Litigation: Is it smart to spend time and money to be right?
This is the big question that a disputant should ask when proceeding to litigation. Today, there are options to litigation such as Mediation where the focus is not on being right, but on the needs of disputants and on reaching a settlement to satisfy those needs. Mediation is a process that is fast and cost effective. So it’s a call to be smart - spend time and money to be right ( litigation - where you may even end up being wrong) or spend much less time and much less money to satisfy needs (Mediation).
Delays in courts have reached ridiculous levels. Searching for ways to reduce delays has been the preoccupation of many Ministers of Justice over many years. The challenge to find solutions continues. One of the most comprehensive studies was carried out by the “Laws Delays and Legal Culture Committee” headed by Justice R. S. Wanasundera in 1984/ 85. The report detailed the causes for delays and proposed solutions. It contained a poignant observation that ‘in an adversarial system of justice such as ours, delays destroy justice, deterrence is lost, costs are increased, court resources are wasted and severe emotional hardship is inflicted upon litigants. In combination, these factors undermine the efficacy of the whole legal system, sapping its strength, vitality and even its integrity, and making the majority of litigants lose confidence’. These sentiments remain relevant today, 36 years later. While substantive and procedural laws can be reformed in an attempt to eliminate delaying features, the legal culture which is a significant contributor can only be reformed through good practices that then constitute our legal culture. Here’s where we fail.
Laws delays is not a phenomenon that’s peculiar to Sri Lanka. It’s a problem in many jurisdictions across the globe. It’s this disillusionment with litigation which is riddled with delay and consequential expense that has motivated the diversion to alternative methods of resolving disputes. The most popular Alternative Dispute Resolution (ADR) methods are Arbitration, Mediation and Negotiation. In Sri Lanka, the practice that has developed around Arbitration has corrupted it with the same evils of delay and expense that compelled a search for alternatives. It’s fast losing its status as the most favoured ADR method. This situation has a serious adverse impact on the ease of doing business. A regime that offers cost effectiveness and efficiency in terms of time and which makes good commercial sense, is what business is asking for. At a time when Sri Lanka looks to attract investors, and to inspire local business, improving our ADR services makes good sense. This article discusses Mediation which is fast becoming accepted globally as an alternative that offers benefits that have proved to be meaningful.
Why Mediation?
Facilitative Mediation offers a process that’s unique in its features and is in complete contrast to litigation or Arbitration. Mediation evokes excitement because it’s speedy and cost effective. These virtues alone make a good case for opting for Mediation. There are others -
It provides for party autonomy. Parties decide on the Mediators, the venue, the language of the mediation, the rules, and importantly controls the outcome. No outside party sits in judgment over the dispute or how it should be settled. It’s informal. Parties sit with the Mediator in an informal setting and are provided ample space during the sessions to speak about their concerns. There are no formalities as in a court of law. But parties are required to conduct themselves in a disciplined manner. Parties are guided to move away from positions and focus on interests and needs instead.
Procedural rules are simple and user friendly and are designed only to ensure responsible conduct. The process is not bogged down with procedural imperatives. There’s never a risk as prevails in litigation, that some flaw in complying with a procedural rule will get primacy over the legal merits of the dispute, in determining the fate of the parties.
It’s voluntary. The disputants use the option of mediation by choice and are free to walk out of a mediation at any time and are not obligated at any stage to stay in the process. This is so, even if reference to mediation is mandatory by law, based on the category of dispute and its monetary value. What is mandatory is to attempt a mediated settlement prior to proceeding to file action in a court of law.
There’s no judgment of right vs wrong. It’s a process that seeks to find common ground to agree on a settlement and is not a process that evaluates legal entitlements although those can also be taken into account by parties when agreeing to a settlement.
The process affords the opportunity for parties to repair fractured feelings, because of the non adversarial approach thus enabling an ongoing business relationship.
It’s confidential: This is an important feature of Mediation. Parties are required to sign agreement to maintain confidentiality with regard to all matters discussed. Parties agree not to divulge the substance of discussions at any other dispute resolution forum. The process is skillfully facilitated by a third party neutral, the Mediator. The Mediator controls the process using special skills and techniques and facilitates the disputants to reach an outcome that’s acceptable to them. The Mediator ensures that ground rules are followed to control emotions and avoid aggression during discussions. Neutrality of the Mediator is an important feature. The Mediator must at all times maintain independence and neutrality. If at any time a disputant feels that this principle is breached, a mediation can be terminated.
In Sri Lanka the Mediations Boards Act, No. 72 of 1988 as amended, and the Mediation (Special Categories of Disputes) Act No. 21 of 2003 provide for the establishment of Mediation Boards by the State, for the resolution of various categories of disputes.
UN Convention on Mediation
Mediation has increased in acceptance over the years because of its benefits. It is this popularity and its increasing use in international commercial dispute resolution that inspired UNCITRAL’s Working Group on Dispute Settlement to negotiate and draft the Convention on International Settlement Agreements Resulting from Mediation which provides for a harmonious regime that sets standards for the cross-border enforcement of international settlement agreements resulting from mediation.
The Convention was adopted by the UN General Assembly on December 20, 2018 and opened for signature on August 7, 2019 in Singapore. Sri Lanka became a signatory on that same day. Popularly known as the "Singapore Convention on Mediation", it came into force on September 12, 2020. As at February, 2022 it has been signed by 55 countries. Sri Lanka is now obligated to enact domestic legislation to give effect to the provisions of the Convention. UNCITRAL’s work on the Convention and its adoption by the UNGA, is evidence of the the global acceptance of Mediation to resolve commercial disputes.
Delays in courts have reached ridiculous levels. Searching for ways to reduce delays has been the preoccupation of many Ministers of Justice over many years. The challenge to find solutions continues
The CCC- ICLP International ADR Centre
In 2018, the Ceylon Chamber of Commerce (CCC) and the Institute for the Advancement of Commercial Law and Practice (ICLP) as joint partners, founded a new Centre, the CCC-ICLP International ADR Centre to provide ADR services. It was a response to the need of the business community for more efficient dispute resolution. The Centre launched its Arbitration and Mediation Rules in April 2021 and has trained Mediators and Arbitrators who are available to provide services. The Arbitration Rules of the Centre seek to eliminate some of the common causes for delay. It’s the only Centre that offers institutionalised Mediation for commercial dispute resolution.
Conclusion
Given the global success of mediation, the services provided by the CCC-ICLP IADR Centre will no doubt improve the commercial dispute resolution landscape. It will also contribute to improve Sri Lanka’s performance in the contract enforcement indicator in the Doing Business rankings. The enactment of domestic legislation to enable the enforcement of international mediated settlement agreements in line with the Singapore Convention will also certainly enhance Sri Lanka’s potential to attract foreign investors.