Daily News: 06/09/2005" by S. S. Wijeratne, Chairman, Alternative Dispute Resolution Institute (ADRI).
On June 15, the Minister of Justice and Judicial Reforms gazetted the operation of Mediation (Special Categories) Act No. 21 of 2003 in relation to tsunami disputes. The Legal Aid Commission had been advocating the need for a special dispute resolution mechanism to deal with a myriad disputes, especially with regard to property and equitable rehabilitation assistance of the half million tsunami displaced persons.
When Mediation (Special Categories Act) No. 21 of 2003 was presented in Parliament, its constitutional validity was challenged before the Supreme Court. The petitioners contended that the Special Mediation Act which could be extended by the Minister to cover social and economic issues is interfering with the judicial process.
The Supreme Court rejected the contention on the basis 'that Minister can only prescribe by Gazette Notification, types of disputes to be referred and the qualification of the Mediators'. The panel of mediators was not appointed by the Minister but by the Mediation Board Commission appointed under Mediation Boards Act No. 12 of 1988 by the President.
Three out of five Commissioners should have held judicial office either in the Supreme Court or in the Court of Appeal. Independence of the Special Mediation Boards was thus secured.
Litigious culture
Ironically, the skill and unblemished reputation of the superior courts of Sri Lanka for integrity, independence and the commitment to uphold the principle of Rule of Law is a major reason for the proclivity of an adversarial litigation culture in Sri Lanka.
Despite the perennial complaints of Laws Delays and unsalutary professional practices of some lawyers and the recalcitrant attitude of some judges which underpin the Laws Delays, Sri Lankan litigants, human or juristic, are submerged in a litigious culture. They wallop at winning cases even pyrrhic victories at great cost sometime contributing to social discord.
Sri Lanka is considered to be the second most litigious society in the contemporary world, a record that we should not be proud of as litigated victories and defeats can increase violence and even result in gruesome murders like the reported Hokandara quintuplet killing.
Despite the existence of socio-religious creeds of non-violence influencing the Sri Lankan psyche, social violence - whether they erupt due to bitter litigations, elections or ethnic or religious prejudices appear to define modern Sri Lankan society. We are no longer peace-loving or peaceful. Even the demonstrations for peace end up in violence.
Historically, the greatest protagonists of mediation as the basis of non-violent dispute resolution were the founders of great religions. Moses, The Buddha, Jesus Christ, Prophet Mohamed were all great mediators. In more recent times Mahathma Gandhi and Dr. Martin Luther King espoused the doctrine of non-violence as a political philosophy. Negotiation and mediation was their chosen strategy.
In the modern world, after the great catastrophe of the two World Wars, the victorious nations set up the United Nations as the superior mediator of international disputes. The comparative decrease of international wars during the past fifty-two years was largely due to the UN mediation efforts.
"Med-Arb" process
All mediation by definition should be facilitative where emotional barriers between parties are addressed by improving the communication process and identifying a range of mutually beneficial options. In the profit-driven commercial world, where rational, profitable, and timely decisions are made, negotiation is the primary method of dispute resolution.
The failure of inter-party negotiations, mainly due to subjective reasons, sequentially calls for provision in commercial agreements mediation clauses. If mediation fails parties may resort to arbitration by agreement of all disputants or resort to adversarial litigation as a fundamental right.
Since the late Seventies, a growing trend in the developed countries, specially in the USA and Scandinavian countries as well as international agencies mandated to resolve specific sector disputes, such as intellectual property, is to develop a hybrid process termed "Med-Arb" - an abbreviation for mediation - Arbitration process.
"Med-Arb" procedure for dispute resolution is triggered when a commercial agreement provides that in the event of any dispute arising out of the contract it will be resolved by negotiation with the assistance of a mediator failing which the matter will proceed to arbitration. The fundamental requirement is that the use of the 'Med-Arb' process should be agreed upon before hand.
As an illustration, we can cite the ingredients in the World Intellectual Property Organisation's "Med-Arb" clause. The first part of the 'Med-Arb' clause provides for the reference of all disputes arising from the contract to be submitted to be settled in accordance with WIPO mediation rules. The place of mediation and the language to be used in the mediation should be included in the contract.
The second limb of the clause deals with the question what follows if the dispute is not settled by mediation within the stipulated period of time. The clause provides that if the dispute is not settled within in the stipulated period (i.e. 90 days/six months) from the commencement of mediation, it will be referred to arbitration if either party files a request for arbitration under the WIPO arbitration rules or in the alternative if before the expiry of the stipulated time period if any party fails to participate in the mediation, the other party has the right to request for arbitration for final adjudication in accordance with WIPO arbitration rules.
