Over the last few months and especially due to the exceptional and emergency circumstances that the world has been going through as a result of the Covid-19 pandemic, the number of disputes and conflicts arising out of contractual obligations has increased enormously, particularly those related to cross-border transactions, employment, rental and construction services.
In parallel, traditional methods of dispute settlement have faced numerous challenges, and e-litigation has been the subject of long debates and negotiations. On the other hand, the importance of mediation as an alternative means of resolving conflicts has been underlined by dispute-resolution institutions, as well as several countries’ legislators. These have recommended, more than ever before, the use of mediation and raised awareness of its importance.
Mediation is a process in which a neutral and independent third party, called a mediator, assists the parties involved in a dispute to settle their differences and reach a mutual agreement. This method differs from other dispute-settlement methods in that the parties are in full control of the process. They draft the terms of the settlement agreement by themselves, since the role of the mediator is limited to identifying the points of disagreement, and the agreement between the parties reaches the best solutions that maintain the continuity of their relationship.
The mediator creates an appropriate atmosphere for the negotiations without having the authority to impose a solution or a settlement during the process. This dispute-settlement mechanism may be conducted between two contracting parties or by one contracting party and a state, known as investor-state mediation.
Given the importance of mediation as an amicable means of settling disputes that may resolve investment, commercial, labour and other disputes, it has been codified in national legislations. For instance, the Irish legislature issued its Mediation Act of 2017 that placed an obligation on all solicitors to advise their clients to consider mediation as a means of attempting to resolve a dispute prior to proceeding to litigation and to clearly outline to their clients the benefits of mediation that include cost and time efficiencies.
Likewise, the Chinese Civil Procedure Law includes a special chapter on mediation, which is conducted by a court in which judges sit as mediators. Similarly, in Egypt the Economic Courts Law 120 of 2008 was amended last August to establish a Preparation and Mediation Committee. The law gives authority to the judges on the committee to advise litigants or their representatives to resolve their dispute through mediation before referring it to litigation. If the parties reach a settlement agreement, this will have enforceable legal effect, and the law represents noticeable progress in the field of alternative dispute resolution.
The aforementioned type of mediation, that conducted by judges in civil proceedings, is called court-connected mediation, which is codified in legislation in most cases and not always subject to enforcement difficulties if it occurs inside borders. The other type of mediation, which is mainly conducted outside of courts through lawyers, experts or others, is commonly known as out-of-court mediation and is in many cases not codified by national laws. It also faces several problems at the time of the enforcement of a settlement agreement either inside or outside the borders of a country.
In other words, despite its importance, the main problems faced by mediation processes conducted outside of the courts are usually the enforcement of settlement agreements, especially if foreign parties are involved and the agreement is to be enforced abroad.
To this end, the United Nations Commission on International Trade Law (UNICTRAL) has adopted the United Nations Convention on International Settlement Agreements resulting from Mediation, also known as the Singapore Convention on Mediation. The aim of this convention is to draw up a legal framework that enhances the cross-border enforceability of mediated settlements concluded in writing by parties that have their places of business in different states and want to resolve a commercial dispute.
In 2019, 46 countries had signed the convention, which will enter into force on 12 September 2020, and these have included the world’s two largest economies, the United States and China. Among the Arab countries, only three have signed the convention – Saudi Arabia, Jordan and Qatar.
It is vitally important that Egypt and the Middle East and North Africa region (MENA) countries join the Singapore Convention on Mediation to enhance the enforceability of international settlement agreements resulting from mediation, as it represents an efficient way for parties, particularly investors, to solve their disputes in short periods of time and preserve their funds and assets, as well as their commercial relationships.
In brief, the businesses of any signatory country will find it valuable to resort to mediation when a settlement agreement is enforceable in their country, as well as in that of their counterparty abroad.
* The writer is an attorney at law.
*A version of this article appears in print in the 2 July, 2020 edition of Al-Ahram Weekly