- IADR Centre Director and Secy. Gen. Attorney at law Dhara Wijayatilake on the importance of commercial dispute resolution for SL’s investment prospects
The United Nations (UN) adopted the Singapore Convention on Mediation (the Convention on International Settlement Agreements Resulting from Mediation) in 2018, to which Sri Lanka became a signatory in August, 2019. The Convention was drafted with the aim of strengthening international dispute resolution and allowing commercial disputes to move towards mediation. Now, the World Intellectual Property Organisation (WIPO), the UN - Commission on International Trade Law (CITRAL), the International Bar Association (IBA) and even countries like India, Singapore, the Maldives and Hong Kong have adopted mediation as a means of dispute resolution. Sri Lanka however, until now, had no such process, lagging behind its competing investment destinations in Asia in this vital area of mooting investor confidence. But, that has changed. Sri Lanka now has its first International Alternative Dispute Resolution (IADR) Centre. The state of the art centre is a private sector joint venture between the Ceylon Chamber of Commerce and the Institute for the Development of Commercial Law and Practice and fills a vacuum in the dispute resolution milieu in Sri Lanka. Looking at Sri Lanka’s imperative for foreign direct investments (FDIs) and trade, options for resolution outside of litigation are vital.
Kaleidoscope visited the newly opened IADR Centre at the World Trade Centre (WTC) in Colombo Fort for a look around Sri Lanka’s pioneering commercial dispute resolution locale and to discuss the importance of commercial dispute resolution and mediation in the current corporate context with the Centre’s Director and Secretary General, attorney-at-law (AAL) Dhara Wijayatilake.
Following are excerpts of the interview:
Why are mediation services needed for commercial dispute resolution?
The world over, litigation has not been the answer to every kind of dispute resolution. There are some categories that need to go to court, but in trade and business, one needs to be smart about the choices that are made. Globally, there has been a great deal of user dissatisfaction with litigation, in a multiplicity of disputes. The world has been looking for alternatives from way back. It’s not just a phenomenon in Sri Lanka and it’s not an issue that Sri Lankans alone face. However, we are facing the challenges that litigation poses. Litigation is riddled with the evils of delay, expense and unpredictability. In the trade and business world, you need to have smart answers and quick responses. Disputes cannot be avoided, but you have to find smart ways to resolve them fast. Preserving relationships is also important in business. There’s a global move towards mediation, because of the values that it offers.
Is Sri Lanka relatively new to the concept of commercial dispute resolution?
Yes. However, for other minor disputes at the community level, we’ve had mediation in place for a long time.
What challenges do you foresee in dispute resolution in the current Sri Lankan landscape?
A comprehensive ecosystem is needed to enable mediation services in Sri Lanka. We need legislation and quality resources, which means that we need trained mediators. A mediator is not someone who sits silently and patiently and helps parties to come to a settlement. On the contrary, mediation itself is a very disciplined and strict process. It’s user friendly as well. Mediators have to adopt special techniques and skills to assist the relevant parties. It’s a process that empowers both sides to come up with their own solutions. The process is very different to litigation and arbitration. We also need the support of the Government. Our Centre is a purely private entity, but what we do here impacts Sri Lanka being showcased as an investment friendly destination and as a country with a good contract enforcement regime which helps businesses. This will interest investors. Therefore, the Government should be interested in the work that we do.
Looking at the investment landscape for Sri Lanka, how does this help?
A few years ago, Sri Lanka was being evaluated for our Ease of Doing Business ranking by the World Bank. It was shown then that in terms of contract enforcement, we were lacking, and thus, we were very poorly ranked. We were even below the South Asian average, which is not a good story to present to investors. We need to change that by offering more meaningful options and mediation is one such. The world over, the UN, the UNCITRAL, the WIPO, the IBA, and several other organisations have taken to mediation because of their respect towards the values it offers in trade, investment and cross border investment dispute resolution.
What services does the Centre offer for dispute resolution?
The Centre offers ADR services, arbitration and mediation services. We are trying to eliminate the weaknesses entrenched in the culture of how arbitration is practiced. Arbitration is not viewed as the best method for dispute resolution, as it is riddled with the same weaknesses seen in litigation. We offer mediation services. We have our own institutional roles. The Centre is a very functional, state of the art facility with great infrastructure. It houses individual rooms that can be used for mediation and arbitration. We also offer advisory services, including advice on clauses that can be incorporated into contracts. We offer a whole gamut of services that will help to actually implement mediation.
What elements need to be in place for this to work?
