As American businesses increasingly find themselves involved in cross-border transactions, business litigators correspondingly need to be equipped to help resolve disputes with foreign entities. While practices and procedures for much of litigation involving non-U.S. parties are well defined, mediation largely remains a rather murky area of international dispute resolution.
In contrast to U.S. practice, mediation is uncommon in many parts of the world. Accordingly, it may be beneficial to introduce mediation as a dispute resolution tool in contracts involving foreign parties or in negotiations when a dispute arises out of a cross-border deal. But before international companies can be expected to buy into the process, a common definition of the process must be shared. A primer on alternative dispute resolution offered by the International Institute for Conflict Prevention and Resolution provides a no-frills definition of mediation that captures the common understanding prevalent in the United States:
Mediation is facilitated negotiation, whose object is the consensual resolution of a dispute on terms that the parties themselves agree upon. It is a form of alternative dispute resolution in which a neutral party (a mediator) selected by the parties seeks to determine the interests of the parties, discover which of these interests may be shared, and alert them to a resolution that may further those interests.
International Institute for Conflict Prevention and Resolution, An ADR Primer: An Introduction to ADR Terms and Processes.
The Ideal Process
In those rare circumstances where litigators are invited to help shape the contractual terms for dispute resolution before a deal is inked, the ideal process to consider may involve three steps: (1) negotiations between party representatives if a dispute arises, (2) mediation if negotiations fail, and (3) litigation as a last resort. Even if this kind of escalating process doesn’t appear in the contract, the parties should consider it anyway. As wisely stated by Justice Sandra Day O’Connor, “The courts of this country should not be the places where resolution of disputes begins. They should be the places where the disputes end after alternative methods of resolving disputes have been considered and tried.” Jone Johnson Lewis, Sandra Day O’Connor Quotes, About Educ., available at http://womenshistory.about.com/od/quotes/a/s_d_oconnor_2.htm (accessed Sept. 10, 2015). Mediation is a logical step after unassisted negotiations fail but before parties must resort to the courts.
Once mediation is accepted as a tool to be used in the effort to resolve an international dispute, some unique questions may come into play, such as the following: What language will be used? Where will the mediation take place? Who may attend and who must attend? How will the mediator be selected?
Typically, the language of the contract will control the language of any dispute resolution, but unique language-related challenges may arise in mediation. For example, some involved in the mediation may not be as fluent in the language of the contract as would be ideal. Consequently, ironing out any language issues up front—such as whether interpreters may be used and, if so, to what extent and at whose expense—may result in a more productive mediation.
Where the mediation occurs also may take on more meaning in an international setting than it does when disputes between American parties are involved. This is because enforcement of the result may be affected by the choice of the mediation venue, potentially making this an important strategic decision.
Who may—and must—attend should also be well defined. In addition to the strategic reasons for wanting decision makers at parallel levels involved on both sides, the logistics of international mediation make advanced discussions and planning for this eventuality more critical. In other words, it isn’t practical to assume that the parties’ expectations about who will appear at mediation will match or can be readily altered at the last minute if they don’t.
Selecting the Mediator
Last but not least, the selection of the mediator and the process by which it happens are critical. While a variety of organizations offer international mediation services, these services might entail costs and structures that may not suit all circumstances. The following organizations provide information on their websites about some of the better-known international mediation services:
- International Chamber of Commerce, www.iccwbo.org/
- International Centre for Dispute Resolution, www.international arbitrationlaw.com/arbitral- institutions/icdr/
- International Institute for Conflict Prevention & Resolution
- JAMS International
- International Mediation Institute, https://imimediation.org/home
- Singapore International Mediation Centre, http://simc.com.sg/
In addition, parties may want to consider whether they need a mediator with unique industry expertise instead of simply someone with broad mediation skills. Defining such considerations up front in the contract may be worthwhile.
Once the stage is set for international mediation, the details should be defined. For example, the parties should consider the following:
- What will the mediator receive before the mediation? Will she be provided with a written statement from each party (and if so, will the statements be confidential or exchanged)? Will she receive documents in advance? Will she be free to talk with counsel and the parties in advance?
- What will the mediation day or days entail? How long will the mediation last, and how will the time be used? What are the rules of engagement regarding confidentiality of the communications?
- What is the expected commitment of the parties to participate in the process, as this setting usually isn’t court-ordered or otherwise required?
- How will costs be handled?
Finally, assuming mediation happens and succeeds, it’s important to ensure the resulting agreement is enforceable. Because the dispute is international and the parties are in different countries, ensuring enforceability may present unique considerations. These may relate to the laws of the jurisdiction of the parties, any pending cases, assets that are potentially subject to enforcement, or the venue of the mediation. In other words, thought should be given in advance to the requirements of jurisdictions where the result will need to be recognized and enforced. And the settlement documentation should reflect such requirements, allowing for the mediation result to serve as the basis for a final and enforceable order of a proper court.
A key strength of mediation in any setting is its adaptability to the needs of the parties. In the international context, where disputes can quickly become complicated by differences in cultural practices and views of applicable rights and responsibilities, mediation’s informality allows the parties and counsel to be creative in structuring a customized dispute resolution process. As a result, American counsel would be well served to consider using it when looking to resolve international disputes short of litigation.