The most noteworthy addition to the new LCAM Arbitration Rules is Article 6, a provision that encourages parties to attempt, in good faith, to resolve their dispute through mediation at any stage before or after the commencement of arbitration proceedings. Any settlement the parties reach in the mediation may be referred to the Arbitral Tribunal to be made a consent award on agreed terms.
The focus on mediation and its relationship with adversarial proceedings is timely. In June 2021, the Civil Justice Council published a detailed report examining the lawfulness and desirability of compulsory alternative dispute resolution in civil litigation in England and Wales. Its conclusion endorsed compulsory ADR, including compulsory mediation, both in terms of lawfulness and desirability.
In practice, when it comes to ADR mechanisms such as mediation, timing is everything. Parties are often presented with mediation at the wrong time for it to be truly effective. Multi-tiered dispute resolution clauses that impose mediation as a gateway to litigation or arbitration are popular with businesses but tend to push parties into mediation at a time when the mood is tense and the appetite for amicable discussions and settlement is low.
Article 6 does not, fortunately, make mediation a prerequisite to arbitration. The approbatory nod that it gives to mediation serves, however, as a welcome reminder to parties of the ready availability of mediation services through the LCAM and the possibility of converting a mediated settlement into an internationally enforceable arbitration award.
The LCAM provides a model Arb-Med-Arb clause that complements Article 6. Both Article 6 and the model clause refer to LCAM’s Model Mediation Procedure. Arb-Med-Arb can be a useful framework for a mediation as it presents parties with mediation at a time when a claimant has been given the opportunity to properly assess the merits of its case and to set it out a way accessible to the other side. Once all (or at least more) cards are on the table, mediation may seem a more attractive option to bridge the gap between both parties’ positions. The statements of case give the parties a basis on which to take a step back and, facilitated by a mediator, take another look at their differences. And as the mediation is happening within the framework of arbitration proceedings, the arbitral tribunal remains on standby and may swiftly continue with the arbitration if the mediation fails.
Duncan Gorst, Senior Associate, Osborne Clarke
