MEDIATION TAKES ON INVESTOR-STATE DISPUTE SETTLEMENT
Across the spectrum of alternative dispute resolution (ADR), mediation has gained significant momentum in international commercial dispute resolution, where it is now clearly preferred over other established methods in cases where there is a chance to salvage the commercial relationship at stake.
Mediation serves to establish a common ground between parties in dispute, unlike arbitration that is won based on which party presents the stronger legal case. Under the guidance of the impartial mediator, the process encourages collaborative approaches that take into account commercial and other aspects. Recourse to mediation to forge sustainable solutions that reach beyond purely legal considerations has proven to work across industries and jurisdictions. Its recognition as a universally applicable method of ADR is evidenced by the steady evolution of multi-tiered commercial dispute resolution frameworks on a local, regional and international level.
The new frontier for mediation is incorporation into the investor state dispute settlement (ISDS) framework. In contrast to international commercial disputes, disputes between private parties and sovereigns take on a structure that poses a unique array of challenges. At the same time, international consensus seems to be forming to the effect that the incorporation of mediation will be a catalyst that works to the benefit of both states and investors.
At this important juncture, there are diversified views on how to reform the mechanism. Recent proposals to introduce mediation as an ADR method into ISDS illustrate a shift toward a party-driven yet process-focused method that produces win-win solutions and supports long-term relationships, which takes on an increased importance in investor-state relationships.
Apr-Jun 2021 issue
AKG ADVISORY