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Mediation or Arbitration? Smart Choices in International Business


Effective dispute management is a critical factor in today's complex business environment. Alternative Dispute Resolution (ADR) offers a range of effective out-of-court dispute resolution methods, including mediation and arbitration. By understanding the differences between these processes, businesses can choose the most appropriate route for their needs.

The ADR Landscape

Alternative dispute resolution (ADR) methods, such as mediation and arbitration, resolve disputes without going to court.

  • Mediation involves a neutral third party who helps the disputing parties to communicate and negotiate an agreement. The mediator does not impose a decision; the outcome remains in the hands of the parties unless they agree otherwise.

  • In contrast, arbitration involves a neutral arbitrator or panel who hears arguments from both sides and makes a binding decision, making it more formal and similar to a court process. Mediation's flexibility encourages amicable solutions and preserves relationships, while arbitration's formal, binding nature provides a definitive resolution.

 The Trend Towards Mediation

With the entry into force of the United Nations Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention on Mediation) on 12 September 2020, there is a compelling shift towards the global use of mediation. This landmark Convention, a beacon of hope for businesses, ensures that mediation agreements can be enforced internationally, significantly increasing the attractiveness of mediation for resolving cross-border disputes. The ability to have mediation agreements recognised and enforced in different jurisdictions makes mediation a viable option for businesses seeking efficient and amicable dispute resolution.

To Sum Up

Before considering arbitration, companies should first try mediation. It is often quicker, less expensive, and preserves business relationships by encouraging co-operation. In addition, opting for ad hoc mediation rather than relying on the mediation services offered by arbitration centres can increase the parties' control and allow them to tailor the process to the specific needs of the dispute. Mediation, a proven and effective method, can help businesses benefit from a more collaborative, cost-effective and efficient dispute resolution process. As the ADR landscape evolves, staying informed and adaptable will be key to maintaining solid and productive business relationships.

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