This article was previoulsly published in the Stockholm Arbitration Report 2000:1.
With its Arbitration Institute long acknowledged in the world of international arbitration the Stockholm Chamber of Commerce has now established a junior sibling – the Mediation Institute of the Stockholm Chamber of Commerce (below the “SCC Mediation Institute”), with its own set of rules for mediation (the “SCC Mediation Rules”).
From a domestic point of view this is quite an event because the SCC Mediation Rules are the only mediation regulations at all available in Sweden, apart from a few provisions within the framework of ordinary court procedure. However, it could also be considered a non-event, in that mediation in one form or the other is an intrinsic part of the Swedish legal “milieu” and therefore something which many legal practitioners always considered a core activity.
From an international perspective the situation could be said to be the opposite – the event there is the swing in the western legal world from an adversarial approach towards more exploratory, consensus searching techniques. Already in 1997 eighty-eight percent (88%) of legal counsel of the 1000 largest U.S. corporations used mediation 1. As a result of this trend almost every dispute resolution centre with an international standing today has ADR-rules as a complement to their arbitration rules, one recent addition being the London Court of International Arbitration (LCIA) Mediation Procedure. Even the ICC now seems to be moving towards adopting its own new ADR-rules.
Therefore, the SCC Mediation Institute and the SCC Mediation Rules established by the Stockholm Chamber of Commerce may not seem all that spectacular. Nevertheless they deserve being introduced and briefly described. I will do so below – highlighting some features particularly worth mentioning.
2. THE MODEL CLAUSE
Any mediation stands on an agreement to mediate. The agreement form recommended by the SCC Mediation Institute for use by parties – before they have a dispute – is the following Model Clause: Any dispute, controversy or claim arising out of or in connection with this contract, or the breach, termination or invalidity thereof, shall first be referred to Mediation in accordance with the Rules of the Mediation Institute of the Stockholm Chamber of Commerce, unless one of the parties objects. If one of the parties objects to Mediation or if the Mediation is terminated, the dispute shall be finally resolved . . .
. . . by arbitration in accordance with the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce.
. . . by arbitration in accordance with the Rules for Expedited Arbitration of the Arbitration Institute of the Stockholm Chamber of Commerce.
. . . in any court of competent jurisdiction.
3. TWO MAIN FEATURES
One important feature of the Model Clause, concerning the front end of the mediation, is that under the SCC Mediation Rules a party can not use mediation for purposes of delay by forcing the other party to participate. If a party objects to mediation the SCC Mediation Rules will not come into operation. As a consequence the mediation clause will – in my opinion – not bar a party from directly requesting arbitration since the request would in itself constitute an objection to mediation. This may at first glance seem to weaken the mediation at its root, but that is not so. On the contrary, the mediation must from its very beginning rest on the relatively sure assumption that both parties would want to explore the possibilities of mediation.
At the far end of the mediation, the SCC Mediation Rules provide another feature worth mentioning: the parties can – if they have reached a settlement agreement, and subject to agreement by the mediator – appoint the mediator as arbitrator for the purpose of confirming the settlement agreement in an arbitral award. This leads into the interesting and seemingly endless discussion whether or not one and the same person can act both as an arbitrator and as a mediator in the same case. Here I will just make a few remarks.
In certain countries like in Germany, it is common in arbitration cases that an arbitrator becomes involved as conciliator, and that if the settlement efforts fail the same arbitrator will finally render an award. This is not common practice in Sweden, mainly because settlement discussions without the arbitrator could be more open, since thereby the parties would avoid the unfortunate situation – in case settlement is not reached – that the arbitrator, as a result of his participation in the settlement efforts, knows more than has been openly presented in the case, when he is rendering the award. The SCC Mediation Rules go clear of this problem by allowing the mediator to act as arbitrator after the mediation has resulted in a settlement agreement, and then only to confirm just that agreement.
