Mediation and Arbitration clauses in Agreements
Demetris Ch. Demetriades LLC has adopted since July 2020 the med/arb approach on dispute resolution maters relating to agreements drafted for and on behalf of our clients.
Before the adoption of the Med/arb clause our dispute clauses were governed by the Courts of the Republic of Cyprus, taking into consideration however the expenses, time and effort required to resolve a dispute between parties we now more than ever recognise the need to offer our clients a more effective approach in resolving disputes and we therefore encourage all of our clients to incorporate in their agreement the dispute resolution mechanism of mediation and in the event that a solution cannot be achieved through this process to then proceed with Arbitration.
Mediation
Mediation is an efficient and cost-effective mechanism in resolving a dispute. It allows the parties to prevent or settle a dispute taking into consideration their interest and avoiding a win/lose outcome[1]. By opting to partake in this mediation process the parties may avoid terminating commercial relationships and overcome a dispute in an amicable and completely confidential manner that may benefit all parties.
The Process
The Mediation process does not follow any adjudicative proceedings and allows the mediator to unfold the process to establish a solution-oriented mindset. The process is voluntary for both parties are free to:
- Agree on a mediator
- Agree on the mediation procedure
- Determine the scope of issues to be submitted and addressed in the mediation
- Develop their own solutions
- Resolve their dispute holistically or agree on partial solution or terminate the mediation at any time if no common ground can be found.
It should be noted that each party may choose to enter the mediation process with their legal counsel as representatives.
Settlement Agreement
Provided the mediation process was conducted successfully, the agreed proposal is drafted and executed by both parties. The Mediator has no authority to impose a settlement between the parties and such agreement is only entered through their own free volition. The agreement may be submitted at the appropriate District Court of the Republic of Cyprus which shall verify its validity and enforceability.
Termination of the mediation
In the event that it is not possible for the parties to find a common ground either party may choose to opt out of the mediation process and terminate the procedure. Once the mediation procedure is terminated and provide the parties have opt for a med/arb cause for resolving disputes the parties must initiate arbitration procedures.
Why choose mediation?
Mediation is the fasted most cost-effective method of resolving a dispute between the parties. The Process can be concluded in a matter of days or weeks depending on the complexity of the matter and the procedure is completely confidential. The fundamental prerequisite for a successful mediation is the parties intentions to mend the dispute amicably to allow for a commercial continuation of an agreement.
Arbitration
Arbitration is a procedure that is submitted, by agreement of the parties usually to one or three arbitrators who shall make a binding decision on the disputed issue. When opting for a three-member arbitral tribunal each party shall chose one arbitrator and then the two arbitrators will choose the presiding arbitrator. In contradiction to the mediation process once the parties have initiated the arbitration process it is not possible to terminate such process and any decision issued by the arbitral tribunal will be final and enforceable. An arbitral decision are enforced by national Courts and such decisions may only be set aside in very limited circumstances.
Benefits of Arbitration
Unlike litigation, arbitral tribunals are presided by arbitrators with expertise in the disputed subject matter. Consequently, the arbitrator/s shall be more appropriate to handle technical, specialised and or specific disputes in their area of expertise allowing for the ability to tailor procedures to the needs of a particular dispute. The cost and time duration of the proceedings are dramatically lower.
Why hasn’t this Trent been adopted for all disputes.
While the Med/arb dispute resolution process has important advantages the public are as always reluctant to change and the unknown, it is for this exact reason that the management at Demetris Ch. Demetriades LLC as decided to promote awareness on the matter in an effort to assist in the shift of dispute resolution where more favourable procedures could be used rather that litigation.