Jurisdiction - Hong Kong
Reports and Analysis
Asia Pacific – New ICC Mediation Rules: Mediation As Default Alternative Dispute Resolution.

7 May, 2014

 

 
On 1 January 2014, the International Chamber of Commerce (ICC) replaced its decade old ICC Amicable Dispute Resolution Rules with the ICC Mediation Rules. The change promotes mediation as the default dispute resolution mechanism, reflecting the ICC’s experience of the success of mediation in settling international disputes commercially and cost-effectively. On 31 March 2014, Ms Hannah Tümpel – Senior Counsel and Manager at the ICC, visited Clyde & Co Australia to give her insights on the new ICC Mediation Rules.
 

Introduction

 

On 1 January 2014, the ICC Mediation Rules (Mediation Rules) came into effect, replacing the ICC Amicable Dispute Resolution Rules (ADR Rules) which had previously been applicable since July 2001. Under the previous ADR Rules, a dispute could be resolved through mediation, conciliation, neutral evaluation, a “mini-trial” or through a combination of the preceding methods. In comparison, the Mediation Rules set mediation as the default dispute resolution mechanism. Click here to access the Mediation Rules.

 

This change reflects the ICC’s experience with international dispute resolution since 2001, which has shown that up to 90% of matters were eventually resolved through mediation. Further, out of those matters transferred to an ICC mediator, over 75% had concluded with a settlement.1  Indeed, mediation has proven to be one of the most commercially efficient and cost-effective means of alternative dispute resolution methods.

 

Significant Aspects Of The Mediation Rules

 

The Mediation Rules were designed to facilitate the easy conduct of mediation, by allowing the parties to place the administrative and procedural burdens of the mediation in the hands of the ICC.  Below are a number of key aspects of the Rules:

 

  • Mediation even when no prior agreement – provides that a party may suggest mediation even where there is no prior agreement to do so. Upon receipt of a written proposal from the party seeking to refer a dispute to mediation, the ICC will inform all parties of the proposal and assist the parties in considering the proposal.
  • Place, language and mediator – where the parties have not agreed to these issues, the ICC may determine the place and language of the mediation, and also select the mediator (or compile and provide to the parties a list of mediators to choose from).2
  • Conduct of the mediation – the Mediator and parties shall discuss the proposed conduct of the mediation, followed by the mediator promptly providing the parties with a written note informing them of the manner in which the mediation shall be conducted. Further, the ICC Mediation Guidance Notes provide recommendations on aspects such as preparing for the mediation – logistical arrangements and procedural agreements. The Guidance Notes also recommend how to best approach the treatment of the relationship between mediation and arbitration proceedings (if applicable), so as to maximise the chances of successful dispute resolution.
  • Good faith, fairness and impartiality – the Mediator shall be guided by the wishes of the parties and treat them with fairness and impartiality.3 Further, each party shall act in good faith throughout the mediation.4
  • Private and confidential – unless agreed otherwise or prohibited by the applicable law, mediations and any settlement agreements are private and confidential,a party shall not in any manner produce as evidence in any judicial, arbitral or similar proceedings any views, admission, documents or the like used during the course of mediation.
  • Other forms of alternative dispute resolution – parties may apply the new rules to other forms of alternative dispute resolutions such as conciliation or neutral evaluation.6
  • Suggested mediation clauses – The ICC has provided four suggested mediation clauses to suit the different circumstances of each dispute and meet the parties’ needs. For instance, Suggested Clause D, the most widely used ICC standard multi-tiered clause provides for mediation followed by arbitration, if required, as follows:

 

Obligation To Refer Dispute To The ICC


In the event of any dispute arising out of or in connection with the present contract, the parties shall first refer the dispute to proceedings under the ICC Mediation Rules. If the dispute has not been settled pursuant to the said Rules within [45] days following the filing of a Request for Mediation or within such other period as the parties may agree in writing, such dispute shall thereafter be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with the said Rules of Arbitration.

 

The ICC has a standard arbitration clause and recommendations about issues that should be addressed in that clause for it to operate effectively. Ms Hannah Tümpel explained that the ICC has taken a minimalistic approach towards these suggested clauses. Click here to access the suggested clauses. As such, parties should refrain from simplifying or reducing these suggested clauses to avoid validity or enforceability issues subsequently. However, parties are welcome to include add-ons to these base suggested clauses.

 

The Mediation Rules are also accompanied by the Mediation Guidance Notes which deals with various practical issues such as organising and preparing for mediation, and using case summaries and documents and independent experts in mediation. The Guidance Notes do not prescribe solutions, however, encourage flexibility for parties to work out the best arrangements for their particular case. This preserves the spirit of mediation – which may be conducted in different ways to suit the parties’ background and the nature of each dispute. The Guidance Notes and Mediation Rules were revised by a Task force which consisted of over 90 specialists from 29 countries.

 

Costs Of Mediating Under The ICC Mediation Rules

 

An ICC mediation attracts the initial, non-refundable filing fee of USD 2,000. Similar to the sliding scale implemented under the ICC Arbitration Rules, the ICC will fix administrative fees for mediation at its discretion and dependant on the amount in dispute (for instance, a USD 17 million dispute will attract a maximum administration fees of USD 15,000). However, the ICC reserves the right to increase administrative fees in exceptional circumstances if necessary.

 

The fees for the mediator will be charged on a reasonable hourly rate in light of the complexity of the dispute and other relevant circumstances. The Centre will ensure that the Mediator’s time and expenses spent are reasonable and monitored. Separate fee arrangements between the parties and the Mediator are not permitted by the Rules.

 

Mediation And Arbitration Under The ICC

 

Multi-tiered dispute resolution clauses often require mediation as the first step, and arbitration as a second step, in resolving a dispute. In other cases, mediation and arbitration proceedings may run in parallel. An attractive mechanism of the Mediation Rules is that the filing fee paid for such arbitration proceedings shall be credited to the administrative expenses of the mediation (but only where the total administrative expenses paid with respect to the arbitration exceed USD 7,500).

 

Conclusion

 

Mediation and arbitration at the ICC are widely used for international trade and projects disputes. ICC mediation and arbitration rules will give parties the benefit of having their entire dispute resolution process conducted and administered by the same institution. The ICC’s new Mediation Rules reflects the success and rise of mediation in resolving international disputes.

 

End Notes:

 

1 See http://www.iccwbo.org/News/Articles/2013/New-ICC-Mediation-Rules-unveiled-at-global-launch-event/
Arts 4 and 5, ICC Mediation Rules
3 Art 7, ICC Mediation Rules
4 Art 7, ICC Mediation Rules
5 Art 9, ICC Mediation Rules
6 Art 2(1)(c), ICC Mediation Rules

 

Clyde & Co
 
For further information, please contact:
 
Beth Cubitt, Partner, Clyde & Co
beth.cubitt@clydeco.com

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