Adoptive Arbitration: An Alternative Approach to Enforcing Cross-Border Mediation Settlement Agreements - ARIA - Vol. 25, No. 2 2014
Author(s):
David Weiss
Brian Hodgkinson
Page Count:
14 pages
Media Description:
1 PDF Download
Published:
December, 2014
Practice Areas:
Description:
Originally from American Review of International Arbitration - ARIA
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I. INTRODUCTION
This article explores cross-border Mediation Settlement Agreements
(“MSAs”) by reviewing national laws implemented to address the enforcement
and recognition of such agreements.1 The authors hope to underscore the
benefits of legislation that allows a cross-border MSA to be converted into an
arbitration award. Such legislation would permit a mediator to adopt specific
international dispute provisions, thereby enabling the mediator to become an
arbitrator and to enter an MSA as an arbitral award.2 The authors refer to this
process as “adoptive arbitration.” Adoptive arbitration would augment the
enforceability of an MSA as an arbitration award in the transnational order,3 while
still maintaining the essential characteristics of mediation, notably its
confidentiality, voluntary nature, and non-litigious character. Adoptive arbitration
grants fluidity and certainty to resolving international commercial disputes, and
marks a jurisdiction providing the approach as an attractive forum for resolving
these disputes.
II. CROSS-BORDER AGREEMENTS: ENFORCING AN MSA IN A
FOREIGN JURISDICTION
Cross-border Alternative Dispute Resolution (“ADR”) is on the rise.4 In the
complex world of ADR, more parties to international commercial disputes are
interested in mediation before arbitration to resolve their affairs.5 Unfortunately,
one of the perils of cross-border mediation is the enforcement and recognition of
the written settlement agreement to the underlying commercial dispute. There is
often a false assumption that notions of good faith will drive parties to respect
mediated settlement agreements, and that failing such, the agreement will be
upheld transnationally by a foreign court applying comity.6 However, issues
arising from such assumptions often prove difficult to resolve. Although one
objective of international law is the orderly, consistent, and final resolution of
disputes, challenging or defending the enforcement of a cross-border mediation
agreement is difficult because, unlike an arbitral award, it lacks the designation of
a “final judgment” or “final award,” and consequently will often face greater
scrutiny in the jurisdiction where enforcement is sought.7
Absent a designation as an arbitral award, an MSA must meet the formalities
and substantive elements of a contract in order to be enforceable.8 In the
transnational context, however, different legal systems often have varying
requirements for proper contract formation. For instance, in common-law systems
the minimum requirements for the formation of a contract are offer, acceptance,
and consideration.9 Attendant to these basic elements are more nuanced
requirements such as the mutual “meeting of the minds,” which common-law
courts look to as indicative of the parties’ intent to form a binding agreement.10
Moreover, and apart from the issue of whether a contract was actually formed, the
recalcitrant party has defenses available under the common law, such as fraud,
duress, and undue influence, which can be used to contest the agreement’s
duress, and undue influence, which can be used to contest the agreement’s