In the age of globalisation and commercialisation, it is more and more often that disputes arise between people and companies from around the world, whether they stem from disagreements about contracts or conflicts arising from work execution etc. What remains essential in resolving such disagreements is to determine which mechanism one should choose to resolve the parties’ disputes. More recently, alternative dispute resolution has become more prevalent.
Traditionally, parties will go to the court to settle their disputes. However, the court legal system is rigid and inflexible. Thus, may not lead to the best legal result that the parties are hoping for.
Lately, Alternative Dispute Resolution has become a more and more common and popular option for parties to settle their disputes (normally through a settlement agreement) without the need to go to court.
Alternative Dispute Resolution refers to a private, voluntary process of dispute settlement, where parties agree to appoint a neutral third party to help them settle their disputes. It can speed up dispute resolution to ensure that progress is not hindered by the need to await the outcome of protracted litigation.
The reason why people would agree to adopt alternative dispute resolution is because of the various advantages:
Alternative dispute resolutions can be done in weeks/months whereas litigation through court can take years
Lawyers and experts are employed for a shorter period of time, so the fees for their work time are lower in comparison to the costs of court litigation; People who cannot necessarily afford court litigation can thus go for alternative dispute resolution instead
As apart from arbitration and expert determination, parties are not necessarily bound by the result of the alternative dispute resolution; Moreover, unlike in court, they have the opportunity to tell their own side of the story by themselves instead of through lawyers
As alternative dispute resolutions are generally more about parties cooperating to work out a win-win solution rather than a legal battle
Is preserved through alternative dispute resolution. Private contractual terms and business practices are safeguarded in the alternative dispute resolution processes; private processes also preserve business relationships as company disputes are not brought to public light
Compared to court litigation as there is no need for court appearances, lawyers and the whole affair is more private (court litigation will usually be put on public record as well)
It is possible for alternative dispute resolution processes to make agreements/arrangements that courts may not enforce or order e.g. policy changes in a business/cross-border arbitration
There are various forms of alternative dispute resolution including arbitration, mediation, negotiation, and expert determination. The most common ones are arbitration and mediation.
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions.
The ICC and LCIA are the two most widely used arbitral institutions in Europe and in Asia, the parties generally prefer HKIAC or SIAC. The UNCITRAL Arbitration Rules are the best-known and most widely used ad hoc rules, which can be used if the contracting parties wish to avoid involving an arbitral institution above.
For an arbitration to take place, disputing parties must all agree to take their dispute to arbitration. The agreement is often made in the form of an arbitration clause in business contracts.
Parties signing the contract will agree that any disputes arising from the contract will be heard by one or more private individual(s) who are acting as arbitrators. Even if parties try to go to court, the courts will normally stray from the proceedings and force the parties to arbitrate instead to be in accordance with their contract.
The arbitral reward is final and binding on the parties and cannot be challenged except in exceptional circumstances. What also distinguishes arbitration is that arbitral awards made in one country can be enforceable through the courts of many countries around the world.
“Any dispute shall be referred to and finally resolved by arbitration under the [relevant arbitration body] which Rules are deemed incorporated by reference into this clause. The arbitral tribunal shall consist of [1 or 3] arbitrator(s). The language of the arbitration shall be [English] and the seat and place of the arbitration shall be [venue].
Neither party shall be limited in the arbitration to the evidence or arguments previously put before the Panel to obtain its decision. The arbitrator[s] shall have full power to open up, review and revise any decision, approval, recommendation or determination made and the decision of any Expert Panel in respect of the Dispute referred to arbitration.”
Apart from using an arbitration clause, some parties may choose to sign an arbitration agreement if parties do not prefer to go to court when a dispute arises.
This separate arbitration agreement is necessary if there is no arbitration clause in the original contract, as one party cannot unilaterally force another party to arbitrate.
The arbitration agreement provides the legal basis for the arbitrator’s jurisdiction. Parties can modify or add on to the terms of the arbitration agreement by highlighting the applicable arbitration rules, venue, place of jurisdiction, and the binding nature of arbitration by express writing in the arbitration agreement.
