Exploring Arbitration – Mediation Interplay in Resolving Complex Disputes

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Author: Blazo Nedic, Attorney-at-Law & Mediator

Modern business practice requires various dispute resolution options in order to effectively manage conflicts incumbent in the global commercial arena. International dispute resolution practice has developed a variety of hybrid models facilitating the parties in finding the most appropriate dispute resolution model and process that would fit a dispute of every type, scope and complexity.

This paper examines to what extent the international arbitration instruments and best practices in drafting international commercial contracts, enable the disputing parties to take advantage of various “mixed-mode” process, primarily focused on the combination of arbitration and mediation.

“Consensuality” of mediation, and “finality” and “enforceability” of arbitration may present the most logical and appropriate choice for many disputants and conflicts, although there are other available combinations. Still, although this and other combinations aim to utilize “the best of both worlds”, they inevitably carry some of the ethical challenges and legal controversies immanent to their hybrid nature.

“Speak softly and carry a big stick.”

Every society faces conflicts. Conflict is an integral part of life and human interactions. Conflicts are also a normal part of doing business: conflicts with and among employees, vendors, partners, conflicts with government institutions, consumers, etc. The potential for conflict is increased when corporations do business across national and cultural borders. However, the way how a conflict is handled and managed will determine if it will also present an opportunity for development and improvement in the organizational policies and procedures, or it will impede the organization’s development, strain human relations, drain resources, and, eventually bring the organization to its knees.

Today, there are is a variety of methods for resolving conflicts before they escalate to become legal disputes that often require the use of lawyers and a neutral forum in order to reach a resolution. Multiple dispute resolution options have been developed to resolve legal disputes and modern lawyers must be familiar with available alternatives for dispute resolution. In this aspect a distinction between adjudicative and non-adjudicative dispute resolution process might help us create a map of various options. On the least formal end of the spectrum, there is direct negotiation between the parties in a dispute, while court litigation is on the very opposite. They naturally differ in the level of party control, formality, as well as escalation, and effect they have on the party relationship. Between these two extremes there is a whole spectrum of dispute resolution processes used to resolve legal disputes.

Some of these methods are particularly suited for commercial disputes that normally arise in connection with business activities, or disputes that arise from commercial relations of legal entities and entrepreneurs. The most common commercial disputes are related to trade in goods and services, but disputes in construction, banking, insurance, trade disputes referred to representation and advocacy, intellectual property protection and the like, are also very common. These disputes may arise both from contractual and non-contractual relationships, they may differ in complexity and duration. The necessity of resolving these disputes quickly and efficiently, however, is underlined by a significant burden and inefficiency of many national judicial systems, partly caused by the complexity of the court proceedings, which often unnecessarily complicate and delay the possibility of finding solutions.