Anecdotally, the settlement rate of international mediations is around 80 per cent. On this basis, there is a very good chance that the dispute, once the parties have agreed to submit it to mediation, will settle. However, there is no way of testing this figure and our experience is that high-stakes complex disputes that are submitted to mediation are not resolved at this rate. None the less, there is a reasonable chance that even a very significant dispute may settle at the mediation stage.
If the mediation is successful, the parties will be in possession of a binding settlement agreement. This is not an enforceable arbitral award, unless steps are available to the parties to convert it into such. For some parties this will not be an issue, but for others the ability to enforce an award under the New York Convention might be an important consideration.
- It is possible to mediate, then appoint the mediator as arbitrator in order to turn the agreed settlement into an arbitration award by consent.
- Unless an arbitration is already ongoing prior to the mediation, issues may arise when it comes to enforcing any such award.
- Where parties appoint the mediator as arbitrator after they have resolved their differences, views differ as to whether the resulting award is properly enforceable under the New York Convention. Accordingly, if the parties need any settlement to be reflected in an enforceable arbitral award, then they should ideally have commenced an arbitration prior to the mediation in order to be in a position to request that the arbitration tribunal issue a consent award reflecting the settlement agreed by the parties.
Most major institutional rules governing mediation do not expressly refer to arbitral awards securing mediation settlements. However, article 14 of the Mediation Rules of the Arbitration Institute of the Stockholm Chamber of Commerce specifically provides: ‘In case of settlement, the parties may, subject to the consent of the Mediator, agree to appoint the Mediator as an Arbitrator and request him/her to confirm the settlement agreement in an arbitral award.’
All major international arbitration institutions provide for a form of ‘consent award,’ where parties that settle postcommencement of arbitration proceedings can obtain an arbitral award, if so requested and if the arbitral tribunal agrees. The UNCITRAL Model Law sanctions such awards and their recognition: ‘[i]f during the arbitral proceedings, the parties settle the dispute, the Arbitral Tribunal shall terminate the proceedings and, if requested by the parties and not objected to by the Arbitral tribunal, record the settlement in the form of an Arbitral Award on agreed terms.’ Article 31 provides that ‘such an award has the same status and effect as any other award on the merits of the case.’
There are similar provisions giving deference to ‘agreed awards’ in the rules governing ICC, ICDR and ICSID arbitrations. Article 26.9 of the LCIA Rules similarly notes that, in the event of any final settlement of the parties’ dispute, the arbitral tribunal may decide to make an award recording the settlement if the parties jointly so request in writing (a ‘consent award’), provided always that such consent award contains an express statement on its face that it is an award made at the parties’ joint request and with their consent. A consent award need not contain reasons. As noted, these consent awards should be enforceable under the provisions of the New York Convention.