Abstract: During arbitral proceedings, the mediation process may cause some certain conflicts that requests the Arbitral Tribunal to seriously consider. Resolving effectively these conflicts based on fundamental legal principles and the arbitration skills of the Tribunal will ensure the rights and interests of disputing parties and third parties. This discourse focuses on analyzing potential conflicts and providing recommendations to the Tribunal to maximize the effectiveness of the mediation process and reduce conflict occurrence.
1. Potential conflicts in the mediation proceedings during the hearingsLegal grounds for conducting mediation in arbitral proceedings:
Article 58 of the Law on Commercial Arbitration (LCA 2010) provides:
“Article 58. Mediation and recognition of successful mediation
At the request of the parties, the arbitral tribunal shall conduct mediation for the parties to reach agreement on the settlement of their dispute. If such an agreement can be reached, the arbitral tribunal shall make a record of successful mediation and have it signed by the parties and certified by the arbitrators. The arbitral tribunal shall issue a decision recognizing the parties" agreement. This decision is final and as valid as an arbitral award.”
Article 29 of VIAC’s Rules of Arbitration stipulates that the Arbitral Tribunal shall conduct mediation in dispute settlement if the parties request for:
“Article 29. Mediation
The Arbitral Tribunal shall, at the request of the parties, conduct a mediation. If the mediation is successful, a minutes of successful mediation shall be drafted. The minutes shall be signed by the parties and the Arbitrators or the Sole Arbitrator. In such case, the Arbitral Tribunal shall make the Decision recognizing the successful mediation. The Decision of the Arbitral Tribunal shall be as valid as an Arbitral Award.”
At VIAC, currently, mediation in arbitral proceedings is almost seen as one of the mandatory procedures during dispute resolution hearings when both parties are fully engaged. In the guidelines on arbitration procedural of VIAC, which came into effect in 2013, the mediation is highly recommended, and the Arbitral Tribunal is advised to facilitate and support mediation to resolve disputes (Section 5.9 Part III of the VIAC guidelines on arbitration procedural). This may include Arbitral Tribunal’s making recommendations for promoting mediation, participating in mediation with the parties, or adjourning the hearing to allow the parties more time for self-mediation, negotiation, and providing results to the Arbitral Tribunal afterward.
Based on these guidelines, many tribunals have successfully coordinated and resolved disputes through mediation during the arbitral proceedings or directly at the hearings. During mediation, the Arbitral Tribunal needs to demonstrate two skills: not only adjudicating and evaluating to render an arbitral award but also promoting and creating opportunities for mediation between the parties, thereby adding value to the process of dispute resolution. However, the Arbitral Tribunal must also be extremely cautious and meticulously study the case files as well as clear distinguish its role to avoid potential conflicts between the two roles of "arbitrator" and "mediator," especially when there remain many shortcomings in the LCA 2010 related to mediation process, plus, the requirements, and procedures for mediation activities in arbitral proceedings are still unclear.
1.2. Potential conflicts when conducting mediation during the hearings
Issue 1: The Arbitral Tribunal provides detailed guidance and recommendations to coordinate mediation, leading to a situation where the parties misunderstand that the Arbitral Tribunal has its opinions on the dispute outcome, even though the opinions of the arbitrators or the Arbitral tribunal are only preliminary conclusions.
The essence of mediation has shown that a mediator serves as a bridge between the parties by asking questions to allow them to self-reflect, self-assess their gains and losses, and reach a mutually agreeable resolution. Therefore, if the Arbitral tribunal expresses its viewpoint too clearly and intervenes excessively in mediation, invisibly, the parties will feel pressured and inadvertently be pushed into forced mediation due to fear of unfavorable results in arbitral award. Hence, the lesson learned for the Arbitral tribunal lies in the fact that it can envision a win-win solution for the parties through mediation; however, the Arbitral tribunal needs to be extremely patient, calm, and coordinate mediation activities by posing open-ended questions to allow the parties to reach reasonable solutions independently.