The arbitration agreement is usually drafted in broad language, e.g. claims arising out of or in connection with a particular contract. The broadness of the term thus can cover both contractual or tort claims in relation to this contractual transaction.
DocPro has two versions of arbitration agreements for users to download:
1. Agreement to arbitrate:
2. Agreement to settle
Mediation is another of the methods of alternative dispute resolution available to parties. Mediation is essentially a negotiation facilitated by a neutral third party (called a “mediator”) to help the disputing parties reach a settlement.
Unlike arbitration, which is a process of ADR somewhat similar to a trial, mediation doesn't involve decision making by the mediators.
Mediators do not issue orders, find fault, or make determinations. Unlike an arbitrator, mediators do not provide legal advice but only facilitate the mediation process. Mediation is more often used in personal or family disputes.
Mediators help parties to reach a mutually acceptable settlement by identifying possible solutions and reviewing the strengths and weaknesses of the two parties’ claims during the mediational processes.
The mediator will assist with communications, obtain relevant information, and developing options during the mediational processes.
The mediator generally encourages parties to reach a mediation agreement but is not given any power to impose a judgment, so the results of the mediation are not legally binding on the parties. The mediation settlement is, therefore, more of an agreement than an enforceable award/judgment.
Parties may choose mediation over an arbitration/litigation as it is more flexible. This is due to the unbinding-nature of the mediation processes. Moreover, the parties can put an end to the mediation at any time at their own discretion. However, if an agreement can be reached, the parties will sign a mediation agreement which is in turn binding on the parties.
DocPro has 2 forms of mediation agreement for users to download:
1. Agreement to Mediate
2. Agreement to Settle
Negotiation is a communication process between parties with the intention to reach an agreement that both parties are satisfied with. It will involve the examination of facts, bargaining and arguments from both sides.
Different from the mediation, there is no need to appoint a neutral third party.
Expert determination is a process where disputes between parties are determined by one or more experts by agreement between the parties. The determination will be binding unless the parties agreed otherwise. The experts that are appointed are usually those who have specialised knowledge in relation to the issue.
The agreement will usually be found as a form of an expert determination clause in the contract where the dispute arises from. When a dispute arises, it can then be referred to expert determination by means of a submission agreement between the parties.
Alternative dispute resolution is completely voluntary (except for those where there is an arbitration clause in the contract) so parties are free to choose any form of alternative dispute resolution that they want.
Parties can take into account the following factors:
Contract: One should first refer to their contractual terms where the dispute is arising from as parties will be bound by their contracts to go for arbitration if there is an arbitration clause in their contracts.
Differences between each form of alternative dispute resolutions:
Arbitral awards and expert determination results are final and binding but settlements from mediation and negotiation are not. However, negotiations and mediations offer more freedom to parties to decide on the way they would like to settle and the agreement terms.
For more information on alternative dispute resolutions and sample clauses, please refer to the introduction to alternative dispute resolution and sample clauses guide at:
For more samples of contractual clauses on dispute resolution/ settlements by alternative dispute resolution, please see:
Similar to court litigations, parties can represent themselves in alternative dispute resolutions if they are unable to afford or do not want legal representation. However, legal representation is generally recommended. This is because it is usually helpful for parties to have lawyers when the case involves complicated legal issues that the parties may not be knowledgeable about.
Moreover, for parties who want to dispute binding foreign arbitral awards, they must turn to a legal court trial, where legal representation will thus become fundamental.
It is fundamental for the neutral third party (e.g. arbitrator, mediator) to be impartial and independent. Both parties need to agree to appoint the same arbitrator or mediator before carrying on with the alternative dispute resolution.
Arbitrators and mediators usually come from various professional backgrounds and have undergone training in arbitration and mediation skills and techniques. They have to meet accreditation requirements covering knowledge and skills in fundamental laws, practices, negotiation and dispute resolution.
