The B20 2015 conferences in Turkey have brought into perspective the importance of mediation in settling cross-border issues.

The rise in global economy has forged business partnerships between countries, leading to a steady increase in foreign investments and cross-border trade. With increased trade also comes the increased possibility of disputes. Mediation is considered to be the optimal way to settle such disputes.

Cornwall Stodart Special Counsel, Peter McMullin, who is representing Australia at one of the B20 forums says Mediation and arbitration, well developed in countries like Australia, provide a recognisable form of dispute resolution for companies seeking to invest in developing countries, where legal processes often vary and are less established.”

As Australia seeks to solidify its trade relations in Asia, specifically with Korea, Japan and China, businesses need to explore the vast opportunity that cross-border dispute mediation offers.

Role of mediation in cross-border trade issues

Since the legal structure, laws and trade regulations vary from country to country, international trade and investments often fall victim to this disparity. Mediation provides a quick resolution to such issues so that business relations can proceed unhindered.

Even in the initial stages where business negotiations are in progress, mediation can be a useful tool in drawing out contracts, setting up arbitration clauses and in general, representing the client interests. Businesses, on their own, may not possess the legal knowledge, cross-cultural awareness and diplomacy required to iron out road-blocks in setting up and conducting trade at an international level.

When disputes arise, mediation is an easier and cost-effective way to resolve the dispute, compared to litigation, and it does not end in a bitter note, which means trade relations can still proceed to the benefit of both nations. And companies get to protect the interest of their shareholders by avoiding a costly and prolonged legal conflict.

Even in large international disputes where litigation is unavoidable, mediation can be undertaken initially in a bid to narrow down the dispute areas.

Benefits of settling cross-border trade issues through mediation

Apart from the obvious benefits of low-cost and speedy settlement, mediation in cross-border trade disputes also brings the following benefits:

  • Offers more control to the people involved in the dispute
  • Takes into account cultural factors that may have a bearing on the dispute
  • Offers a customisable and confidential settlement that is mutually agreeable, paving the way for enhancing business ties between the two countries
  • Allows businesses involved in the dispute to carve out a solution that best meets their commercial interests. They have freedom to consider various approaches to resolve the dispute and then arrive at a solution that is agreeable to all.

The European Union, a prominent member of the G20 group, in a directive on mediation, states clearly its benefit in settling trade disputes: ‘Mediation can provide a cost-effective and quick extrajudicial resolution of disputes in civil and commercial matters through processes tailored to the needs of the parties. Agreements resulting from mediation are more likely to be complied with voluntarily and are more likely to preserve an amicable and sustainable relationship between the parties. These benefits become even more pronounced in situations displaying cross-border elements’.

The B20 2015 Conference brings into sharp focus the need for stakeholders to look into mediation as a prime way to deal with disputes that arises during business transactions. Through mediation, international businesses can find more amicable and cost-effective solutions to cross-border disputes that carry a longer-term impact.