Mediation - Frequently Asked Questions
What is investor-State mediation?
Mediation offers a party-driven approach to dispute settlement. The mediator's role is to facilitate the parties' negotiations, for example, by helping each party to identify its interests, overcome barriers to settlement, and develop possible settlement options with the parties. Mediation is entirely voluntary and typically based on a written mediation agreement between the disputing parties.
When should parties use mediation?
Parties may choose mediation as a standalone process, or in connection with an arbitration, either prior to, during or following the arbitration proceeding. As noted, a mediation procedure is required by some multilateral treaties prior to the institution of an arbitration proceeding. However, mediation may also be conducted in parallel with an ICSID arbitration proceeding, provided that the parties agree in writing. In practice, the arbitration is likely to be stayed pursuant to a party agreement while the mediation is ongoing. Hence, it is largely in the hands of the parties to decide at what point a mediation could assist in settling some or all aspects of their dispute.
What is the outcome of a mediation?
Unlike an arbitrator, a mediator does not resolve the parties' dispute through a binding decision. Instead, the mediator assists the parties in finding customized settlement options, which may involve the payment of compensation or other actions to be taken by the parties pursuant to their settlement agreement. Ultimately, the parties decide whether to enter into a settlement agreement, and define the scope of such settlement and its terms. Should the parties reach an amicable settlement through mediation, this may be incorporated into a tribunal award pursuant to ICSID Arbitration Rule 43(2). The settlement would then benefit from the simplified enforcement mechanism that is unique to the ICSID Convention.