Mediating investment disputes

Salma El-Nashar
Thursday 15 Mar 2018

Mediation can lead to win-win solutions to business disputes, making countries more attractive to international investors

Mediation is a method of settling disputes by amicable means and is defined as an alternative way of resolving disputes between the parties through a third party called a “mediator” to reach an appropriate settlement.

This mediator plays an essential role in providing an appropriate atmosphere for discussion between the parties to the dispute, identifying points of disagreement and agreement between them to reach the best solutions that maintain the continuity of their relationship.

Mediation differs from arbitration and litigation in that it can be more effective since the final objective is not limited to the mere application of legal texts, but also extends to maintaining the working relationship between the parties, especially with regards to business cases.

Unlike litigation and arbitration, the parties have a major role in drafting the settlement agreement. The mediator’s role is limited to building and maintaining a shared understanding between the parties so that they can reach the right solution. In mediation arrangements there is no loser and no winner, unlike in arbitration and litigation.

The idea is to find a “win-win solution”.

Mediation also adds value to disputes, especially those related to corporate-governance conflicts.

The settlement of corporate disputes by amicable means ensures a balance between the interests of the parties concerned, including employees, the board of directors and shareholders.

Mediation in corporate-governance disputes can thus become a management tool and strive for conflict prevention rather than conflict resolution.

Some countries have laws regulating mediation, particularly in the settlement of investment disputes.

The most recent development in this area came in October 2012 when the International Bar Association (IBA) adopted new rules for investor-state mediation.

These rules were drafted by the IBA subcommittee on state mediation and comprise 12 articles designed for the mediation of investment-related differences or disputes involving states and state entities.

They were followed in 2014 by both the International Chamber of Commerce (ICC) Mediation Rules and the Stockholm Chamber of Commerce (SCC) Mediation Rules in Sweden.

There is no doubt that the length of time a case takes to be settled, especially in investment disputes, is one of the most important factors for measuring the competitiveness of the investment climate in any given country.

The use of amicable mechanisms to resolve disputes between investors, including arbitration, mediation and conciliation, increases Egypt’s competitiveness, for example, in attracting foreign investment.

Furthermore, some states make recourse to mediation a pre-condition for commencing litigation in the first place (mandatory mediation), without preventing the parties from exercising their rights of access to the judicial system.

It was for these reasons that the Egyptian Investors Dispute Settlement Centre, housed at the General Authority for Investment and Free Zones (GAFI), was established in 2009 to settle disputes between investors through mediation according to international practices and comparative legislation, as well as through the recommendations of the United Nations Commission on International Trade Law (UNCITRAL).

This centre gives Egypt a significant advantage, as it allows it to maintain and attract the foreign investment that will contribute to its development.

The GAFI is also playing a pivotal role in protecting the interests of foreign investors seeking opportunities in Egypt’s economy and seeing it as an export hub to the Arab world and Africa. It has a well-trained and qualified staff, and its employees can facilitate investment procedures, or help resolve disputes between investors, in order to help create an investment climate in Egypt in accordance with the international standards.

*This article was first published in Al-Ahram Weekly

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