Mediation to resolve international commercial litigation

---

You do business with companies from all over the world. Whether it's exports of goods, services or even imports of components for your supply chain, it can be a growth sector for your business.

What should you do when a dispute arises with a customer or supplier located in another jurisdiction? Whether it is in another country, province or state, this can complicate claims procedures, including legal proceedings. First, determining a court's jurisdiction may require several proceedings before the courts. Once the preliminary question of the court's jurisdiction has been decided, all the usual legal proceedings must be commenced until trial.

This will necessarily involve costs and time. This wasted time can itself have an impact on your company's activities. In addition, having to present your case before a court of another jurisdiction can bring unpredictability as to the decision that will be rendered. . 

1) Mediation:

Mediation is a very interesting option to consider. First, what is mediation?  Mediation is a private form of alternative dispute resolution chosen by parties to prevent a potential dispute or resolve an existing one[1]. To refer to mediation, five criteria are generally required[2]: the presence of a neutral and impartial third party (the mediator), confidentiality, free and voluntary nature, the obligation of the parties to negotiate in good faith and the self-determination of the parties.

In other words, it is the parties who will try to find solutions to their dispute with the help of the mediator. This has many advantages including confidentiality (unlike legal proceedings that are public), speed (the dispute can be settled in a few weeks unlike years in court), flexibility (e.g. being able to proceed by videoconference at times that suit the parties) and lower costs.

Although success rates in mediation are generally very high, parties are not obliged to settle their dispute in mediation. They remain free to suspend the process or to settle only part of the dispute or even to continue the proceedings in court. In the latter case and in the vast majority of jurisdictions, the parties will not be forced to testify about what was exchanged during the mediation, just as for the mediator[3]. However, for non-compellability to apply, be sure to use the services of a certified mediator[4]. 

Even when the parties do not reach a complete agreement on their first attempt at mediation, they generally maintain better relationships that can facilitate a future agreement. The parties may even attempt mediation again if they wish. 

In most cases, mediation will result in an agreement between the parties. Very often, this agreement will make it possible to settle several conflicts at the same time rather than obtaining a rigid judgment on a specific point of law before the courts. 

2) Recognition of the mediation agreement by the courts in Quebec and around the world:

First, let us see how the mediation agreement is recognized in Quebec. If the parties reach an agreement, it may be confirmed by a transaction[5]. Briefly, a transaction is a contract that put an end to the dispute between the parties and has, for them, the authority of a judgment[6]. This transaction may be homologated by a court in order to have the same force and effect as a judgment[7].

In short, the transaction is a contract between the parties where they mutually undertake to perform their obligations (e.g. payments, deliveries, services to be rendered) within a prescribed period. If one of the parties defaults, the other party may have the transaction homologated and enforced as if it had obtained a judgment in courts.

The same principle applies before the vast majority of courts outside Quebec. Indeed, several jurisdictions have these principles codified in their laws or regulations. In addition, the Singapore Convention on Mediation[8] by the United Nations Commission on International Trade Law provides a framework for the recognition of mediation agreements by signatory countries. At the time of writing this article, 55 countries around the world have signed the convention, including China, the United States, Australia, Nigeria, Chile and Brazil[9].

If a mediation agreement is reached between the parties and the execution of this agreement must be done in one of the signatory countries, the recognition of the agreement and its enforceability may apply. This could therefore avoid the usual legal representations before a court outside Quebec.  
   

3) How to proceed through mediation?

It is very easy to proceed through mediation. First, it is strongly suggested to include a mediation clause in contracts with your clients. In the event of a dispute, this will ensure the participation of the parties in the mediation process. 

Even if the parties have not included a mediation clause in their contracts, they can attempt mediation, even if they have started legal proceedings. Once the parties have agreed to attempt mediation, simply choose an accredited mediator to take charge of the case. In mediation, the parties may represent themselves alone or with lawyers.

In general, the mediator will hold preparatory meetings with each party to obtain their general positions on the dispute, explain the mediation process and agree on the availability of each one. For example, this could mean proceeding by videoconference or in person, agreeing on the times to proceed by notifying the different time zones and planning if the participation of other stakeholders is necessary (e.g. experts, employees, external professionals).

Usually, the costs and fees for mediation will be shared equally between the parties. A mediation protocol will be concluded between the parties and the mediator notably to govern the process and the sharing of costs.

As soon as the parties and the mediator are available, the mediation process can begin. Thus, it can be very fast and advantageous for everyone. Depending on the complexity of the dispute, an agreement between the parties may be reached after a single day or in a few weeks.

4) Conclusion: 

Considering the many advantages of mediation, it is very interesting for companies, especially those doing business internationally, to consider this resolution process to settle or even prevent a litigation. Although this article focuses on international trade, it is important to note that mediation can also resolve more regional disputes as well as those within a company. In all cases, it is a fast, confidential, flexible and cost-effective process for all parties.  

Simon Blais is a certified mediator in civil, commercial and labour issues. He assists parties in the process of alternative dispute resolution. With extensive international experience, he appreciates using this perspective to help companies find solutions to their challenges. 

The use of the masculine is only intended to lighten the text.

REFERENCE:  

[1] Quebec’s Code of Civil Procedure, CQLR c C-25.01, Article 1.

[2] See BLAIS, Simon: "What is mediation?", Blais Legal Services Inc., published on March 10, 2020, accessible at https://blaislegal.ca/art-eng-mediation, as of November 26, 2022;

[3] Quebec’s Code of Civil Procedure, CQLR c C-25.01, Article 606.

[4] Reconnaissance des organismes accréditeurs en médiation civile : Directive encadrant le pouvoir discrétionnaire du ministre de la Justice, entered into force on August 22, 2018 and last updated on January 17, 2022, available at https://cdn-contenu.quebec.ca/cdn-contenu/adm/min/justice/publications-adm/directives/DIR_organ_PRD_MJQ.pdf, as of November 26, 2022. 

[5] Quebec’s Code of Civil Procedure, CQLR c C-25.01, Article 613.

[6] Civil Code of Quebec, CQLR c CCQ-1991, Articles 2631 to 2637.

[7] Quebec’s Code of Civil Procedure, CQLR c C-25.01, Article 528.

[8] United Nations Convention on International Settlement Agreements Resulting from Mediation (New York, 2018) (the "Singapore Convention on Mediation"), adopted on December 20, 2018 and open for signature on August 7, 2019, accessible at https://uncitral.un.org/en/texts/mediation/conventions/international_settlement_agreements, as of November 26, 2022.

[9] United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention on Mediation), Status of treaties, available at Status: United Nations Convention on International Settlement Agreements Resulting from Mediation | United Nations Commission On International Trade Law, as of November 26, 2022.