Mediation offers alternative to suing

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VietNam News English - 37 month(s) ago 3 readings

Mediation in commercial disputes operates without the intervention of public officials. When a commercial dispute arises, the disputing parties may propose and approve involving an impartial and neutral third party (the mediator)...

Mediation in commercial disputes operates without the intervention of public officials. When a commercial dispute arises, the disputing parties may propose and approve involving an impartial and neutral third party (the mediator) who plays the role of an intermediary, bridging conflicting parties to an appropriate solution to resolve the disputes between them.

As one form of alternative dispute resolution, mediation has features which are different from negotiation and arbitration. Compared to negotiation, the participation of a third party in mediation makes the dispute resolution progress quicker and more objectively.

Mediation attempts to settle a legal dispute through the active participation of a third party who works to find a middle ground and to propose a fair outcome on which the conflicting parties may agree. This differs from arbitration, in which the arbitrator acts much like a judge, but in an out-of-court, less formal setting, and does not actively participate in the negotiation of a settlement.

Mediation as a means of alternative dispute resolution exists in two forms: proceedings mediation (PM) and non-proceedings mediation (NPM). Conceptually, PM is conducted under the auspices of a court of law in a given civil lawsuit or is utilised as a step in an arbitration process to resolve a dispute at the request of contesting parties. Conversely, NPM is carried out by a neutral party prior to the parties bringing the dispute into arbitration or a court of law.

In mediation, both parties are free to find a plan to resolve the dispute. The third-party mediator does not issue a decision which is binding upon parties but acts as an intermediary between the two parties to reach their own agreement. The agreement derived from mediation is also not binding upon the parties but a resolution that depends on the willingness of the parties.

In the course of mediation, a third party must be present in the position of an intermediary, referred to as the mediator. A mediator is not an arbitrator or an agent for either party. This person should be independent from all parties and must have no relation to the dispute.

Mediation is a favoured method of dispute resolution by the business community because it is often a less cost prohibitive. A mediator may offer a competitive fee compared to a lawyer and the mediation process does not consume as much time as court proceedings, which can drag on for months or even years.

Mediation also guarantees the confidentiality of the parties. A court must hold proceedings in public, but mediation can keep sensitive information in a dispute confidential. This is meaningful, as in almost all legal systems around the world, the law does not require the mediator to report to the court the contents and/or progress of a mediation.

By resorting to mediation, parties can exert reasonable influence over the dispute resolution process and may obtain a better outcome than a court-awarded solution which typically gives parties less control over the process. Mediation helps balance the interests of all parties in a win-win solution in which no one is an absolute winner or loser.

Once parties decide upon mediation, they tend to co-operate to come up with a specific solution, which is rarely seen in more adversarial negotiations. As long as both parties are willing to sit down to resolve dispute, they may prefer co-operation to hostility, helping retain any pre-existing business ties and relationships.

Today, with the intense growth and integration of economies, mediation as a recognised form of alternative dispute resolution has been institutionalised in international treaties and national legislation.

The United Nations has adopted the Conciliation Rules of the UN Commission on International Trade Law (UNCITRAL) with General Assembly Resolution No 35/52 of December 4, 1980 (UNCITRAL Conciliation Rules). Under these rules, mediation is acknowledged as a dispute resolution method applicable to disputes arising from international trade relations. These rules are accordingly recognised in numerous countries and create a common legal framework, setting out basic principles regarding conciliation in international trade dispute resolution such as commencement of conciliation proceedings, appointment of conciliators, communication between the conciliator and parties, and suggestions by parties for settlement of disputes. The rules provide a default mechanism and are not entirely compulsory on parties, who are free to adopt alternate articles in their mediation process.

In 1994, the World Trade Organisation (WTO) adopted the Dispute Settlement Understanding to deal with disputes relating to goods, services, investment and intellectual property to address some of the drawbacks in the General Agreement on Trade in Services. Other rules of mediation that should be noted are the Alternative Dispute Resolution Rules of the International Chamber of Commerce and the Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings of International Centre for Settlement of Investment Disputes.

In neighbouring countries, mediation has also been institutionalised into laws. In 1987, the China Council for the Promotion of International Trade established the Beijing Conciliation Centre in 1987 which immediately issued a concise mediation procedure. The Thai Arbitration Institute was formed in 1990 under the auspices of the Ministry of Justice and has actively promoted alternative forms of dispute resolution, promulgating its own Rules of Conciliation including 19 articles regarding legal terms, mediation proceedings, mediators, and fees. Singapore follows rules of conciliation created by the International Arbitration Centre in Singapore.

After the August Revolution of 1945, Viet Nam adopted early legislation forming regimes of conciliation in civil disputes, with People's Courts and the Ministry of Justice holding the responsibility for mediating disputes. Legal documents on mediation included Ordinance No 90-SL of October 1945, Ordinance No 13-SL of January 1946, Ordinance No 51-SL of April 1946, and Ordinance No 85-SL of May 1950.

The National Assembly of Viet Nam has since enacted legislation on mediation such as the 1998 Ordinance on Organisation and Operation of Mediation, the 2004 Civil Procedure Code and the 2010 Law on Commercial Arbitration. However, the regime continues to be based on a collection of scattered laws and general principles and is not regulated in any specific legal document, governed by provisions in the 2005 Commercial Law, the 2005 Law on Investment Law, the 2003 Law on Oil and Gas. Resolving disputes by mediation is also regulated in treaties to which Viet Nam is a signatory, including the Bilateral Trade Agreement between Viet Nam and the United States (Article 7), Agreement between Viet Nam and Bulgaria on Mutual Promotion and Protection of Investments (Article 9), and Agreement between Viet Nam and India on Mutual Promotion and Protection of Investments (Article 9).

In 2007, mediation was added to the functional scope of the Viet Nam International Arbitration Centre (VIAC) with a department dedicated to providing professional mediation services. VIAC issued its own mediation rules that took effect on September 10, 2007. Since then, VIAC has mediated five cases at the request of concerned parties, although these cases have involved only domestic enterprises. And, while VIAC rules are a major sources of reference, these rules are only applied to clients who use its services.

It is vital that lawmakers pay greater attention to and invest further resources in this form of alternative dispute resolution, selectively adopting international best practices on commercial dispute resolution, suited to the specific context of Viet Nam and compliance with international commitments. More professional commercial dispute resolution services should also be established with requirements on the qualifications of mediators. Training should also be offered at no cost to enterprises to boost their awareness of commercial dispute resolution by medication and conciliation.

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