Mediating International Commercial Disputes: Differences in U.S. and European Approaches

Dispute Resolution Journal, Aug-Oct 2005 by Cairns, David J A

Another difference between common law and civil law jurisdictions is that the mechanisms to protect the confidentiality of statements and offers made in negotiations are more developed in common law jurisdictions. These protections enable parties to engage in the kind of full and frank exchanges that often bring disputes to an end.

Finally, Anglo-American litigation generally is much more costly and disruptive than civil law adjudication. These very defects in Anglo-American litigation encourage disputants to negotiate and mediate. Some European commentators have pointed to the reasonable costs of European justice as a major reason for the slow development of ADR in Europe.12

Accordingly, many structural factors that facilitated the enthusiasm and acceptance of mediation in the United States are lacking in Europe.

An important cultural obstacle to international mediation with a continental European party is likely to be the language difference. Mediation is primarily an oral process. It requires oral communications not only between lawyers, but also between the senior representatives of the parties involved. The techniques of mediation rely heavily on language and the search for mutual understanding. Mediation often involves expressions of anger and other emotions (venting), and its success requires good listening skills. If there are language obstacles, it will be difficult for the parties to reach an understanding of each other's needs and interests.

The formality of arbitration proceedings provides an established framework for the use of interpreters. This framework does not exist in mediation. There are many bilingual international arbitrators who can hear evidence in different languages. However, conducting a mediation in two languages is a different and substantially more difficult story. The problem of language differences in international mediation should not be underestimated.13

Drafting International ADR Clauses

The following common sense guidelines for drafting ADR clauses with a continental European country recognize that there are language barriers and that Europe lags in its understanding of mediation.

1. Avoid boilerplate clauses. Do not mechanically copy a boilerplate ADR clause from a contract used in a U.S. transaction. Consider the specific circumstances of the parties and the contract, such as whether there are international industry practices relating to dispute resolution with which both parties are familiar. You can also make inquiries as to the other party's understanding of mediation, or the level of use of mediation in the country where the other party resides. In the construction industry, there are international standards for dispute resolution that already exist and are familiar to both parties. Thus, in an international construction contract, it might be appropriate to use the standard form clause. However, if mediation is not well established or understood by the other party or in the jurisdiction where the contract will be performed, and direct recourse to arbitration is not satisfactory there, it makes sense to consider a more structured form of ADR (such as dispute boards) or to require good faith negotiation by relatively high-level executives to take place over a defined period (say 15 or 30 days), rather than mediation. Good faith in contractual dealings is a well-developed and understood concept in Europe. If the principle of negotiation prior to arbitration is established in the contract, it is always possible at the time the dispute arises to propose that negotiations take place with the assistance of a mediator.