Free trade agreements are intended to encourage foreign investment by nationals of the state parties. The United States is a party to a number of free trade agreements. Ecuador is in the midst of negotiating a free trade agreement with the United States. Certainly, Ecuador hopes that this agreement will nurture the business relationships between investors from the two countries.
All business ventures, however, are likely to experience disputes. This is almost inevitable. For the most part, parties involved in international transactions have used international arbitration to resolve disputes. Yet mediation is an even better method of dispute resolution. But regrettably, it is not yet an accepted method of resolving international disputes. This chapter examines the impediments to mediation’s use and ways to overcome them. It also outlines a special “med-arb” procedure for high-risk international disputes.