Abstract
The normal process for resolution of transnational commercial disputes in the resources sector is arbitration. Few disputes are mediated following an unsuccessful negotiation or once arbitration has commenced. This may be contrasted with domestic commercial dispute resolution throughout developed (and in many developing) jurisdictions where some form of mediation is commonplace. The European Parliament recognised the value of mediation of cross border disputes through its Mediation Directive in 2008. Other institutions and influential intermediaries such as international arbitration centres and the ICC have rules that facilitate and govern commercial mediation. The question arises: why are disputants in the resources sector not more predisposed to mediation as a first step in the dispute resolution process before resorting to arbitral or litigation proceedings? This chapter argues the case for the greater use of mediation by transnationals in the resources sector. It outlines some of the positive factors that ought to encourage participants to turn to mediation as their preferred process for dispute resolution in this sector or indeed have it as the default process. Some potential negative factors that might dissuade parties from adopting a ‘mediate first’ approach are considered. Different mediation processes and styles are also considered to demonstrate mediation’s flexibility and suitability to the resources sector.
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Notes
- 1.
The Right Honourable the Lord Woolf (discussing compulsory reference to mediation), ‘Mediation: The Way Forward’ (Speech delivered at the 2013 Singapore Mediation Lecture, Singapore, 10 October 2013) http://www.mediation.com.sg/assets/downloads/address-by-the-rt-hon-the-lord-woolf/lordwoolfspeech.pdf.
- 2.
NADRAC was an independent non-statutory body established in 1995 to provide expert policy advice to the Australian Attorney-General on the development of ADR and promoted the use of alternative dispute resolution. NADRAC concluded in late 2013.
- 3.
NADRAC, Dispute Resolution Terms (3 September 2003) Australian Government: Attorney-General’s Department http://www.ag.gov.au/LegalSystem/AlternateDisputeResolution/Documents/NADRAC%20Publications/Dispute%20Resolution%20Terms.PDF.
- 4.
Council Directive 2008/52/EC of 21 May 2008 on Certain Aspects of Mediation in Civil and Commercial Matters [2008] OJ L 136/3, art 3(a) (‘EU Mediation Directive’), includes this definition: ‘Mediation means a structured process, however named or referred to, whereby two or more parties to a dispute attempt by themselves, on a voluntary basis, to reach an agreement on the settlement of their dispute with the assistance of a mediator. This process may be initiated by the parties or suggested by a court or prescribed by the law of a Member State.’
- 5.
Adam Curl, Making Peace (Tavistock Publications, 1971) 177.
- 6.
Christopher W. Moore, The Mediation Process, Practical Strategies for Resolving Conflict (Jossey–Bass, 1st ed, 1986) 124.
- 7.
Conciliation is rarely the preferred means of resolution of commercial disputes in Australia. It is, however, in the field of industrial relations: the Conciliation and Arbitration Act 1904 (Cth). While much has changed in the industrial landscape over the last century, conciliation is an integral part of industrial relations and arguably remains an important principal means of resolving industrial disputes in Australia. The Institute of Arbitrators & Mediators Australia (IAMA), a professional body that has provided arbitration and conciliation services since 1975, has embraced mediation since the mid-1990s when the demand for domestic arbitrations and conciliation dropped off.
- 8.
For a discussion on the objectives and applicability of the EU Mediation Directive governing various mediation issues within Member States, and for a review of the availability and process of mediation in 21 jurisdictions across the Americas, Asia-Pacific and Europe specific examples see: Linklaters, Commercial mediation—a comparative review—2013 (3 April 2013) http://www.linklaters.com/Publications/Commercial-mediation-comparative-review-2013/Pages/Index.aspx#sthash.uQ3mDcMV.
- 9.
Christian-Radu Chereji and Constantin-Adi Gavrila, ‘What went wrong with mediation?’ on Kluwer Mediation Blog (6 February 2014) http://kluwermediationblog.com/2014/02/06/what-went-wrong-with-mediation/.
- 10.
Lord Woolf, ‘Mediation: The Way Forward’, above n 1:
An explanation may be that arbitrators, especially in commercial litigation, are more diffident in encouraging the use of mediation than full time judges who would conduct the trial in civil or commercial courts. After all, they usually owe their appointment as arbitrators to the parties’ lawyers. Thus, arbitrators would be likely to defer to them on questions such as whether there should be an attempt to resolve the dispute by mediation.