It has been suggested, however, that there is another problem in that an award under the SCC Mediation Rules might not be enforceable under the New York Convention. 2. The line of thought is that when the arbitrator was appointed there was no longer any dispute, and since the New York Convention (Article 2) deals with agreements to submit “differences” to arbitration the Convention would not come into operation. It is also thought that appointing an arbitrator after reaching agreement would be analogous to asking a judge to give judgement by consent where no proceedings have been issued, which would be an “abuse of process”.
I believe this argument – although coherent – is wrong. The point of departure in mediation and in arbitration alike is the joint wish of the parties. The systems set up to render arbitral awards and to make them enforceable have a degree of freedom to meet the joint wish of the parties, which is greater than is normally provided in national court proceedings and national exequatur provisions. Two parties who have made an agreement to submit a dispute to mediation and arbitration under the SCC Mediation Rules by use of the above quoted Model Clause must reasonably be said to have expressed their common wish to have the possibility of making the result of the dispute resolution enforceable. If they reach a settlement as a result of the mediation and agree to have it confirmed in an arbitral award they would do so on the understanding that the award would be enforceable. If exequatur were denied one of the foundations of the settlement agreement has been demolished, and arguably the parties have been denied justice.
The more formal arguments are that by submitting their dispute to be resolved under the SCC Mediation Rules the parties have “ab initio” an agreement to arbitrate, and that the arbitrator is identified and potentially appointed already at the start of the mediation process.
Finally it would make little sense to say that asking for exequatur of a consent award would be an abuse of process, such award being the result of the parties having avoided engaging in a full scale arbitration. The analogy with court procedure simply does not work since the two systems have different points of departure.
The main characteristics of the SCC Mediation Rules are:
5. THE CONDUCT
The SCC Mediation Rules do not provide a set of provisions about the conduct of the mediation. This is a matter for the mediator to determine – giving consideration to the wishes of the parties – with a view to reaching an expeditious and efficient resolution of the dispute, within the two months available as from the date when the dispute was referred to the mediator. This flexibility is the great advantage of mediation (anywhere) as it facilitates, or rather requires, efficiency in all doings of the parties and the mediator.
6. CONCLUDING REMARKS
The new Rules provide, at least, two advantages as compared with “ad hoc” mediation: firstly, the initiating party avoids the risk of being seen to have a weak case (since the parties have already agreed to try mediation before going to arbitration or court litigation) and, secondly, the aggregate expertise of the Board of the SCC Mediation Institute is available in the selection of a mediator.
Inevitably the personality of the mediator is an important factor in the creation of the mediation process in each particular case. The reader may have heard that a mediator should have “the patience of Job” and “the wisdom of Solomon” – together with a host of other abilities very rarely to be found in one and the same person. This being maybe an unrealistic requirement profile, a mediator should at least be a good listener, have the ability to put the right questions and know when the time has come to bring the mediation to an end – one way or the other. I would like to say here that one should avoid calling a mediation “a failure” simply because it did not result in a settlement agreement.
The discussion will continue between those who look favourably upon ADR and those who are hesitant, or against it. However, I believe that regardless what stance you take in that debate, there is no reason not to offer the business community the mediation alternative by way of a two-sided option, as does the SCC Mediation Rules. Through the SCC Mediation Rules, the SCC Mediation Institute has now provided means for disputing parties to remain on deck, until and unless it proves unavoidable to engage in the engine room techniques of litigation. It is now in the hands of the business community, their counsels, and the mediators to decide if mediation under the SCC Mediation Rules is to become a successful complement to arbitration.
1. Cornell/PERC Institute on Conflict Resolution, The Appropriate Resolution of Corporate Disputes: A Report on the Growing Use of ADR by U.S. Corporations (1998).
2. Christopher NEWMARK and Richard HILL, “Can a mediated settlement become an enforceable arbitration award?”, vol. 16 Arbitration International (2000, no. 1).
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