1. LAW, JUSTICE AND DEVELOPMENT WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT November 14-17, 2011 Washington DC LJD LAW JUSTICE and DEVELOPMENT

2. Mediation vs. Arbitration vs. Litigation: Understanding the Basics Susan D. Franck Associate Professor of Law, Washington & Lee University School of Law 15 November 2011 2LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT

3. Evolution of International Commercial Dispute Resolution  Generation #1: – Gunboat Diplomacy – Diplomacy and “soft” negotiation  Generation #2: – Focus on legal rights – Judicialized dispute resolution (courts and arbitration)  Generation Next: – Thinking systematically about Appropriate Dispute Resolution (ADR) – Consider adjudicative (arbitration) and non-adjudicative options (mediation) – Selectively choose options to achieve maximum client objectives LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT3

4. Types of Options to Consider in “Generation Next”  Negotiation  Mediation  Early Neutral Evaluation  Expert Determination – Fact Finding  Arbitration  Mixed Processes – Mediation-Arbitration – Arbitration-Mediation  Ombuds  National Courts LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT4

5. Basic Definitions: Negotiation  Dialogue amongst interested parties.  Objective is to seek a common decision to achieve complimentary objectives in order to achieve gains to settle a dispute.  Different types of negotiation: – Adversarial – Interest Based LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT5

6. Basic Definitions: Mediation  Mediation uses a neutral third party.  The mediator assists two or more parties to reach a voluntary, negotiated settlement of their differences, without prejudice to legal remedies.  The mediator uses various skills and techniques to help the parties choose to reach a settlement.  The mediator has no power to make a decision. – Facilitative Mediation (based upon the parties’ mutual interests) – Evaluative or Directive Mediation (based upon mediator’s professional opinion) LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT6

7. Basic Definitions: Arbitration  Decision made by a neutral third party (1 or 3 specialist arbitrators).  Finally resolves a dispute using adjudicative capacity and applying facts to law.  Awards are immediately enforceable – Compare ICSID Conciliation = functional equivalent of non-binding arbitration LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT7

8. Comparing Options NegotiationMediationAdjudication Voluntary Parties may part company Voluntary Parties may leave process Not voluntary Parties must stay Enforceable once agreement is reached Enforceable once agreement is reached Binding (subject to attack or appeal) No third party involvementImpartial third party selected by parties involved Imposed decision-maker Predictable Not necessarily predictable Informal and flexible Formal Focus: past and futureFuture focusPast focused Outcome mutually ok Outcome imposed Private Often Public

9. Comparing Options NegotiationMediationAdjudication Time spent smallTime limited by agreementTime-consuming Relatively inexpensive Expensive Parties decide who participates Private caucuses possibleAll parties present Voluntary sharing of information Compelled disclosure

10. 1. ADR is non-binding determination of rights False. ADR involves rights but is mainly based on the parties’ interests 2. ADR is not suitable for civil law systems False. Cost savings may be higher in common law systems where litigation is more expensive, but ADR is equally valid in all legal systems 3. A good lawyer does not need ADR to settle a case False. The good lawyers are the ones who recognize the advantages of ADR 4. ADR is suitable only for small disputes, family law, etc. False. There is no limit on the potential application of ADR 5. ADR is suitable only for large companies False. There is no limit on the potential application of ADR. 6. One should avoid extending an offer to mediate if there is a chance the other side will not accept False. On the contrary, a refusal to mediate may indicate a party’s lack of confidence in their case Common Misconceptions about ADR

11. Basic resources: ADR and International Investment  Definitions and Supporting Information on ADR: – http://investmentadr.wlu.edu/resources/page.asp?pageid=587 http://investmentadr.wlu.edu/resources/page.asp?pageid=587  Podcasts about international investment and ADR: – http://investmentadr.wlu.edu/Podcasts/ http://investmentadr.wlu.edu/Podcasts/  Legal research guide for investment law and ADR: – http://investmentadr.wlu.edu/deptimages/Resources/Research%20Pathfinder.pdf http://investmentadr.wlu.edu/deptimages/Resources/Research%20Pathfinder.pdf LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT11

12. Thank you! LJD WEEK 2011 INNOVATION AND EMPOWERMENT FOR DEVELOPMENT12