- 11.
This view is based on a review of many contracts in the oil & gas sector and mining sector in Western Australia and beyond, including forms of Joint Operating Agreements (JOAs) used in the upstream oil and gas sector commonly adopted by multinationals, and based on my discussions with those who draft such contracts.
- 12.
In the Supreme Court of Western Australia for example a mere 3 % of cases filed proceed to a trial. By comparison, the incidence of disposal of arbitral proceedings by award following a hearing may reveal a different outcome, though this is conjecture and would not easily be established given the number of ad hoc arbitrations.
- 13.
Justice PA Bergin, ‘The objectives, scope and focus of mediation legislation in Australia’ (2013) 2 Journal of Civil Litigation and Practice 49, 56.
- 14.
For example IAMA in Australia, CEDR in the UK, the International Chamber of Commerce (‘ICC’) in Europe and American Arbitration Association in the United States.
- 15.
CEDR Ireland, The Mediation Report (21 March 2013), 8 http://www.cedr.com/docslib/CEDR_Ireland_Mediation_Audit_main_(2).pdf.
- 16.
This disadvantage is more relevant to foreign enforcement; it can be readily addressed, particularly in the Med-Arb process discussed below. This is also being addressed through the EU Mediation Directive [2008] OJ L 136/3 which provides for agreements reached through mediation to be made enforceable should the parties request it. Any agreement that has been made enforceable in one Member State should be recognised and declared enforceable in other Member States in accordance with Community or national law.
- 17.
There are techniques mediators can adopt to counter abusive behaviour, though sometimes if it persists and is sufficiently damaging to the process, little will be gained by allowing the mediation to continue. For further reading on this subject and valuable techniques see: Roxanne K Livingston, Chronically Hurtful People: How to Identify and Deal with the Difficult, Destructive and Disconnected (Createspace, 2011).
- 18.
A party who unreasonably refuses to mediate a dispute that is later litigated can suffer adverse costs consequences. For example Phillip Garrit-Critchley and Others v Andrew Rinnan, Solarpower PV Limited [2014] EWHC 1774.
- 19.
International Chamber of Commerce, ICC Mediation Rules, Article 9 (‘ICC Mediation Rules’).
- 20.
AWB Ltd v Daniels (Unreported, New South Wales Supreme Court, Commercial Division, Rogers CJ, 12 May 1992).
- 21.
EU Mediation Directive [2008] OJ L 136/3, paragraph 6.
- 22.
Ibid paragraph 13.
- 23.
Many Member States have passed legislation specifically to implement the Directive, including France, Germany, Luxembourg, the Netherlands, Spain and Sweden (these jurisdictions are discussed in: Linklaters, above n 8). However to date, other states, including the UK, have only specifically implemented certain aspects of the Directive. Refer to the study entitled: Giuseppe De Palo et al., ‘Rebooting’ The Mediation Directive: Assessing the Limited Impact of its Implementation and Proposing Measures to Increase the Number of Mediations in the in the EU (January 2014) European Parliament: Directorate-General for Internal Policies <http://www.europarl.europa.eu/RegData/etudes/etudes/join/2014/493042/IPOL-JURI_ET(2014)493042_EN.pdf>.
- 24.
ICC Mediation Rules.
- 25.
Nick Rudge, Focus: Asia Pacific International Arbitration Update: New ICC Mediation Rules (9 April 2014) Allens Linklaters http://www.allens.com.au/pubs/arb/foarb9apr14.htm#New_I.
- 26.
International Chamber of Commerce, Suggested Clauses for ICC Mediation http://www.iccwbo.org/products-and-services/arbitration-and-adr/mediation/suggested-clauses/#sthash.FfsemL0f.dpuf.
- 27.
Ibid.
- 28.
International Chamber of Commerce, Mediation Guidance Notes http://www.iccwbo.org/Products-and-Services/Arbitration-and-ADR/Mediation/Rules/Mediation-Guidance-Notes/ (‘ICC Mediation Guidance Notes’).
