Mediation model rule for commercial disputes

How to cite this journal: Author, Date of the post, WMO Conflict Insight, Title of the post, ISSN: 2628 6998, https://worldmediation.org/journal/

Abstract *

This article examines the role of mediation as the appropriate mechanism for resolving commercial disputes in Bangladesh, a country that possesses a modern arbitration law but, at the time of writing, no dedicated mediation legislation. The author argues that the interdependent nature of supply chain relationships makes amicable dispute resolution a commercial necessity, since business partners cannot easily replace long standing upstream and downstream relationships. Drawing on the deeply rooted Bangladeshi tradition of Shalish, the article proposes that the business community can adopt consensual rules of mediation modelled on internationally accepted standards, including procedural principles developed in Chinese mediation practice, until formal legislation is enacted. The article outlines core principles such as neutrality, confidentiality, voluntariness and expedition, and describes the practical stages of a commercial mediation from the appointment of mediators to the facilitation of settlement.

Keywords *

Mediation, Alternative Dispute Resolution, Bangladesh, Shalish, supply chain relationships, commercial disputes, Chinese mediation rules, arbitration, confidentiality, settlement

Introduction

The profession of business is interdependent on many stakeholders. Business enterprises are part of a manufacturing or creating products and services. This is a kind of relay race. The concept of supply chain management developed from the specialization of the job of making something which again raw materials of other business and finally creating a good or service to deliver to the consumer for consumption. Businesses are dependent on upstream as the source of raw material and dependent on buyers at the downstream market. The relationship is not for one day or cannot develop overnight. The success of one business is part of a supply chain relationship and unable to break and create now relationship overnight. The nature of the profession and cost of legal processes encourage the mediation of disputes amicably under certain rules or conventions.

Businesses try their best to maintain the relationship despite disagreement over certain issues and try to resolve to continue the relationship. Mediation, a category of Alternate Dispute Resolution (ADR) is the appropriate method of resolve the dispute to continue the business transaction. The parties in dispute also continue the business transactions despite a dispute and mediation process on certain issues. The main issue of mediation is determining damages and there is not a critical dispute about liability or an issue of principle. All the parties in mediation are ready to resolve the issue with mutually agreed compensation for damages without any legal proceeding in the court.

Main Corpus

Unfortunately, Bangladesh has no law for mediation although many developed and developing countries have such law. We have a long tradition of Shalish of many types of disputes in rural societies. The business communities in many sectors have their own Shalish and conventional rule usually followed by the member of that business society. It has social and inner community methods of enforceability without any legal bindings.

Since Bangladesh has no mediation law but has a long tradition of Shalish in society, there may be consensus on certain rules and regulations based on local and global rules and practices. There are some global standard procedures and conventions of mediation usually agreed upon by business national and international businesses. It has some general principles like- (1) The process is non-binding. Unless the parties otherwise agree, the mediators shall have no authority to issue an enforceable award or judgment. (2) The mediators shall be neutral and impartial. The mediators shall have no interest in the outcome of the dispute and have no current or anticipated business or personal relationship with any party to the dispute. (3) The process shall be conducted expeditiously. Each party representative will make every effort to be available for meetings. (4) Parties usually agreed on the terms of mediation in the business contract. (5) If the respondent party has not previously agreed to mediation through a contract or other agreement, they will agree to certain terms after any dispute arises.

The standard terms of mediation in agreement before any business deal or agreed upon after any dispute occurs are on Mediator and place of mediation etc. All the parties will nominate a mediator and disclose their identities to other parties for their acceptance. The acceptance of mediators shall be mutual and unanimous. A party may challenge a mediator candidate if it knows of any circumstances giving rise to reasonable doubt regarding the candidate’s impartiality. Before the appointment, the mediators will assure the parties of availability to conduct the proceeding expeditiously. Upon retention of the mediators, the parties shall enter into an engagement agreement for mediation.

The mediation methods are very formally informal among the mediators and disputing parties. At the initial stage, the mediators will sit to discuss the rule and processes among themselves and agreed on certain other issues to follow during mediation. During the mediation, the mediators shall take care to maintain a useful and creative joint approach and shall confer privately as may be necessary and advisable.

Each party will submit to the mediators a written statement summarizing the background and present status of the dispute. The parties may agree to submit jointly certain records and other materials. The mediators may request any party to provide clarification and additional information. The parties may also exchange documents among themselves to the opinion of others and even submit a joint statement of facts and figures to the mediators.

In certain cases, upon the agreement between parties, the mediators shall keep confidential any written materials or information that are submitted. At the conclusion of the mediation process, upon request of a party, the mediators shall return to that party all written materials and information which that party had provided to the mediators without retaining copies, or else certify that the destruction of such materials.

After the initial hearing from the disputing parties and going through though the documents and papers the mediators will initiate and facilitate the negotiation for a mutually agreed settlement in any manner the mediators believe is appropriate. The mediator shall help the parties to explore alternative resolutions for mutually agreed settlement of the dispute.

