By Dhara Wijayatilake¹

A disputant goes into court against another because he thinks he is right and the other is wrong and wants a court pronouncement to cement his position. After many years, huge expense, many consultations with Lawyers, many trips to the court house, postponed hearings, and even perhaps much emotional turmoil, a Judge delivers a judgment. One party is proven right and the other wrong, or the case may even be decided on a procedural matter with no determination as to who is right and who is wrong. Even the winner, if there is one is a loser. Today, there are options to litigation such as Mediation where the focus is not on being right, but on what each disputant needs and on reaching a settlement to satisfy those needs. It’s a process that is fast and cost effective. So, it’s a call to be smart – spend time and money to be right (litigation – where you may even end up being wrong) or spend much less time and much less money to satisfy needs (Mediation).

Delays in courts have reached ridiculous levels. Many Ministers of Justice over many years have attempted to reduce delays by “reforming” laws. The outcomes have not made a significant difference and the challenge to find solutions continue. One of the most comprehensive studies on Laws Delays in Sri Lanka was perhaps the one done by the “Laws Delays and Legal Culture Committee” headed by Justice R. S. Wanasundera, Judge of the Supreme Court. In its Report of October 1985 the Committee identified several causes for delays and submitted proposals to remedy them. The Report included a poignant observation that remains valid even today, ie. that in an adversarial system of justice such as ours, delays destroy justice, deterrence is lost, costs are increased, court resources are wasted and severe emotional hardship is inflicted upon litigants. In combination, these factors undermine the efficacy of the whole legal system, sapping its strength, vitality and even its integrity, and making the majority of litigants lose confidence. This observation remains valid even today. While substantive and procedural laws can be reformed in an attempt to eliminate delaying features, the legal culture which is a significant contributor can only be reformed through good practices that then constitute our legal culture. Here’s where we fail.

Laws delays is not a phenomenon that’s peculiar to Sri Lanka. It’s a problem confronting many jurisdictions across the globe. It’s this disillusionment with litigation which is rooted in the adversarial system, that has motivated a diversion to alternative methods of resolving disputes. The most popular Alternative Dispute Resolution (ADR) methods are Arbitration, Mediation and Negotiation. This article discusses Mediation which is accepted globally as an alternative that offers benefits that have proved to be meaningful.

Features of Mediation

There are many models of Mediation including Facilitative and Evaluative which are the most popular. In the 1960s, Facilitative Mediation flourished because of its marked difference in approach to conflict resolution and the resulting successes. Evaluative mediation is used by Mediators who are subject experts and offers an opinion on the strengths and weaknesses of the legal positions of the disputants leading to informed decision making by the disputants. This method is often used by judges in jurisdictions that provide for a settlement conference. This article discusses Facilitative Mediation which offers a process that’s unique in its features and is in complete contrast to litigation or Arbitration. Mediation evokes excitement because it’s speedy and cost effective, These virtues alone make a good case for opting for Mediation. There are others.

=It provides for party autonomy. Parties decide on the Mediators, the venue, the language of the mediation, the rules, and importantly, controls the outcome. No outside party sits in judgment over the dispute or how it should be settled.

=It’s informal but inspires trust. Parties sit with the Mediator and the other parties in an informal setting and engage in the process directly. They are provided ample space to speak of their concerns and participate fully while maintaining their dignity. Although there are no formalities as in a court of law, parties are required to conduct themselves in a disciplined manner. Parties are guided to move away from positions and focus on interests and needs instead.

=The procedural rules are simple and user friendly and are designed only to ensure responsible conduct. The process is not bogged down with procedural imperatives. There’s never a risk as prevails in litigation, that some flaw in complying with a procedural rule will get primacy over the core issues in the dispute, in determining the fate of the parties.

=It’s voluntary. The disputants use the option of mediation by choice and are free to walk out of a mediation at any time and are not obligated at any stage to stay in the process. This is so, even if reference to mediation is mandatory by law, based on the category of dispute and its monetary value. What is mandatory is to attempt a mediated settlement prior to proceeding to file action in a court of law.

= There’s no judgment of right vs wrong. It’s a process that seeks to find common ground to agree on a settlement that addresses the interests of both parties, and is not a process that evaluates legal entitlements although those can also be taken into account by parties when agreeing to a settlement.

=It adopts a completely non adversarial approach and therefore affords the opportunity for parties to repair fractured feelings, thus enabling an ongoing relationship.

