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Litigious culture
Ironically, the skill and unblemished reputation of the superior
courts of Sri Lanka for integrity, independence and the commitment
to uphold the principle of Rule of Law is a major reason for the
proclivity of an adversarial litigation culture in Sri Lanka.
Despite the perennial complaints of Laws Delays and unsalutary
professional practices of some lawyers and the recalcitrant attitude
of some judges which underpin the Laws Delays, Sri Lankan litigants,
human or juristic, are submerged in a litigious culture. They wallop
at winning cases even pyrrhic victories at great cost sometime
contributing to social discord.
Sri Lanka is considered to be the second most litigious society in
the contemporary world, a record that we should not be proud of as
litigated victories and defeats can increase violence and even
result in gruesome murders like the reported Hokandara quintuplet
killing.
Despite the existence of socio-religious creeds of non-violence
influencing the Sri Lankan psyche, social violence - whether they
erupt due to bitter litigations, elections or ethnic or religious
prejudices appear to define modern Sri Lankan society. We are no
longer peace-loving or peaceful. Even the demonstrations for peace
end up in violence.
Historically, the greatest protagonists of mediation as the basis of
non-violent dispute resolution were the founders of great religions.
Moses, The Buddha, Jesus Christ, Prophet Mohamed were all great
mediators. In more recent times Mahathma Gandhi and Dr. Martin
Luther King espoused the doctrine of non-violence as a political
philosophy. Negotiation and mediation was their chosen strategy.
In the modern world, after the great catastrophe of the two World
Wars, the victorious nations set up the United Nations as the
superior mediator of international disputes. The comparative
decrease of international wars during the past fifty-two years was
largely due to the UN mediation efforts.
"Med-Arb" process
All mediation by definition should be facilitative where emotional
barriers between parties are addressed by improving the
communication process and identifying a range of mutually beneficial
options. In the profit-driven commercial world, where rational,
profitable, and timely decisions are made, negotiation is the
primary method of dispute resolution.
The failure of inter-party negotiations, mainly due to subjective
reasons, sequentially calls for provision in commercial agreements
mediation clauses. If mediation fails parties may resort to
arbitration by agreement of all disputants or resort to adversarial
litigation as a fundamental right.
Since the late Seventies, a growing trend in the developed
countries, specially in the USA and Scandinavian countries as well
as international agencies mandated to resolve specific sector
disputes, such as intellectual property, is to develop a hybrid
process termed "Med-Arb" - an abbreviation for mediation -
Arbitration process.
"Med-Arb" procedure for dispute resolution is triggered when a
commercial agreement provides that in the event of any dispute
arising out of the contract it will be resolved by negotiation with
the assistance of a mediator failing which the matter will proceed
to arbitration. The fundamental requirement is that the use of the
'Med-Arb' process should be agreed upon before hand.
As an illustration, we can cite the ingredients in the World
Intellectual Property Organisation's "Med-Arb" clause. The first
part of the 'Med-Arb' clause provides for the reference of all
disputes arising from the contract to be submitted to be settled in
accordance with WIPO mediation rules. The place of mediation and the
language to be used in the mediation should be included in the
contract.
The second limb of the clause deals with the question what follows
if the dispute is not settled by mediation within the stipulated
period of time. The clause provides that if the dispute is not
settled within in the stipulated period (i.e. 90 days/six months)
from the commencement of mediation, it will be referred to
arbitration if either party files a request for arbitration under
the WIPO arbitration rules or in the alternative if before the
expiry of the stipulated time period if any party fails to
participate in the mediation, the other party has the right to
request for arbitration for final adjudication in accordance with
WIPO arbitration rules.
The arbitral tribunal can consist of a sole arbitrator or a panel of
three and the place and the language of arbitration should be
stipulated. The WIPO 'Med-Arb' clause could be suitably modified and
adopted to suit the Sri Lankan Arbitration Law and the several
arbitration institutions.
Many transnational commercial disputants prefer to avoid the delay
and exorbitant expenses, when settling international commercial
disputes. But also at the same time prefer to have a legally-recognised
and a binding and enforceable conclusion to their commercial
disputes.
On the other hand the 'Med-Arb' process which combines the two
traditional methods assures a non-adversarial mediation phase in the
resolution of the dispute. In this anticipation of eventual
arbitration if mediation fails, the disputants try to act in a
non-adversarial manner and reasonably, which help to dissolve
subjective emotional barriers.
However, this prior knowledge that the failure of negotiation will
lead to arbitration would make the parties extremely cautious and
may withhold vital confidential information needed for successful
mediation.
The task of the mediator is more difficult than an arbitrator or
judge who is called upon to decide on the dispute on the applicable
law. But the task of a 'Med-Arb' neutral is even more difficult. The
prestige of the 'Med-Arbitrators' should be so high, that often,
former judges of the superior courts of third countries with
reputable legal systems are sought to perform this function.
The mediator in the 'Med-Arb' process could transit to arbitration
mode if the contract so stipulates of if the parties agree. However,
the confidential information received from parties in mediation
caucuses should not be used in making the arbitral award unless the
party concerned continues to rely on the confidential process even
during the arbitral proceedings.
This is an extremely sensitive process and it is essential that the
mediator checks with the parties before hand whether the information
confided in him during the mediation caucuses could be used when the
mediator assumes the role of an arbitrator.
In Sri Lanka, like many other developing countries 'Med-Arb' clauses
are rarely incorporated in commercial contracts. The main reason is
that we do not have the necessary institutions or skill training
programs to develop mediation.
The Arbitration Act No. 11 of 1995 while modernising the Arbitration
law to keep abreast with international developments had also
empowered in its section 14 that the "Arbitration Tribunal with the
agreements of the parties" use "mediation, conciliation, or any
other procedure at any time during the Arbitral proceedings to
encourage settlement." Hence incorporation of 'Med-Arb' clauses in a
commercial contract is legally feasible and could contribute to fill
a void, developing modern legal norms and practices to meet the
challenges of globalised commerce.
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