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Report: Expert Discussion on What is the Future of International Commercial Mediation

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Date: Friday, August 19, 9:00 to 11:00 am CEST via Zoom.

The event was chaired by Mr. Tianze Zhang, founder of SCLA, and moderated by Mr. Philip Hackett QC, President of GIDI. GIDI stands for Geneva International Dispute Resolution Institute focusing its activities on forms of alternative dispute resolution especially in disputes with a link to China.

The purpose of this seminar was to discuss the advantages offered by mediation compared to adversarial methods of dispute resolution and the contribution which GIDI can make with the vast experience of its mediators and other professionals having already joint the Institute or expected to join it in the near future.

After welcome messages by Mr. Zhang and Mr. Hackett Hermann Knott was the first speaker. He is an experienced international transactions and disputes lawyer based in Cologne, Germany. He introduced the various forms of mediation differentiating mediation from conciliation and facilitation. He also addressed the different methods of mediation, like caucuses and plenary sessions of all parties. Mediation can be performed by one or two mediators, with two (each representing the cultural background of one party) offering the advantage of better bridging the cultural differences of both parties. He also addressed the different contexts in which mediation can arise, i.e. related to ongoing adversarial procedures, independent of procedures or even preventing emerging controversies.

The next speaker was Agada Elachi from Lagos, Nigeria. He is a mediator with unparalleled experience in mediation and being the President of the International Mediation Institute. He emphasized the responsibility of the parties for resolving the dispute on a voluntary and consensual basis.

He discussed the alternatives of a non-binding and binding mediation discussing the pros and cons of both methods. He described the institutional framework for mediation in Africa where there is a very long and established tradition of mediating disputes. He also discussed the differences as to whether mediation is conducted based on institutional rules or in an ad-hoc basis.

Philip Hackett emphasized the advantage of mediation avoiding the length of controversial proceedings which can be experienced both in the context of litigation and arbitration.

The third speaker was Dr. Jian CHEN, Vice Secretary General of the Shanghai Arbitration Commission and an arbitrator with CIETAC and over fifty other institutions. He describes the experience and practice with mediation in China where ad-hoc mediation is not recognized.

Philip Hackett then described the relevance of conciliation where the conciliator is invited by the parties to propose a solution for the dispute. He then discussed the way a change from arbitration to mediation or the other way around from initially failing mediation to arbitration may occur.

Philip Hackett asked Dr. Jian CHEN whether ad-hoc mediation could become an option for Chinese SOEs. There is a big concern about confidentiality among CEOs, reported Dr. Joan CHEN. Therefore, it is important that the discussions are not recorded. Another problem relates to enforcement, as Dr. Jian CHEN reports: since enforcement requires public action it runs against the principle of confidentiality of mediation. China has signed (though not yet ratified) the Singapore Convention which favors a direct enforcement of settlement agreements reached by mediation.

Hermann Knott further elaborated on enforcement of mediation settlements in times before the Singapore Convention (which provides for immediate enforceability of settlement agreements, unless certain exemptions are fulfilled) will enjoy broader acceptance. Currently, enforcement follows the rules applicable to private written agreements in general, thus it is necessary to obtain an enforceable judgment in the courts of law. Under the New York Convention Arbitral awards are easier to enforce than court judgment. Therefore, the parties may prefer to conclude the mediation by way of a consensual award.

Using German law as an example Hermann also explained how contracts could be made enforceable Instrumente under local laws where enforcement is likely. EU countries are reluctant to sign and ratify the Singapore Convention because it means a loss of sovereignty over which agreements are enforceable. Thus, the EU has established its own uniform regime for mediation

Philip Hackett then presented a very interesting publicly known case relating to the difficulties of enforcement, the Sulu claim relating to a grant made in 1878 by the Sultan of Sulu of certain land against payment of a fixed compensation amount which in proceedings against Petronas, the Malaysian state oil company, the Sulu claimants consider inadequate given the vast oil fields discovered and exploited there. Enforcement of an award in the amount of almost US$ 15 billion had been started in Luxembourg.

In the further discussion of characteristic elements of mediation and the role of GIDI to contribute to its development Godson Ugochukwu, a very experienced dispute lawyer from Nigeria, emphasized the importance of mediator confidence when managing the process.

It was agreed that training of mediators and the role of mediation in investor-state disputes remained important aspects for future activities.

The session was closed by remarks of Philip Hackett and Tianze Zhang announcing further activities of GIDI in terms of seminars and training.

Dr. Hermann Knott, LL.M. (Upenn)
Rechtsanwalt, Attorney-at-Law (New York), FCIArb FHKIArb FSIArb
KUNZ Lawyers
Phone/WeChat: +49 151 576 28 456
Email: [email protected]