published by the llinois Institute for Continuing Legal Education

© 2001 by Stephen E. Smith

III. Drafting the International Arbitration Agreement

N. [23.20] Mediation as a First Step

This is the first "tiered" ADR provision mentioned in this short chapter on alternative dispute resolution methods. However, it is perhaps the most important. Since all these methods are consensual, the parties must feel, prior to arbitration, that they still have the ability to control, that they still have control over a potential resolution with which they can live and perhaps even continue their business relationship. At the same time, the parties must know that if they cannot resolve their dispute through intercession of a third-party facilitator, conciliator or mediator, they can move very quickly to arbitration.

As international arbitration has increased in cost and length, the procedure has actually been separated in the minds and vocabulary of the parties and practitioners from other forms of dispute resolution such as mediation, conciliation and mini-trials. There has been a stead increase in the use of these modalities and the skills of the neutrals who practice them. It must be pointed out that the skills of the most well-respected arbitrator may not work well at all in a mediation, in which it is necessary to communicate with the ultimate decision makers in a way that allows those authority figures to hear the weaknesses as well as the strengths of their respective positions. The most effective mediation provides the parties with the perspective to evaluate, for instance, their own "best alternatives to a negotiated agreement" (BATNA), if they do not resolve their dispute and allows the parties to craft a new agreement with which each can live. Not only does mediation provide a joint-session format, as always occurs in arbitration whenever the arbitrators meet with parties to listen to their presentations, but a good mediation also provides "caucuses" in which neutrals meet separately with each party, sharing only that information that the mediators have been told is allowable by the parties. In mediation, unlike arbitration, "cross-talk" is encouraged to some extent to allow the parties to vent their frustration with the problem that has arisen and then move toward possible solutions. Since much of this book is given over to mediation in only one country, it is necessary to say only that in the international mediation arena, it is even more important to notice and respect cultural differences in this sort of ADR.