They are also required to abide by a Code of Practice and have substantive experience. The qualification / accreditation organisations will handle the complaints against the arbitrators and mediators.
There are organisations around the world that provide lists of arbitrators and mediators that one can appoint, e.g. in the UK, one can find a list of arbitrators from the London Court of International Arbitration, Chartered Institute of Arbitrators etc.
Below is a non-exhaustive list of common organizations that provide a list of arbitrators and mediators of different countries:
Australian Centre for International Commercial Arbitration (ACICA)
List of arbitrators: https://acica.org.au/arbitrator-panellist-search/#!directory
List of mediators: https://acica.org.au/mediator-panellist-seach/#!directory
List of arbitrators: https://adrchambers.com/arbitrators/
List of mediators: https://adrchambers.com/mediators/
List of arbitrators, mediators, expert witnesses and adjudicators can be found from their members’ directory: https://www.ciarb.org/membership/member-directory/?page=1&name=&specialism=&countryOfResidence=
Searching for a mediator: https://civilmediation.org/mediator-search/
List of mediators: https://usam.com/mediator-panel/
List of arbitrators and mediators: https://www.uscib.org/uscib-arbitratormediatorexpert-database/
List of arbitrators and mediators: https://www.namadr.com/neutrals/
List of arbitrators: http://icadr.nic.in/# (Please see under the Tab “Panel”)
List of mediators: http://icadr.nic.in/file.php?123?12:1545289166
Canadian Arbitration Association
List of arbitrators: https://www.siac.org.sg/our-arbitrators/siac-panel
List of mediators: http://simc.com.sg/mediators/
List of mediators, adjudicators, neutral evaluators etc.: https://www.mediation.com.sg/experts/mediators/
International Centre for Settlement of Investment Disputes (ICSID) is an international institution focused on international investment dispute settlement
List of Arbitrators, Conciliators and Ad Hoc Committee Members: https://icsid.worldbank.org/en/Pages/arbitrators/CVSearch.aspx
The governing law that is applied during alternative dispute settlement processes is usually the governing law of the contract.
If the contract is governed by foreign law, parties may be required to find an expert witness to give evidence in order to find the applicable principles of foreign law for the arbitral tribunal.
If the contract is silent on what the governing law is for the contract, the contract should be governed by its putative proper law as determined by Conflicts of Laws principles and agreed by the parties.
In case of an arbitration, the tribunal itself will determine what the law is. It is therefore recommended to include in any agreement the specific governing law and jurisdiction for dispute resolution to prevent any misunderstandings.
For settlement by mediation / negotiation, the enforcement of any settlement agreement agreed by the parties is no different from enforcing any other contract under Contract Law. So one should be careful in selecting the governing law, jurisdiction or arbitration and exclusive or non-exclusive jurisdiction when preparing the settlement agreement to ensure that it can be properly enforced overseas.
The lack of an effective method of enforcement for settlement is a major impediment to international mediation. The parties in international commercial disputes may not make full use of mediation given the risk that any outcome might be unenforceable. The parties may prefer to resort to arbitration where there is a higher possibility of enforcement in cross-border disputes.
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), also known as the New York Convention, is one of the key instruments in international arbitration. The New York Convention recognizes and enforces foreign arbitral awards and court referrals to arbitrate. Below is a list of countries/ jurisdictions that have ratified the New York Convention:
If your country is a signatory to the New York Convention, foreign awards will be enforceable in your country regardless of where the arbitral award was handed down. For some courts, when handling arbitral awards handed down by foreign arbitration tribunals, they will only carry out a nominal examination of the arbitral awards with minimal intervention to see if the arbitral award is going against legal procedures or is legally incorrect.
In many cross border transactions, arbitrations are generally preferred over courts if both parties are from New York Convention member states. This is not only because of the lower costs of arbitrations, but it is generally easier to enforce an arbitral award between New York Convention member states than a judgment from courts.
Please note that this is just a general summary of the position under common law and does not constitute legal advice. As the laws of each jurisdiction may be different, you may want to speak to your lawyer.
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