switch from the term ‘conciliation’ to the term ‘mediation’ in the context

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21 Another terminological distinction that needs to be made is between international and cross border enforcement of MSAs. Actually, this distinction is particular to mediation and is also linked to the non-existence of forum in mediation. Where a forum exists, in the private international law sense (i.e., an adjudicating judge with full authority to rule on the case) the outcome, namely the judgment, is first and foremost enforceable in the country of that forum. Once enforceable there, it can be further enforced on a cross-border basis in another country, pursuant to the applicable bilateral or multilateral treaty or simply by virtue of the local law of the country of enforcement, in case no such treaty exists. The same applies to authentic instruments of any type that can also be enforced on a cross-border basis in a similar manner.

22 At the risk of stating the obvious, it should be underpinned that negotiation involves a number of barriers that can be overcome in mediation, which should in principle make mediation more attractive. Evidently, overcoming such barriers is not a straightforward exercise and the starting point is to acknowledge them. In this sense, they are also part of the mediation process and one of the mediator’s tasks is to avoid being driven by them and to assist parties in the same direction.

23 Various types of barriers do exist. The first type are the ‘strategic barriers’, namely certain actions taken by the parties to allow them to conceal information or to

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24 A further question is whether the mediator should be allowed to provide legal advice to the parties in the context of the mediation. The vast majority of institutions that render mediation services (at least in the West) explicitly forbid mediators from providing legal advice. However, it may well be the case that well-respected and knowledgeable mediators would be expected to assist parties by offering their view on the case. Furthermore, on the basis of a cultural perspective, mediators could also be expected to provide legal advice

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25 Mediation also involves issues arising from cultural and diversity barriers. said it has very accurately been stated that “Rights-based determinative forms of dispute resolution such as litigation and arbitration do not allow for exploration of the cultural differences that may have led to the dispute.” A very interesting article on the role of culture in negotiation has been written by Jeswald Salacuse, Who defines culture as the “socially transmitted behavior, patterns, norms, beliefs and values of a given community”.