The existing network of international investment agreements, including the Energy Charter Treaty (ECT) have created a strong degree of legal certainty in the relationships between foreign investors and the countries hosting their investments. However, there is a growing recognition that solving investment disputes by rights-based adversarial adjudication means, for example, through national courts or investment arbitration, could be expensive, drawn out and destructive for long-term relations.

While international arbitration is a useful mechanism in the hands of investors, solving disputes through more flexible means, looking at the interests of both parties, could better ensure stability for complex long-term relations. Amicable agreements are always to be preferred and arbitration should be the last resort.

What is investment mediation?

Mediation is a process in which a neutral third party, a mediator, actively assists the disputing parties to reach a settlement based on their business interests and risk assessments, or policy considerations, and not only their legal positions. In this informal but organised process, the mediator facilitates negotiation among the parties to help them identify interests, develop settlement options and overcome barriers to settlement.

Mediation can be used in any type of dispute, including those where numerous parties are involved. Though mediation is often considered at the onset of a dispute, it can be initiated at any time, even while arbitration is ongoing. Therefore, the key question is when mediation will be a helpful instrument for the disputing parties in a particular case. The earlier mediation takes place, the less information parties may have available, but they can save more on legal costs.

Oct-Dec 2017 issue

International Energy Charter