By Edmund Mingle
A new Report by the Commission on Arbitration and ADR of the International Chamber of Commerce (ICC) is promoting the use of mediation during arbitration proceedings as it finds that the use of mediation facilitates settlement of arbitration cases.
The 2023 report, titled “Facilitating Settlement in International Arbitration,” declares that “to date, mediation has proven to be the most popular and successful ADR tool for commercial disputes. Securing effective access to mediation during arbitration proceedings is clearly an important initiative that parties, arbitral tribunals and arbitral institutions can take to facilitate settlement of disputes.”
It is therefore urging arbitration tribunals and institutions to access mediation option during arbitration through available mediation windows.
According to the report, the role of the arbitral tribunal in facilitating settlement of disputes has evolved in recent years. While arbitrators in some jurisdictions are accustomed to being proactive in this respect, the traditional viewpoint in most jurisdictions has been that the role of the arbitral tribunal is to decide the case in an enforceable award. Consistent with this view, the parties remained free to negotiate and settle their dispute should they wish to do so, but that was not something the arbitral tribunal should seek to encourage, facilitate or, least of all, become directly involved with. This view was motivated by concerns that taking on such a role would negatively impact the tribunal’s impartiality vis-à-vis the merits of the dispute or the parties’ perception of it.
It notes that his traditional view has, however, evolved as demonstrated by the way in which the ICC Arbitration Rules themselves and other publications now address the topic, explaining that “the debate has now moved from whether arbitrators (and arbitral institutions) should take steps to facilitate settlement, to how that should be done.”
The report observes that there is now significantly less concern than there was a few years ago about an arbitral tribunal being aware that the parties are seeking to arrive at a settlement, whether through mediation or otherwise. “Understandably, what has not changed, is the concern that whatever steps are taken by an arbitral tribunal to facilitate settlement, such steps should not expose the arbitrators to challenge, or jeopardise the enforceability of their award.”
The report also provides guidelines for the creation and accessing of mediation windows in arbitration proceedings either through the arbitration clause, case management conferences or mid-stream interventions.
Background
The ICC has been promoting mediation – within the framework of its mainstream arbitration services – at least since 2007 when it published the Report on Controlling Time and Costs in Arbitration. Its second edition was released in 2012, followed by the ‘Mediation Guidance Notes’ in 2014.
In 2012, ICC updated its Arbitration Rules to include a case management conference as well as a new Appendix IV entitled “Case Management Techniques,” Those techniques included a paragraph on settlement, adopting the recommendation from the ICC Report on Controlling Time and Costs in Arbitration and adding at paragraph (h)(ii): “where agreed between the parties and the arbitral tribunal, the arbitral tribunal may take steps to facilitate settlement of the dispute, provided that every effort is made to ensure that any subsequent award is enforceable at law.”
In 2014, ICC Commission published the “Effective Management of Arbitration – A Guide for In-House Counsel and Other Party Representatives.”
This Guide included a section entitled “Settlement Considerations,” describing how settlement methods under the ICC Mediation Rules and case management techniques in arbitration can be used to facilitate settlement.
The section concludes: “Arbitrations often take on a life of their own once the parties have developed their positions and incurred costs. Parties and their counsel should keep in mind that a settlement can occur at any time during an arbitration and that the ICC Rules of Arbitration encourage the parties to explore this possibility. When exercising their will and their creativity in seeking a settlement, parties often arrive at solutions that are unavailable through arbitration.”
In the ICC 2021 Arbitration Rules, the wording of Appendix IV evolved further, and rather than simply informing parties that they were free to settle their disputes, arbitrators were empowered to “encourage the parties to consider settlement.”