Issue 2: Arbitrators acting as mediators and/or applying procedures as in commercial mediation cases.
The procedures of arbitration and mediation have been designed and operated according to different directions to accurately reflect the features of each method. The issue arising here is that if arbitrators fully implement a mediation procedure in the arbitration process, are there any problems arising? In arbitral proceedings, there are some activities that the Arbitral Tribunal is not allowed to perform, such as actively meeting individually with each party to discuss, or in cases where the Arbitral Tribunal proposes a mediation process, both individually and collectively, with the parties' unanimous agreement. In these cases, if the parties reach a mediation agreement, there is no significant concern. However, if the parties cannot reach an agreement, will the impartiality and independence of the arbitrators be affected when the tribunal continues resolving the dispute in arbitration? Therefore, arbitrators need to be extremely cautious by making efforts to promote mediation only within the framework of arbitral proceedings.
Issue 3: Arbitral Tribunals pushing mediation "excessively" even in cases where one of the parties requests for stop mediating and prefers to resolving the dispute by arbitration.
In cases where the parties cannot mediate and do not wish to continue the mediation, however, the Arbitral Tribunal may see "openings" for dispute resolution and vigorously promote the mediation process, even forcing the parties to mediate. This leads to the mediation process being conducted coercively and completely contrary to the feature of mediation. The issue arising is the need to clarify to what extent the Arbitral Tribunal should intervene in mediation of the parties. Besides, the Arbitral Tribunal also needs to determine the appropriate time to transition between mediation and arbitration to both not deprive the parties of opportunities and respect the parties' agreement.
These issues, in essence, stem from shortcomings in the regulations guiding arbitrators in moderating mediation activities. Currently, aside from Article 58 of the 2014 Law on Commercial Arbitration, there are no further guidelines on this issue in the legal provisions. In the Rules of Arbitration and guidelines on arbitration procedural of VIAC, VIAC has also attempted to provide specific instructions for arbitrators; however, in practice, the arising issues can be much more diverse and complicated. Mostly, arbitrators handle these based on experience and apply the principles of arbitration-mediation to adapt to the situation. This shortcoming leads to several drawbacks, such as:
2. Recommendations for the Arbitral Tribunal regarding the mediation process in arbitral proceedings and clarifying the Tribunal's scope of directive:
(i) The Arbitral Tribunal should research and anticipate potential conflicts to have a direction for resolution during the mediation process.
(ii) Regarding conflicts about the roles/relationships between parties and arbitrators, the arbitrators themselves and the Arbitration Institutions need to carefully revise relevant information to ensure accuracy.
(iii) For conflicts arising from the interests of the parties and third parties, they should be resolved with caution and in collaboration with the competent court if the law does not restrict the possibility of arbitral awards being set aside.
(iv) The Arbitral Tribunal needs to balance between efforts at mediation and resolving conflicts arising from the parties or from third parties to avoid creating significant tension or entirely preventing the parties from filing complaints with the Arbitration Institutions after mediation.
(v) Supplement provisions on what arbitrators can and cannot do during the mediation process in arbitral proceedings.
(vi) The Arbitral Tribunal may act as mediators only with the consent of the parties and immediately terminate if either party disagrees.
(vii) The Arbitral Tribunal may propose the parties to use the mediation services provided by a third party (a mediator or a mediation center) to simultaneously resolve disputes by both mediation and arbitration:
***This article only represents the opinions and views of independent experts and has no affiliation or intention to represent the opinions or views of the Vietnam International Arbitration Center (VIAC) or any other agency or organization.
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The workshop "Mediation in arbitral proceedings: Neutral third parties’ roles and influences on resolving disputes" is the third event in the 2024 Arbitration - Mediation Symposium 2024: Third parties and influences on arbitral proceedings (AMS 2024), organized by VIAC in collaboration with law universities in Ho Chi Minh City. The series will run from March 22, 2024, to April 11, 2024. For detailed information about AMS 2024, please see HERE.
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