Mediation law for commercial dispute resolution

http://www.thefinancialexpress-bd.com/2015/03/18/85368 VOL 22 NO 126 REGD NO DA 1589 | Dhaka, Wednesday, March 18 2015

Mediation law for commercial dispute resolution M S Siddiqui A 'commercial dispute' means (as defined by the US Mediation Act) a dispute between parties relating to matters of a commercial nature, contractual or not. There are related to trade transactions for supply or exchange of goods or services, distribution agreements, commercial representation or agency, factoring, leasing, construction of works, consulting, engineering, licensing, investment, financing, banking, insurance, exploitation agreements and concessions, joint ventures, other forms of industrial or business co-operation or carriage of goods or passengers etc.

Alternative Dispute Resolution (ADR) is out- of-the-court settlement of disputes and has many options like arbitration, mediation, reconciliation, mitigation etc. The popular options are arbitration and mediation. There are some differences between arbitration and mediation.

All commercial disputes are not appropriate for arbitration. Where the amount in dispute is comparatively small, or where some non-legal issues are involved, the most frequently chosen option is mediation. Small and medium enterprises, for instance, would not normally opt for arbitration. They would not be able to afford the cost involved, or the legal fees. For such disputes, it is common to resolve the problem through mediation.

Mediation has a magnificent feature: it allows the disputing parties to resolve their disputes and resume their business relationship, if they so choose. It usually involves some private meetings between each party and the mediator. The silent feature of mediation is that any discussions and its results are not made public unless both parties so desire. Even the outcome may be publicised, if both parties agree.

Mediation means a collaborative process into a commercial dispute which parties agree to request a third party, referred to as a mediator, to assist them in their attempt to reach a settlement of their commercial dispute, but a mediator does not have any authority to impose a solution to the dispute on the parties.

Mediator assists the parties in their negotiations, independently and impartially. He does not make a decision about the merits of the case or the resolution. A mediator facilitates re-appraisal of the situation, risks and opportunities, and considers a range of possible ways of resolving the

dispute. He is focused on resolution of the dispute on mutually acceptable terms.

The mediator must have no stake in the dispute or its outcome. He cannot be linked to either party in dispute. In some cases, the mediator may be a specialist in the particular area of dispute wherein some technical or specialised knowledge involves understanding of the nature of dispute.

Mediation process is confidential and without prejudice (up to the point where agreement is reached) and is non-binding and consensual - either party can walk away from the mediation.

The process is forward-looking and can maintain the business relationship between the parties more effectively than litigation/arbitration, which are both retrospective and antagonistic forms of dispute resolution.

The court and in arbitration, both the parties try to won and finally one party win the case but in mediation the parties are able to agree on solutions that would be beyond the scope of a judge or an arbitrator, for example, finding a 'win-win' solution by introducing commercial issues, not the subject of an existing dispute.

A mediator does not judge the issues but facilitates agreements which can be committed to in a binding form. He is entrusted with the 'true' position of each party as to where the dispute will be settled. He helps the parties to bridge the gap between them since he knows how wide the gap truly is, as opposed to the parties' public statements. Sometimes, the inside story is different from the public statement.

The increasing use of mediation throughout the world has largely been attributed to the encouragement given by courts to use mediation as an aid to settlement. In the modern world, over 90 per cent of commercial disputes are settled prior to a court or arbitration hearing.

Bangladesh started practising Alternative Dispute Resolution (ADR) in settlement of disputes before going to formal court system. The United Nations Commission on International Trade Law (UNCITRAL) is a subsidiary body of the General Assembly. Bangladesh has become a party to the New York Convention of UNCITRAL on international commercial mediation and followed the model law to pass an arbitration law in 2001 relating to international commercial arbitration, recognition and enforcement of foreign arbitral award and other arbitrations. This law is the updated version of The Arbitration (Protocol and Convention) Act, 1937 and the Arbitration Act, 1940.

The Civil Procedure Code (Amendment) Act 2002 had been enacted to introduce ADR system for early and consensual disposal of civil suits. Section 89A and 89B have been inserted to allow parties to settle their disputes in suits through mediation or arbitration but ADR is not widely practised.

The other law of the country was also updated incorporating mediation for domestic disputes between banker and borrower, national exchequer and tax payers, property developer and buyers etc. The Artha Rin Adalat Ain (Money Loan Court Act) 2003 inserted the option of mediation in 2010. Again in 2013, mediation was made mandatory prior to hearing in court. The Bangladesh

Energy Regulatory Commission Act 2003 and the Real Estate Development & Management Act 2010 provide for ADR. Customs, VAT and Income Tax were also amended to facilitate ADR of cases on optional basis.

The process for settlement of industrial disputes is stipulated under Section 210 - 211 of the Labour Act 2006 with negotiation and conciliation.

The International Chamber of Commerce is running the Bangladesh International Arbitration Centre (BIAC) for Arbitration and recently started mediation. The Bangladesh Indenting Agents Association (BIAA) is in process of setting up a mediation entre in collaboration of the China Council for the Promotion of International Trade (CCPIT). It comprises enterprises and organisations representing the economic and trade sectors in China. Their mediation centre is a standing organisation dedicated to helping disputants resolve disputes arising out of commercial and maritime transactions by means that do not involve litigation and arbitration. The centre has established 43 sub-centres, forming a nationwide conciliation network. They have much collaboration with many trade associations in other countries to set up overseas centres. The BIAA is the Bangladesh partner of the CCPIT to resolve disputes of parties between Bangladesh and China.

Our experience is not encouraging in domestic and international business arena. Parties in dispute are not very keen in ADR. The overseas parties are not also very keen to come to Bangladesh for ADR due to many reasons. One of the reasons is enforcement of decisions. The parties in disputes feel the necessity of addressing the enforceability of a settlement agreement that arises out of mediation.

Although mediation is an option in some laws in Bangladesh, modern mediation techniques have not been practised adequately. Bangladesh has arbitration law and mandatory and optional mediation options in some laws. It needs a specific law to enforce and encourage use of mediation. The law may be based on the United Nations Commission on International Trade Law, (UNCITRAL) Model Law on International Commercial Conciliation (2002), Confidentiality is a basic characteristic of mediation. The parties in disputes are concerned over their business secrets. The disputed parties prefer mediation than arbitration or court litigation to safeguard business secrets. The law should be carefully drafted to protect the confidentiality of information since the best part of mediation is quick disposal and confidentiality of information related to disputes.

The mandatory law will help resolve many disputes in domestic and cross-border disputes without going through expensive and lengthy legal process.

The writer is a legal economist shah@banglachemical.com