The arbitral tribunal can consist of a sole arbitrator or a panel of three and the place and the language of arbitration should be stipulated. The WIPO 'Med-Arb' clause could be suitably modified and adopted to suit the Sri Lankan Arbitration Law and the several arbitration institutions.
Many transnational commercial disputants prefer to avoid the delay and exorbitant expenses, when settling international commercial disputes. But also at the same time prefer to have a legally-recognised and a binding and enforceable conclusion to their commercial disputes.
On the other hand the 'Med-Arb' process which combines the two traditional methods assures a non-adversarial mediation phase in the resolution of the dispute. In this anticipation of eventual arbitration if mediation fails, the disputants try to act in a non-adversarial manner and reasonably, which help to dissolve subjective emotional barriers.
However, this prior knowledge that the failure of negotiation will lead to arbitration would make the parties extremely cautious and may withhold vital confidential information needed for successful mediation.
The task of the mediator is more difficult than an arbitrator or judge who is called upon to decide on the dispute on the applicable law. But the task of a 'Med-Arb' neutral is even more difficult. The prestige of the 'Med-Arbitrators' should be so high, that often, former judges of the superior courts of third countries with reputable legal systems are sought to perform this function.
The mediator in the 'Med-Arb' process could transit to arbitration mode if the contract so stipulates of if the parties agree. However, the confidential information received from parties in mediation caucuses should not be used in making the arbitral award unless the party concerned continues to rely on the confidential process even during the arbitral proceedings.
This is an extremely sensitive process and it is essential that the mediator checks with the parties before hand whether the information confided in him during the mediation caucuses could be used when the mediator assumes the role of an arbitrator.
In Sri Lanka, like many other developing countries 'Med-Arb' clauses are rarely incorporated in commercial contracts. The main reason is that we do not have the necessary institutions or skill training programs to develop mediation.
The Arbitration Act No. 11 of 1995 while modernising the Arbitration law to keep abreast with international developments had also empowered in its section 14 that the "Arbitration Tribunal with the agreements of the parties" use "mediation, conciliation, or any other procedure at any time during the Arbitral proceedings to encourage settlement." Hence incorporation of 'Med-Arb' clauses in a commercial contract is legally feasible and could contribute to fill a void, developing modern legal norms and practices to meet the challenges of globalised commerce.
On June 15, the Minister of Justice and Judicial Reforms gazetted the operation of Mediation (Special Categories) Act No. 21 of 2003 in relation to tsunami disputes. The Legal Aid Commission had been advocating the need for a special dispute resolution mechanism to deal with a myriad disputes, especially with regard to property and equitable rehabilitation assistance of the half million tsunami displaced persons.
When Mediation (Special Categories Act) No. 21 of 2003 was presented in Parliament, its constitutional validity was challenged before the Supreme Court. The petitioners contended that the Special Mediation Act which could be extended by the Minister to cover social and economic issues is interfering with the judicial process.
The Supreme Court rejected the contention on the basis 'that Minister can only prescribe by Gazette Notification, types of disputes to be referred and the qualification of the Mediators'. The panel of mediators was not appointed by the Minister but by the Mediation Board Commission appointed under Mediation Boards Act No. 12 of 1988 by the President.
Three out of five Commissioners should have held judicial office either in the Supreme Court or in the Court of Appeal. Independence of the Special Mediation Boards was thus secured.
Litigious culture
Ironically, the skill and unblemished reputation of the superior courts of Sri Lanka for integrity, independence and the commitment to uphold the principle of Rule of Law is a major reason for the proclivity of an adversarial litigation culture in Sri Lanka.
Despite the perennial complaints of Laws Delays and unsalutary professional practices of some lawyers and the recalcitrant attitude of some judges which underpin the Laws Delays, Sri Lankan litigants, human or juristic, are submerged in a litigious culture. They wallop at winning cases even pyrrhic victories at great cost sometime contributing to social discord.
Sri Lanka is considered to be the second most litigious society in the contemporary world, a record that we should not be proud of as litigated victories and defeats can increase violence and even result in gruesome murders like the reported Hokandara quintuplet killing.
Despite the existence of socio-religious creeds of non-violence influencing the Sri Lankan psyche, social violence - whether they erupt due to bitter litigations, elections or ethnic or religious prejudices appear to define modern Sri Lankan society. We are no longer peace-loving or peaceful. Even the demonstrations for peace end up in violence.