=It’s confidential. This is an important feature of Mediation. Parties are required to sign agreement to maintain confidentiality with regard to all matters discussed. Parties agree not to divulge the substance of discussions at any other dispute resolution forum.

= The process is skillfully facilitated by a third party neutral, the Mediator. The Mediator controls the process using special skills and techniques and facilitates the disputants to reach an outcome that’s acceptable to them. The Mediator ensures that ground rules are followed to control emotions and avoid aggression during the sessions.

Neutrality of the Mediator is an important feature. The Mediator must at all times maintain independence and neutrality. If at any time, a disputant feels that this principle is breached, a mediation can be terminated.

Sri Lanka’s Mediation statutes

Mediation was first institutionalized with the enactment of the Mediation Boards Act, No. 72 of 1988 which incorporated all of the key features of Mediation. Mediation Boards now function in every Divisional Secretary’s area across the country. These have come to be known as “community Mediation Boards.” Subsequently, the Mediation (Special Categories of Disputes) Act, No. 21 of 2003 was enacted² to provide for more specialized mediation services for certain identified categories of disputes.

The 1988 Act stipulates that certain categories of disputes must be mandatorily referred to Mediation, and also that certain disputes cannot be entertained by Community Mediation Boards.

Where reference to Mediation is mandatory, no action in respect of such a dispute can be instituted in or be entertained by a court of law unless Mediation has been unsuccessful and a certificate of non settlement from the Mediation Board is produced.

Disputes that must mandatorily be referred to Mediation are-

a) where the value of the dispute is below the monetary threshold set out in the Act, unless it’s one which gives rise to a cause of action set out in the Third Schedule to the Act.

In 1988 the monetary threshold was stipulated as Rs. 25,000/=. This has been amended from time to time and the current threshold introduced in 2016 is Rs, 500,000/=¹.

The Third Schedule to the Act sets out fifteen categories of actions. These are actions in relation to disputes that were not considered suitable for settlement through community Mediation Boards.

b) where the dispute is in relation to an offence which is set out in the Second Schedule.

The Second Schedule sets out eighteen offences punishable under twenty six (26) sections of the Penal Code.

While mandatory reference to Mediation is not required in the case of disputes above Rs. 500,000/=, it is possible for the parties to submit the dispute for Mediation voluntarily, unless the dispute is one in respect of which an application for settlement cannot be entertained by a Mediation Board.

The categories of disputes that cannot be entertained by a Mediation Board, even if the value of the dispute is below Rs. 500,000/=, are the following –

where one party is the State; or

where one party is a public officer and the dispute relates to the recovery of property, money or other dues ; or

where the Attorney General has initiated proceedings in respect of an offence.

The Mediation (Special Categories of Disputes) Act, No. 21 of 2003-

The rationale for this Act was motivated by the reality that Mediation is the more appropriate method to resolve certain categories of disputes where positions based on strict legal rights and technicalities must give way to accord primacy to the needs of parties to address the underlying concerns. The challenge to reduce the litigation load in courts was also becoming a very serious one. The Act provides for the Minister to establish Mediation Boards to provide mediation services in respect of defined categories of disputes, in identified areas of the country. The category of dispute, the areas to which it will apply and the monetary threshold below which these disputes must mandatorily be referred to Mediation, are required to be set out in Orders made by the Minister¹. An important statutory guideline that the Minister is required to consider to determine the categories of disputes is, “the need to provide for the meaningful resolution of disputes relating to social and economic issues.“¹ It’s an important policy decision to be taken based on real needs of the people.

While the community Mediation Boards are manned by volunteers who are not required to have any specific educational qualifications, the distinguishing feature of the 2003 Act is that the Minister is required to prescribe by Regulation, the qualifications that a Mediator must possess having regard to the expertise required of Members, considering the nature of the categories of disputes that must be mediated. Different qualifications may be prescribed for different categories of disputes. The appointments are made by the same Mediation Boards Commission referred to in the 1988 Act.

Mediation Boards were established under this Act in 2005 after the Tsunami of 2004 for the resolution of tsunami related disputes and in 2015 to resolve land disputes in the Administrative Districts in the North and East. It was accepted that Mediation was the more meaningful method to address land disputes that arose after the North East ethnic conflict. The Orders currently in force as at February 2022, provide for the following¹ :

It is absolutely important that the persons who will function as Mediators are trained in the techniques and skills of mediation. Without proper, adequate and focussed training, the results will be disastrous and will negate the intentions of the Act since the success of mediation in conflict resolution is totally dependent on the intrinsic value of the techniques adopted. Mediation is not a process that can succeed if you simply have the ear of a patient listener.