Mediators may seek an opinion from the parties to determine matters such as preferred subject matter expertise, time constraints, potential conflicts of interest, and geographic location at the initial stage of mediation. . In case of more than two parties in dispute, if a party withdraws from a multiparty mediation but the procedure continues with the remaining parties.

There are many standard rules of mediation usually agreed upon by parties and mediators. The Chinese mediation rules are very comprehensive and proven to be acceptable in China and other parts of the world. Some of the rules developed by the Chinese are: (1) The mediators shall control the procedural aspects of the mediation. The parties shall cooperate fully with the mediators. (2) The mediators are free to meet and communicate separately with each party, at the mediators’ discretion or at the request of a party. (3) The mediators shall decide when to hold joint meetings with the parties and when to hold separate meetings. The mediators shall fix the time and place of each session and its agenda, in consultation with the parties. There shall be no record of any meeting. Formal rules of evidence or procedure shall not apply. (4) If any party has a substantial need for documents or other information in the possession of another party, or for other information that may facilitate a settlement, the parties shall attempt to agree to terms for the voluntary provision of such information. Should they fail to agree, either party may request a joint consultation with the mediators, who shall assist the parties in reaching an agreement. At the conclusion of the mediation process, upon the request of a party that provided documents or other material to one or more other parties, the recipients shall return those documents and materials to the originating party without retaining copies. (7) Each party must be represented at each mediation conference by a business executive authorized to negotiate a complete resolution of the entire dispute unless excused by the mediators as to a particular conference. Each party may be represented by a business or legal consultant. (8) The mediators may obtain independent expert advice and assistance, with the prior agreement of and at the expense of the parties.

Summary

Even if settlement of all claims and issues is not possible, mediators may help narrow issues and claims in the investigation and discuss with the parties the possibility of their agreeing arbitration. Mediation is a risk-free, inexpensive, confidential, and quick mechanism to evaluate whether a settlement can be achieved in these cases.

Conclusion

Bangladesh has an Arbitration law framed with guidelines of the UN with a provision of enforcement of arbitration at home and abroad. The expert has some reservations about certain rules and it is a landmark modern law to resolve international business disputes. The business community may come to an understanding of rules and methods of mediation until Bangladesh gets a mediation law.

Potential Solution *

The gap the author identifies, a society with a living mediation culture but without a mediation statute, can be bridged in a staged and neutral way that requires no immediate legislative action.

As a first step, the organized business community, for instance through its chambers of commerce and sector associations, could adopt a voluntary Model Code of Commercial Mediation. This code would translate the Shalish tradition into a written, transparent procedure aligned with international standards such as the UNCITRAL Model Law on International Commercial Mediation (2018). Because Shalish already enjoys social legitimacy and internal enforceability, a codified version would not import a foreign mechanism but formalize an existing practice, which increases the likelihood of acceptance across sectors.

Second, a standard mediation clause could be published for insertion into commercial contracts. As the article notes, parties who agree to mediation in advance rarely dispute the process later. A uniform clause specifying the appointment method, seat, language, confidentiality and time limits would give mediated settlements contractual force under existing contract law, compensating for the absence of a statute. Settlements could additionally be recorded as consent arbitral awards under the Arbitration Act 2001, which would make them enforceable at home and abroad through the existing arbitration framework.

Third, a neutral roster of accredited commercial mediators should be established, drawing on respected figures from the business community, the legal profession and, where appropriate, experienced Shalishkars, with training in international mediation technique. Neutrality is best protected through mandatory disclosure of interests, the mutual acceptance requirement the author describes, and a right of challenge for reasonable doubt as to impartiality.

Finally, the experience gathered under this voluntary framework would create an evidence base for eventual legislation. Documented case volumes, settlement rates and procedural refinements would allow lawmakers to draft a mediation act grounded in proven national practice rather than in transplanted foreign models. In this way the informal and the formal systems reinforce one another: the tradition supplies legitimacy, the international standards supply structure, and the future statute supplies enforceability.

* Added by the WMO Editorial Team

References *

1. The Arbitration Act, 2001 (Act No. I of 2001), Government of the People’s Republic of Bangladesh, 24 January 2001.
2. UNCITRAL Model Law on International Commercial Arbitration (1985, amended 2006), United Nations Commission on International Trade Law.
3. UNCITRAL Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation (2018), United Nations Commission on International Trade Law.
4. United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention on Mediation), 2019.
5. Hoque, M. R., & Zarif, M. M. M. (2020). Traditional Shalish system for rural dispute resolution in Bangladesh: An analytical study of its structure and operational mechanism. IIUC Studies, 16, 35 to 56.
6. Chung, Y. (2020). Dispute Resolution Culture and Institution in Bangladesh: Shalish Tradition and Modern Extensions. Journal of Arbitration Studies.
7. Alim, M. A., & Ali, T. O. (2007). NGO Shalish and Justice Seeking Behaviour in Rural Bangladesh. BRAC Research Report.
8. CIETAC Mediation Rules, China International Economic and Trade Arbitration Commission / CCPIT Mediation Center, Beijing.
9. CPR International Institute for Conflict Prevention and Resolution, Mediation Procedure, New York.
10. Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), 1958.