Historically, the greatest protagonists of mediation as the basis of non-violent dispute resolution were the founders of great religions. Moses, The Buddha, Jesus Christ, Prophet Mohamed were all great mediators. In more recent times Mahathma Gandhi and Dr. Martin Luther King espoused the doctrine of non-violence as a political philosophy. Negotiation and mediation was their chosen strategy.
In the modern world, after the great catastrophe of the two World Wars, the victorious nations set up the United Nations as the superior mediator of international disputes. The comparative decrease of international wars during the past fifty-two years was largely due to the UN mediation efforts.
"Med-Arb" process
All mediation by definition should be facilitative where emotional barriers between parties are addressed by improving the communication process and identifying a range of mutually beneficial options. In the profit-driven commercial world, where rational, profitable, and timely decisions are made, negotiation is the primary method of dispute resolution.
The failure of inter-party negotiations, mainly due to subjective reasons, sequentially calls for provision in commercial agreements mediation clauses. If mediation fails parties may resort to arbitration by agreement of all disputants or resort to adversarial litigation as a fundamental right.
Since the late Seventies, a growing trend in the developed countries, specially in the USA and Scandinavian countries as well as international agencies mandated to resolve specific sector disputes, such as intellectual property, is to develop a hybrid process termed "Med-Arb" - an abbreviation for mediation - Arbitration process.
"Med-Arb" procedure for dispute resolution is triggered when a commercial agreement provides that in the event of any dispute arising out of the contract it will be resolved by negotiation with the assistance of a mediator failing which the matter will proceed to arbitration. The fundamental requirement is that the use of the 'Med-Arb' process should be agreed upon before hand.
As an illustration, we can cite the ingredients in the World Intellectual Property Organisation's "Med-Arb" clause. The first part of the 'Med-Arb' clause provides for the reference of all disputes arising from the contract to be submitted to be settled in accordance with WIPO mediation rules. The place of mediation and the language to be used in the mediation should be included in the contract.
The second limb of the clause deals with the question what follows if the dispute is not settled by mediation within the stipulated period of time. The clause provides that if the dispute is not settled within in the stipulated period (i.e. 90 days/six months) from the commencement of mediation, it will be referred to arbitration if either party files a request for arbitration under the WIPO arbitration rules or in the alternative if before the expiry of the stipulated time period if any party fails to participate in the mediation, the other party has the right to request for arbitration for final adjudication in accordance with WIPO arbitration rules.
The arbitral tribunal can consist of a sole arbitrator or a panel of three and the place and the language of arbitration should be stipulated. The WIPO 'Med-Arb' clause could be suitably modified and adopted to suit the Sri Lankan Arbitration Law and the several arbitration institutions.
Many transnational commercial disputants prefer to avoid the delay and exorbitant expenses, when settling international commercial disputes. But also at the same time prefer to have a legally-recognised and a binding and enforceable conclusion to their commercial disputes.
On the other hand the 'Med-Arb' process which combines the two traditional methods assures a non-adversarial mediation phase in the resolution of the dispute. In this anticipation of eventual arbitration if mediation fails, the disputants try to act in a non-adversarial manner and reasonably, which help to dissolve subjective emotional barriers.
However, this prior knowledge that the failure of negotiation will lead to arbitration would make the parties extremely cautious and may withhold vital confidential information needed for successful mediation.
The task of the mediator is more difficult than an arbitrator or judge who is called upon to decide on the dispute on the applicable law. But the task of a 'Med-Arb' neutral is even more difficult. The prestige of the 'Med-Arbitrators' should be so high, that often, former judges of the superior courts of third countries with reputable legal systems are sought to perform this function.
The mediator in the 'Med-Arb' process could transit to arbitration mode if the contract so stipulates of if the parties agree. However, the confidential information received from parties in mediation caucuses should not be used in making the arbitral award unless the party concerned continues to rely on the confidential process even during the arbitral proceedings.
This is an extremely sensitive process and it is essential that the mediator checks with the parties before hand whether the information confided in him during the mediation caucuses could be used when the mediator assumes the role of an arbitrator.
In Sri Lanka, like many other developing countries 'Med-Arb' clauses are rarely incorporated in commercial contracts. The main reason is that we do not have the necessary institutions or skill training programs to develop mediation.
The Arbitration Act No. 11 of 1995 while modernising the Arbitration law to keep abreast with international developments had also empowered in its section 14 that the "Arbitration Tribunal with the agreements of the parties" use "mediation, conciliation, or any other procedure at any time during the Arbitral proceedings to encourage settlement." Hence incorporation of 'Med-Arb' clauses in a commercial contract is legally feasible and could contribute to fill a void, developing modern legal norms and practices to meet the challenges of globalised commerce.
