Mediation Rules for Commercial Disputes

M. S. Siddiqui

20 March, 2021 12:00 AM printer

Mediation Rules for Commercial Disputes

M. S. Siddiqui

Business is an interdependent affair involving many stakeholders. Business enterprises are part of manufacturing or creating products and services. This is a kind of relay race. The concept of supply chain management developed from specialization of job of making something which again raw materials of other business and finally creating a good or service to deliver to consumer for consumption. Businesses are dependent on upstream as source of raw material and dependent on buyer at downstream market. The relationship is not for one day or cannot develop overnight. The success of one business is part of a supply chain relationship and unable to break and create new relationship over night. The nature of profession and cost of legal processes encourage the mediation of disputes amicably under certain rules or conventions.

Businesses try their best to maintain the relationship despite disagreement over certain issues and try to resolve to continue the relationship. The mediation, a category of Alternate Dispute Resolution (ADR) is the appropriate method of resolve the disputed to continue the business transaction. The parties in dispute also continue business transactions despite a dispute and mediation process on certain issues. The main issue of mediation is determining damages and there is not a critical dispute about liability or an issue of principle. All the parties in mediation are ready to resolve the issue with mutually agreed compensation for damages without any legal proceeding in the court.

Unfortunately, Bangladesh has no law for mediation although many developed and developing countries have such law. We have long tradition of Shalish of many types of disputes in rural societies. The business communities in many sectors have their own Shalish and conventional rule usually followed by the members of that business society. It has social and inner community methods of enforceability without any legal bindings.

Since Bangladesh has no mediation law but has long tradition of Shalish in the society, there may be consensus on certain rules and regulations based on local and global rules and practices. There are some global standard procedure and convention of mediation usually agreed upon by business national and international businesses. It has some general principles like- (1) the process is non-binding. Unless the parties otherwise agree, the mediators shall have no authority to issue an enforceable award or judgment. (2) The mediators shall be neutral and impartial. The mediators shall have no interest in the outcome of the dispute and have no current or anticipated business or personal relationship with any party to the dispute. (3) The process shall be conducted expeditiously. Each party representative will make every effort to be available for meetings. (4) Parties usually agreed the terms of mediation in the business contract. (5) If the respondent party has not previously agreed to mediation through a contract or other agreement, they will agree to certain terms after any dispute arises.

The standard terms of mediation in agreement before any business deal or agreed upon after any dispute occurs are on Mediator and place of mediation etc. All the parties will nominate mediator and disclose their identities to other parties for their acceptance. The acceptance of mediators shall be mutual and unanimous. A party may challenge a mediator candidate if it knows of any circumstances giving rise to reasonable doubt regarding the candidate's impartiality. Before appointment, the mediators will assure the parties of availability to conduct the proceeding expeditiously. Upon retention of the mediators, the parties shall enter into an engagement agreement for mediation.

The mediation methods are very formally informal among the mediators and disputing parties. At the initial stage the mediators will sit to discuss the rule and process among themselves and agree on certain other issues to follow during mediation. During the mediation, the mediators shall take care to maintain a useful and creative joint approach and shall confer privately as may be necessary and advisable.

Each party will submit to the mediators a written statement summarizing the background and present status of the dispute. The parties may agree to submit jointly certain records and other materials. The mediators may request any party to provide clarification and additional information. The parties may also exchanges documents among themselves to opinion of others and even submit joint statement of facts and figures to the mediators.

In certain cases, upon the agreement between parties, the mediators shall keep confidential any written materials or information that are submitted. At the conclusion of the mediation process, upon request of a party, the mediators shall return to that party all written materials and information which that party had provided to the mediators without retaining copies, or else certify that the destruction of such materials.

After the initial hearing from the disputing parties and going through though the documents and papers the mediators will initiate and facilitate the negotiation for a mutually agreed settlement in any manner the mediators believe is appropriate. The mediator shall help the parties to explore alternative resolutions for mutually agreed settlement of the dispute.

Mediators may seek opinion from the parties to determine matters such as preferred subject matter expertise, time constraints, potential conflicts of interest and geographic location at the initial stage of mediation. In case of more than two parties in dispute, if a party withdraws from a multiparty mediation but the procedure continues with the remaining parties.

There are many standard rule of mediation usually agreed upon by parties and mediators. The Chinese mediation rules are very comprehensive and have been proven to be acceptable in China and other parts of the world. Some of the rules developed by the Chinese are:  (1) The mediators shall control the procedural aspects of the mediation. The parties shall cooperate fully with the mediators. (2) The mediators are free to meet and communicate separately with each party, at the mediators’ discretion or at the request of a party. (3) The mediators shall decide when to hold joint meetings with the parties and when to hold separate meetings. The mediators shall fix the time and place of each session and its agenda, in consultation with the parties. There shall be no record of any meeting. Formal rules of evidence or procedure shall not apply.  (4) If any party has a substantial need for documents or other information in the possession of another party or for other information that may facilitate a settlement, the parties shall attempt to agree to terms for the voluntary provision of such information. Should they fail to agree, either party may request a joint consultation with the mediators, who shall assist the parties in reaching agreement. At the conclusion of the mediation process, upon the request of a party that provided documents or other material to one or more other parties, the recipients shall return those documents and materials to the originating party without retaining copies. (7) Each party must be represented at each mediation conference by a business executive authorized to negotiate a complete resolution of the entire dispute, unless excused by the mediators as to a particular conference. Each party may be represented by a business or legal consultant. (8) The mediators may obtain independent expert advice and assistance, with the prior agreement of and at the expense of the parties.

Even if settlement of all claims and issues is not possible, mediators may help narrow issues and claims in the investigation and discuss with the parties the possibility of their agreeing arbitration. Mediation is a risk-free, inexpensive, confidential and quick mechanism to evaluate whether settlement can be achieved in these cases.

Bangladesh has an arbitration law framed with guide line of UN with a provision of enforcement of arbitration in home and abroad. The expert has some reservation about certain rules and it is a landmark modern law to resolve international business disputes. Business community may come to an understanding on rules and methods of mediation until Bangladesh get a mediation law.


The writer is a Legal Economist. e-mail: [email protected]m