Many elements will come into play. Firstly, we need to provide quality services and for that, we need trained mediators. Many of us here at the Centre have received training from overseas mediation service providers which are acknowledged and accomplished training entities. We need to improve the infrastructure. While we have this Centre, perhaps in time, we will need more. We also need a comprehensive legal framework. We have worked on two statutes that we have requested the Ministry of Justice to take on. The response has been quite amazing. The current Minister of Justice (President’s Counsel Dr. Wijeyadasa Rajapakshe) has been very supportive. There are two Acts that are forthcoming. The first is the Singapore Convention Bill and this Act will hopefully be ready for presentation to the Parliament next month (October). We also formulated another law to provide for civil and commercial mediation. This is not applicable to community mediation and the total regime that has been established already. This is primarily for commercial contract dispute resolution and investor-State dispute resolution. We need this legislation implemented because we want to set standards that must be complied with. We want observance and compliance with the mediation process, which makes it unique and different from arbitration and litigation. We want respect for things like a code of conduct for mediators. So, all that needs statutory recognition. We also need to create awareness. In Sri Lanka, even those who could benefit from mediation, such as corporate entities and the State, are not aware of the value of mediation. It’s necessary for the business community to realise and acknowledge that mediation is a globally popular mechanism and that Sri Lanka has to play a lot of catch up.
What exactly is the mission of the IADR Centre? What are your objectives?
Our objectives are principally, to establish a Centre and to provide the services necessary to disputants. That is our mission. We are doing something that has become popular globally. We aren’t just taking something that the West has adopted and implanting it here. That’s not what we’re doing. An evaluation has been conducted. If the UN passed a Convention in response to the needs of trade and commerce, if investor dispute resolution is being looked at for the provision of mediation services, if organisations like the WIPO, the IBA and the London Court of International Arbitration have adopted mediation (more particularly, in South Asia, given that Sri Lanka is far behind in comparison to India, Singapore, Pakistan, the Maldives, and Hong Kong, where mediation exists), Sri Lanka needs to introduce mediation in order to create a good and meaningful regime for dispute resolution. This will help business and bring in investors. It will showcase Sri Lanka as a good investment destination. The Centre also provides services to the Colombo Port City. It was statutorily mandated to establish an IADR Centre at the Colombo Port City and we were selected to provide those services to them.
How will this Centre help the private sector in the wider and longer term?
We are working on creating awareness. We need to inspire people to believe in the mechanism and the virtues of mediation as opposed to other means of dispute resolution. Yes, we do offer arbitration, but mediation is relatively unknown. People tell us: ‘Litigation has failed us, we’ve been in court for 30 years and even though we’ve got a court order in our favour, it doesn’t have much value because of the time that has passed’. In business, two things are most important: not wasting time on disputes and being able to continue relations with those you are working with, as business partners. Both of these factors can be satisfied through mediation. A mediation clause needs to be incorporated into contracts. We work with lawyers as well, as they have a role to play in mediation. Mediation is completely different to that adversarial, gladiator garb that you put on when you go to court. Globally, lawyers are adjusting their techniques to be meaningful in the field of mediation. This is what we need to do.
Given that this is something new for Sri Lanka, what is the process that will be employed in commercial dispute resolution?
Firstly, the parties must agree to come to mediation. It cannot happen without both the parties’ consent. What we’re advocating for is the inclusion of a mediation clause in agreements. If it is stipulated that if any dispute arises, the parties will seek mediation, then, they cannot go to court instead. That’s what our civil and commercial law will provide. Once the parties come in, a mediator will be provided and the Centre will provide all administrative services. The mediator will sit with the parties and explain the process to them, and will ask them to comply with a few standards of conduct. They have to engage with absolute bona fides and have to engage truthfully, because this process is designed to empower parties to come up with their own solution that addresses their concerns, needs, and interests. It is not a process that hands down a judgment, nor is it a process where a mediator plays a coercive role. The mediator is very non-coercive. The process helps parties to not look at the legal rights and obligations i.e. no commissions or omissions. Mediation is not judgmental. Whatever the parties’ legal rights may be, mediation is a process that helps them to satisfy their needs.
Where will dispute resolution mediation not be possible?
In a commercial context, mediation is very relevant to every industry and every sector. Services, transport, logistics, etc., any kind of business relationship where a service is offered, mediation is possible. In commercial contracts, family disputes and consumer disputes are excluded.
What’s next, now that you’ve established the IADR Centre?
The challenge is to introduce the features of mediation to Sri Lanka, including the Government, and inspire people to believe in it. People can look at the global examples of how others prefer mediation over other alternatives. We also have to keep improving the quality of the services offered. We must continue training and development. Mediators are just like lawyers or any other profession. It’s about continuing training and education. If you cultivate significant expertise and enhance the quality of the mediators, the users will very soon see how valuable mediation can be. It is a response to the evils of litigation and arbitration. It’s fast, it’s not as expensive, and you get what you want in the end, and not what somebody else hands down to you.
(The writer is the host, director, and co-producer of the weekly digital programme ‘Kaleidoscope with Savithri Rodrigo’ which can be viewed on YouTube, Facebook, Instagram, and LinkedIn. She has over three decades of experience in print, electronic, and social media.)