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Does Mediation need a version of the New York Convention? Part 2

by Luke Lofthouse on 24 Apr 2017

mediation new york convention.jpg

Following on from our previous post, Part 2 makes the case for a new convention

The Rationale for a New Convention

One might contend that a settlement through mediation is inherently resistant to non-compliance by parties: parties have developed the resolution themselves during candid discussion in a confidential setting. Indeed, although empirical evidence on whether enforcement is a problem is sparse, most commentators agree that there is no widespread issue with parties refusing to honour their iMSAs; so what, then, is the point of all this?

A recent anonymous survey of 221 industry professionals (35% private practice, 28% mediators and the rest academics) analysed by S.I. Strong (Realizing Rationality: An Empirical Assessment of International Commercial Mediation) highlighted that even though practitioners don’t perceive a problem with the current regime, there are other, more compelling reasons to move towards some sort of international harmonisation of the legal framework underpinning iMSAs.

There are a number of qualitative analyses that can be drawn when looking at the data, specifically in relation to how participants responded to the survey’s questions.

  1. Why, in your experience, do parties use mediation in international commercial disputes?

Of the multiple-choice options available, the highest ranked were as follows: the desire to save costs (36% of respondents, ranked number one), followed by a desire to save time (28%, ranked number two).

While both of these selections are unsurprising – given the question’s weighting towards commercial disputes – they reveal what commercial entities principally care about when considering ADR in a dispute. Given the expense and length involved in securing compliance with existing settlement arrangements, the idea of a universalised convention starts to make sense. The survey continues:

  1. How can parties be encouraged to use international commercial mediation?

37% of respondents in this group indicated that having more evidence of the effectiveness of the procedure (i.e. more evidence as to the likelihood of a settlement being reached) would be the best way of increasing parties’ use in this context. The second most highly ranked alternative focused on better information about the conduct of the procedure.

There are several implicit presumptions that can be gleaned from these responses – and they’re not concerned with directly educating potential participants. Firstly, by improving the procedure itself (as moving towards harmonisation would presumably do, but again, this is up for debate) more evidence about the likelihood of settlements being reached will resultantly flow out and, similarly, by harmonising procedures, information dissemination to the uninitiated will only improve.

  1. How difficult would it be in your (the respondent’s) home jurisdiction to enforce an agreement to mediate an international commercial dispute when the mediation was to take place outside your home jurisdiction?

Although there is, as mentioned, a paucity of available data for compliance rates vis-à-vis iMSAs, how the respondents answered this question is strongly indicative of the fact that a need for harmonisation in the question’s context certainly exists. 26% of those answering indicated that enforcement would be impossible or very difficult, with 30% specifying that enforcement would be somewhat difficult. Importantly, 36% stated that the issue was largely untested in their home jurisdictions or that they didn’t know how it would be handled in the same.

There is, therefore, a clear and present need for some sort of enforcement mechanism amongst >50%, with it being likely (given what we know about the likelihood of existing state-reciprocal enforcement provisions) that this figure would be far higher.

  1. Do you believe that the existence of an international convention regarding enforcement of an agreement to mediate international commercial disputes would encourage participants in your home jurisdiction to use mediation in international commercial disputes?

Respondents were overwhelmingly in favour of this suggestion: 68% agreed that such a convention would encourage mediation in their countries, only 12% thought that it would not. This position is likewise backed up by two other empirical studies based around this question:

  • In a 2014 survey by the International Mediation Institute (IMI), 90% of respondents agreed that the absence of any kind of international enforcement mechanism for iMSAs presented an impediment to the growth of mediation in resolving cross-border disputes. 93% indicated that they would be likely to settle a dispute with a party from a country that had already ratified a UN convention on enforcement of mediated settlements.
  • A report on a survey conducted in 2007 by the International Bar Association (IBA) reasoned that ‘the enforceability of the settlement is generally of the utmost importance’ and ‘in international mediation… reinforcement is more likely to be sought because of the potential of expensive and difficult cross-border litigation in the event of a failure to implement a settlement’. 

Conclusions

Although there is a dearth of available data, it’s clear that for many people a need for something like a convention exists, and, where enforceability is difficult (given whatever jurisdiction, but obviously this will happen more with cross-border matters) this need is crystallised.

Taking a more reductionist approach, practitioners seem to believe that a multilateral line on enforcement would be a good thing – if only to promote mediation’s use. As is discussed, how this will eventually materialise remains to be seen and, for those wishing for a clear transposition of popularity and effectiveness from the New York Convention, a more bespoke approach – rather than an in-all-but-name renaming - will likely be required.

 

Topics: Mediation

Luke Lofthouse

Written by Luke Lofthouse