The UN Convention on Mediation

Mediation has increased in acceptance over the years because of its benefits. It is this popularity and its increasing use in international commercial dispute resolution that inspired UNCITRAL’s Working Group on Dispute Settlement to address the need for a harmonious regime that will set standards for the cross-border enforcement of international settlement agreements resulting from mediation. As a result of its work, the Convention on International Settlement Agreements Resulting from Mediation was adopted by the UN General Assembly (UNGA) on December 20, 2018,

The Preamble to the Convention recites that the Parties –

“recognize the value for international trade, of mediation as a method for settling commercial disputes in which the parties in dispute request a third person or persons to assist them in their attempt to settle the dispute amicably;

note that mediation is increasingly used in international and domestic commercial practice as an alternative to litigation;

considers that the use of mediation results in significant benefits, such as reducing the instances where a dispute leads to the termination of a commercial relationship, facilitating the administration of international transactions by commercial parties and producing savings in the administration of justice by States; and

are convinced that the establishment of a framework for international settlement agreements resulting from mediation that is acceptable to States with different legal, social and economic systems would contribute to the development of harmonious international economic relations “

The Convention opened for signature on August 7, 2019 in Singapore and Forty Six (46) countries including Sri Lanka became signatories on that same day. Popularly knows as the “Singapore Convention on Mediation”, it came into force on September 12, 2020. As at February, 2022 it has been signed by 55 countries and ratified by 9. Sri Lanka is now obligated to enact domestic legislation to give effect to the provisions of the Convention. UNCITRAL’s work on the Convention and its adoption by the UNGA, is evidence of the the global acceptance of Mediation to resolve commercial disputes.

The CCC- ICLP International ADR Center of Sri Lanka (IADRC)

In 2018, the Ceylon Chamber of Commerce (CCC) and the Institute for the Development of Commercial Law and Practice (ICLP) in a joint venture, incorporated a not for profit company and established a new Center, the CCC-ICLP International ADR Center (IADRC) to provide ADR services. It was a response to the need of the business community for more efficient dispute resolution. The novelty of the new Center is that it offers mediation services in addition to arbitration.

Both Institutions were aware of the global trends that favored ADR and the successes of Regional Centers. The Hong Kong International Arbitration Center (HKIAC) established in 1985, the Singapore Mediation Center (SMC) launched in 1997, the Indian Institute of Arbitration and Mediation (IIAM) established in 2001, the International ADR Center of the Indian Merchants Chamber (IIMC) established in 2015 and the Malaysian Mediation Center (MMC) established in 1999 under the auspices of the Bar Council of Malaysia, offered inspiration. These centers offered services that included Arbitration and Mediation. The Singapore Mediation Center states that, as at Feb 2022, it has mediated 5,200 matters worth over $10 billion since its launch. The rate of successful mediations is stated to be 70% with 90% of those having been settled in one day! The high rate of success can be attributed to the skill and competence and the professionalism of the Mediators. Compliance with the mediation process and using the special skills and techniques are key to achieving good outcomes and hence the absolute need for training.

The IADRC launched its Arbitration and Mediation Rules in April 2021 and has trained Mediators and Arbitrators who are available to provide services. The Arbitration Rules of the Center seek to eliminate some of the common causes for delay. It’s the only Center that offers institutionalized Mediation for commercial dispute resolution. Arbitration and Mediation services can be administered in compliance with these Rules of the Center, or the UNCITRAL Rules, or any others that may be adopted on an ad hoc basis.

The Mediation Rules of the IADRC

The CCC-ICLP Mediation Rules incorporate all the internationally recognized standards that are known to define the Mediation process. The Rules provide for the following-

 To commence the Mediation, an application (a “Request for Mediation”) must be made to the Center either by one party or jointly by all disputing parties, requesting Mediation services for the settlement of the dispute.

 After completing preliminary administrative steps such as obtaining, where appropriate, the consent of all parties to pursue Mediation, the parties are required to sign the “Agreement to Mediate”. This Agreement includes an obligation to “abide by and comply with the Mediation Rules of the Center or other Rules that have been agreed to.”