- 29.
For example, refer to Australian Centre for International Commercial Arbitration at www.acica.org.au, Institute of Arbitrators & Mediators Australia at www.iama.org.au, Australian Commercial Disputes Centre at www.acdcltd.com.au, Centre for Effective Dispute Resolution at www.cedr.co.uk and American Arbitration Association at www.aaa.com.
- 30.
Commercial Arbitration Act 2010 (NSW) s 27D. Some other States in Australia adopted similar amending legislation.
- 31.
For a useful discussion on the relationship between Mediation and Arbitration refer to the ICC Mediation Guidance Notes (above n 29), paragraphs 28 to 35.
- 32.
ICC Mediation Guidance Notes, paragraph 34. Because of the potential risks in some jurisdictions, ICC Mediation Rules, Article 10(3) allows a mediator to act as an arbitrator in the same dispute only when all of the parties have consented in writing.
- 33.
ICC Mediation Guidance Notes, paragraph 34.
- 34.
For a further explanation and valuable contribution to the Med-Arb debate refer to: Alan Limbury, Med-Arb: getting the best of both worlds (29 February 2012) International Mediation Institute https://imimediation.org/cache/downloads/30zzdkccdig4skgw80c8swwc0/hybrid-processes-2010---article-by-alan-limbury.pdf was Australian Alternative Dispute Resolution Law Bulletin 2014 vol no. 4 devoted to the topic.
- 35.
ICC Mediation Guidance Notes.
- 36.
Regulation of mediators through accreditation is still evolving. While incidents of mediators abusing their position may be rare, (for example though lack of suitable training or experience or undisclosed conflicts of interest), safeguards need to be considered to uphold the integrity and competency standards of the mediation profession.
- 37.
Moore, above n 6.
- 38.
Contrast this with an arbitrator or judge, the authority figure who must determine issues according to legal principles and on the evidence as presented.
- 39.
Bernard Mayer, The Dynamics of Conflict Resolution: A Guide to Engagement and Intervention (Jossey-Bass, 2nd ed, 2012) 271.
- 40.
Mark Jackson-Stops, Facilitative or Evaluative? The Myth of the Distinction (18 December 2008) In Place of Strife: The Mediation Chambers http://www.mediate.co.uk/our-knowledge/news_full.html?id=10.
- 41.
In the Supreme Court of Western Australia, the Court may direct that a mediation be conducted by a Judge if warranted by the particular aspects of the case: Supreme Court of Western Australia, Practice Direction 4.2.1 (paragraph 3) and 4.2.1.2, 2 March 2012. A number of judges have been accredited as mediators under the National Mediator Accreditation Scheme. For a detailed analysis of this topic refer to Nicholas Hasluck, ‘Should Judges Be Mediators?’ in Legal Limits (Federation Press, 2013).
- 42.
Often parties engaging in this style of mediation will say they have selected the mediator for this very purpose and had they believed they could persuade the other party they could have done so without a mediator and the only reason for agreeing to mediate is to have the mediator tell the other side that that party’s position is untenable.
- 43.
Unsurprisingly so, as lawyers are trained to analyse and evaluate then argue a case for their clients based on legal principles.
- 44.
‘Deal mediation’ is an important topic and worthy of serious consideration for dealmakers in the resources sector. It is an emerging mediation model and competency. It enables parties who are seeking to negotiate or re-negotiate a deal to do this more effectively by engaging a neutral person (a ‘Deal Mediator’) to actively assist in and manage the negotiation.
- 45.
Having effectively made a ‘determination’, will at least one party regard the mediator as being functus officio?
- 46.
Taken from the title: Robert A Baruch Bush and Joseph P Folger, The Promise of Mediation: Responding to Conflict Through Empowerment and Recognition (Jossey-Bass, 1st ed, 1994).
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Hollingdale, M. (2015). Mediation in the Resources Sector: ‘Alternative’ Dispute Resolution or Now the Norm?. In: Moens, G., Evans, P. (eds) Arbitration and Dispute Resolution in the Resources Sector. Ius Gentium: Comparative Perspectives on Law and Justice, vol 43. Springer, Cham. https://doi.org/10.1007/978-3-319-17452-5_7
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