28 Jun 2016
Global Mediation Development
By James South, Director of Training at CEDR
In the fortieth year since the Global Pound Conference that “led to the birth of the modern dispute resolution system”, I have been reflecting on how truly international mediation has become. In the last decade, CEDR’s work patterns have dramatically changed. In 2005, 90% of CEDR’s training and consultancy work was based within the UK. This is compared to 2015 when 50% of our work was based internationally. For CEDR’s Disputes Group, in 2005 less than 10% of cases involved international parties, with that figure now over estimated at 30%. As the use of mediation and the skillset of mediation spreads, it is useful to continue to reflect on emerging factors that contribute to the development of mediation around the world.
A key motivation for jurisdictions around the world to consider the use of mediation is to reduce case load burdens and improve clearance rates of the courts. ADR can substantially enhance the efficiency in the administration of justice while allowing the state to streamline administrative costs in the justice sector. As an example in India while the legal institutions of the country are strong it suffers from overload and a huge backlog (according to Government data there are a reported 27 million cases pending before district, high and supreme courts). Amongst other things, as a result there are problems in enforcing contracts. In the past decade, India has sought to enhance the use of ADR with a number of court-based mediation programmes having been established supported by CEDR consultants. Likewise in the Dominican Republic, CEDR is consulting with the World Bank on how best to enhance the use of mediation within the country to facilitate faster, cheaper and more efficient and less adversarial methods of dispute resolution to enhance the operation of the Courts.
The business case
The overall time and cost of litigation are important economic indicators to business as the longer a dispute takes the more costs are incurred. The ability to enforce contracts is essential to encourage new business relationships, to generate confidence in more complex business transactions, to attract foreign direct investment and credit, and for the government to secure tax revenues. As one might expect, the effects of transactional costs are especially felt by Micro, Small and Medium-Sized Enterprises (MSMEs) where the costs of enforcing contracts are often disproportionate to the amount in dispute. Accordingly an ADR system which minimises these issues is seen as a way of improving the business environment.
In the instance of Moldova, the World Bank’s Doing Business (2016) report showed that the from filing a dispute to enforcement of a decision in Moldova takes 585 days and costs on average 28.6% of the claim (which includes court costs, enforcement costs and average attorney fees). Compared to global best practice for contract enforcement (using the World Bank distance to the frontier indicator) Moldova scores 60.87% (out of a possible 100). It was due to this situation that prompted the European Bank for Reconstruction and Development (EBRD) to fund a 3.5 year project implemented by CEDR to enhance the use of Alternative Dispute Resolution in the Moldovan jurisdiction (see our case study for more information ).
Style and substance
Mediation can also be seen as a part of wider Civil Justice Reform. In England and Wales this started with the Woolf Reforms (and later the Jackson Reforms), led to significant structural change as to the incentivisation and sanction of refusing to mediate civil disputes. These rules, and the court’s willingness to use them, have had a significant impact on the use of mediation in England and Wales.
Hong Kong has undergone a similar review with new civil procedure rules due to be published this year which will likely see mediation heavily encouraged for civil cases. This has led to both the Hong Kong Bar and Law Society of Hong Kong to work with CEDR to train mediators in order to service the increasing mediation market within Hong Kong.
Mediation can also be attractive as a means of signalling wider social reforms. Following the Rwandan genocide of 1994, many forms of traditional consensual forms of dispute resolution were developed and used to deal with some of the very difficult and deep divisions within the country at this time. After 10 years of successful use, these consensual processes became engrained into the societal fabric and the Rwandan government were interested in extending their use in the commercial sphere. CEDR worked with the Government of Rwanda and the Kigali International Arbitration Centre (KIAC) to assist in the development of a national ADR policy and operationalisation of civil and commercial mediation within the country. We see similar trends in our work in many former-Communist countries in Eastern Europe. The states had very centrally organised societies and look to use mediation as one method to assist in the transformation of the way states interact with its citizens for mutual benefit including individual empowerment and a more efficient judicial sector. One example is in Croatia where CEDR worked closely with the Ministry of Justice, Commercial Court of Zagreb, and the Croatian Association of Mediators to design, implement, and evaluate the first court-based mediation pilot schemes in the country; supported by comprehensive education and awareness campaigns. More recently, CEDR has been assisting the Government of Moldova to promote the use of mediation and arbitration within the business community to support economic development. Sponsored by the EBRD and UKAID, CEDR’s project team provided technical assistance, capacity building and training programmes. To-date, over 200 civil and commercial disputes have been referred to mediation through the Court pilots including several from the Court of Appeal.
Interestingly I have noticed that there is an emerging trend of supra-national motivations for countries to consider mediation as indicator of ambitions to join and interact in the proverbial ‘global village’. This trend is one which I think we should watch in years to come, as it will begin to play increasing importance.
Europe presents good examples of these trends. The introduction of the EU Directive (2008/52/EC) renewed the impulse for ADR development in Europe. Although expressly applying to the use of mediation in cross-border disputes, in order to implement the directive many civil law-based countries have enacted legislation to operationalise mediation domestically also. CEDR has partnered with local providers in several countries including Greece, France, Netherlands and Spain to provide mediators to this emerging European mediation market. As a consequence, businesses in Europe being used to mediating within and across their border cross-border disputes they may also look at doing the same in other parts of the world where problems of contract enforcement, delay and poor business environments exist. Ultimately if the demand for mediation is there, in a desire to become part of global villages, countries and organisations which have not developed mediation will begin to take it more seriously.
Ironically given the recent UK referendum vote to leave the EU, it will be interesting to see if the UK mediation profession can maintain a leading role in Europe and the world in respect of the development of mediation.
Mediation skills as a business tool
The growing culture of mediation in the world also goes beyond developing good practice in commercial disputes. Businesses in the modern interconnected world are also becoming more collaborative in their practice and their for the use of mediation skills, and other collaborative practices are developing as part of good practice in broader commercial relationship and work practices. This is clearly visible by the increasing number of participants CEDR sees coming on its Mediator Skills Training courses, not because they want to be mediators, but because they want to use the skills of a mediator within their everyday working lives. This has led CEDR to develop the Mediator Skills for Leaders course, which focusses on upskilling business leaders in the collaborative and negotiation skills used by mediators.
Furthermore, the skills that the mediators have developed are influencing the shape of broader social relationships in many organisations. Alongside the demand for better dispute resolution, there has been an increasing demand for better conflict and dialogue capability within organisations to enhance performance. In the past five years, CEDR has assisted many organisations worldwide from global banks and UN agencies to local councils and school trusts to create a more resilient organisational culture through dialogue and conflict management skills-based training.
The above are just some of the reasons public and private organisations around the world are turning to mediation, and with each project we learn more about how best to develop this emerging profession of ours. Whilst the demand for civil and commercial mediation emerged from both business and the courts, the skills of mediation are now being demanded by organisations to improve their general performance.
1: C. Laksham, Doing Business in India: A Framework for Strategic Understanding, Chandos Publishing (2015)
2: World Bank Doing Business (2014), http://www.doingbusiness.org/data/exploreeconomies/moldova, also http://www.doingbusiness.org/Methodology/enforcing-contracts#cost
3: As en example, recent work in greece: http://www.cedr.com/blog/portability-of-mediator-skills-training-and-accreditation/