The language of the Mediation will be as agreed to, by the parties.

The next step is to appoint a Mediator or a panel of Mediators. The disputing parties have the discretion to nominate a Mediator from among those accredited by the Center or from outside of that list. Usually, a Mediation will be handled by a single Mediator. However, a panel could be appointed if so desired, where there are complex issues in a dispute.

Importantly, the Mediator has to be independent, impartial and neutral throughout the process. Several safeguards are included to ensure compliance with this principle.

The Mediation sessions then commence. The Mediator manages the process and will, for this purpose convene sessions on dates and times agreed to by the parties, at a neutral venue.

The process will commence with a joint session where all parties are present. The Mediator will explain the principles that apply and explain the process. Thereafter the Mediator will decide when to have joint sessions with all parties, and individual sessions (called a “caucus”) with each party.

 At these sessions, the parties have the opportunity to discuss the matters in dispute from their own perspective. The statements, disclosures and proposals made at a Mediation are maintained in absolute confidence and are made without prejudice. This principle provides the confidence to disputing parties that nothing said can be used in any other dispute resolution process or other forum. The Mediator and the parties cannot be compelled to give evidence as to any matters disclosed at the Mediation in a court of law.

The Rules set out the obligations of the parties – attendance at the sessions in person and in the case of corporate entities attendance through a representative who is given full authority to sign off on a Settlement Agreement; compliance with the rule on confidentiality; full and honest disclosure of matters material to the dispute.

Parties are not entitled to legal representation at the sessions but may call in a Lawyer for the sole purpose of obtaining advice. However, a Lawyer who is a full time employee of a corporate is not excluded from participating at the sessions on behalf of a corporate entity.

During these sessions, a Mediator will not give directions or instructions on how to settle the dispute. The Mediator will however question the parties in a non coercive manner to help them reach a new understanding of the issues in dispute and of the concerns of the other party.

A Mediation is terminated either with an agreement to settle or with an agreement that no settlement is possible.

Where there is an agreement to settle, the Mediator is required to explain to the parties the terms and conditions of the settlement and the obligations that each party is assuming under the agreement. A settlement Agreement will be set in writing and signed by the parties and the Mediator. This is an agreement that binds the parties as any other agreement, and each party has a legal obligation to honour its terms and conditions.

Where the Mediator determines that continuing the Mediation is futile since it’s unlikely to result in a settlement considering the progress of the Mediation, or where a party informs that it wishes to withdraw from a Mediation, the Mediation will be terminated.

In either event, all the documents submitted to the Center by each party will be returned.

In normal circumstances a mediated agreement should stand the test of time since many steps have been taken to ensure it’s sustainability. However, the Rules provide for an application to be made to revise or revoke an Agreement on very limited grounds, ie. On the grounds that a) the terms were agreed to, without a proper appreciation of the obligations; or b) circumstances have arisen that prevent a party honoring the obligations; or c) that there was bias on the part of the Mediator. The last ground is most unlikely given the several steps that are required to be taken to ensure impartiality. However, this ground is included as a principle of good governance since it’s a vital feature of Mediation. An application to revise or revoke will be inquired into by the Center and a settlement will be attempted in compliance with the same principles that apply to a Mediation.

 Mediation is not an expensive process. However there are fees to be paid. The Fees for a Mediation include Administration fees as well as fees for the Mediator/s. The fees are prescribed by the Center in a Fee Schedule and will be a predetermined sum which will be made known to the parties prior to the commencement of the Mediation. There will be no surprises.

Conclusion

Mediation is not the most appropriate method of dispute resolution for all categories of disputes. That’s accepted. Even with the twin evils of delay and expense certain causes of action need to be determined by a court of law. Mediation however, has gained global recognition as the better method for many kinds of disputes ranging from family and workplace disputes to construction and commercial disputes.

Given the potential to be speedy and cost effective, and the high level of user satisfaction, the services provided by the CCC-ICLP IADR Center will no doubt improve the commercial dispute resolution landscape in Sri Lanka. It will also contribute to improve Sri Lanka’s performance in the contract enforcement indicator in the Doing Business rankings. The enactment of domestic legislation to enable the enforcement of international mediated settlement agreements in line with the Singapore Convention will also certainly enhance Sri Lanka’s efforts to attract foreign investors. The slogan “Mediate, don’t litigate” is gaining in popularity given the reality that it’s not always smart to litigate to be right.