De-mystifying mediation for dispute resolution

By Dhara Wijayatilake, Attorney at Law, Director and Secretary General of the International ADR Center, Sri Lanka; former Secretary to the Ministry of Justice

The Mediation (Civil and Commercial Disputes) Bill has been published in the Gazette and presented to Parliament last month (July 2025). Although mediation has been used in Sri Lanka since 1989 for the resolution of minor disputes at community level through Mediation Boards established by Government under 2 statutes there is very little knowledge in Sri Lanka of its value and use worldwide for the resolution of more complex civil and commercial disputes and for Investor-State disputes. There are distinct differences between mediation, litigation, and arbitration. This article seeks to demystify the concept of mediation.

There are many styles of mediation, the popular being Facilitative Mediation also known as Traditional Mediation because in the early times this was the only known style of mediation. The Mediator, as a 3^rd party neutral assists disputants to communicate effectively to better understand their deepest concerns and needs to reach a settlement that best suits them. The intervention of a neutral 3^rd party offers prospects for settlement that direct  negotiations between disputants or their representatives do not. This article deals only with  facilitative mediation which is the type mainly practiced in Sri Lanka. The UN Mediation Convention, the domestic legislation enacted in 2024 and the current Bill, provide for principles that are universally adopted in facilitative mediation.

Two other styles are Transformative Mediation and Evaluative Mediation. The distinction among these are based on the role of the Mediator and the ultimate objective to be achieved.  In Transformative Mediation the focus is on helping parties to appreciate the concerns and interests of the other party and the objective is to transform fractured relationships to an extent that the parties better understand each others’ perspectives. It is used widely but not exclusively in family mediations.  In Evaluative Mediation the Mediator assesses the facts relevant to the dispute and gives an opinion on the strengths and weaknesses of the positions of each party. That opinion is often based on law and legal principles and the Mediator may offer recommendations as to how the dispute could be resolved. Each style has its value depending on the factors relevant to the dispute.

Facilitative Mediation is used for a wide range of disputes including community level minor disputes, family disputes, employment disputes, commercial disputes and Investor-State disputes. It could be used as the sole choice or even prior to or during other dispute resolution processes such as litigation and arbitration.  The key features of the process for all categories are the same and are universally accepted, including in the UN Mediation Convention. The main features are that the Mediator plays a facilitative non coercive role to help parties reach a settlement; the Mediator does not impose a solution on the disputants; the process is confidential; the Mediator is neutral and impartial; party autonomy is upheld; and a settlement is entered into only when parties are fully agreeable to the terms. These key features are incorporated in the Bill and are discussed below.

The Bill provides for a governance regime for the conduct of mediations in respect of civil and commercial disputes. The provisions seek to ensure compliance with universally accepted norms within the local context. The Bill does not seek to establish entities or Boards as in the other 2 statutes administered by Government nor does it provide for mandatory reference to mediation other than when referred by court. While mediations can be conducted to resolve disputes even without a statute, the value in having a statute is that it lays down compliance requirements that ensure its responsible use in conformity with universally accepted standards.

The terms ‘civil’ and ‘commercial’ are not defined.  Although ‘civil’ includes ‘commercial’, the title seeks to emphasize its coverage. These terms are not defined in other domestic statutes either. The UN Mediation Convention does not define the term “commercial”. During the deliberations at UNCITRAL to formulate the text of the Convention, it was agreed that a definition of the term “commercial” was not required.  The UNCITRAL Model Law (2018) does not contain a definition either but provides an explanation in a footnote to Article 1(1) which includes that the term “commercial” should be given a wide interpretation to cover matters arising from all relationships of a commercial nature. It proceeds to set out some of those relationships.

The Bill sets out categories of disputes that are not mediatable, ie. disputes that cannot be settled and brought to closure through mediation. These are disputes the settlement of which requires the inclusion of terms that can be given effect to, only on a decree or order of a court including eleven (11) categories of disputes set out in the schedule to the Bill. These include disputes seeking a dissolution of marriage (divorce), nullity of marriage and disputes in respect of which rights in rem are sought, such as partition of immovable property (unless it is an amicable partition between parties which do not bind non signatories). While these disputes can be brought to finality only with a decree of court, matters relevant to such disputes can be mediated for the purpose of submitting terms of settlement to court for consideration of incorporation in a judgment, decree, or order in compliance with applicable law.

Mediation is a voluntary process. Disputants can submit a mediatable dispute to mediation voluntarily. However, many jurisdictions have also provided for mandatory reference to mediation by courts or  in terms of statutory provisions. These are mandatory pre litigation or pre trial steps that favour an attempt to settle either prior to accessing court, or during a court proceeding but prior to trial.

When there is a pre dispute Mediation clause in a contract, ie. a clause stating that any dispute arising shall be referred to mediation, that choice  must be honoured and  parties must then submit the dispute to mediation and cannot file action in court or go for arbitration, because  mediation is their voluntary choice. Further, if a mediation has commenced, no action can be filed in court until the process is over. A pre dispute Mediation clause is the same as an arbitration clause in a contract. A multi-tiered or hybrid dispute resolution clause could also be opted for, to

provide for the use of both arbitration and mediation. Here, parties could use mediation first, followed by arbitration if mediation fails (Med-Arb) or use mediation within the arbitration process (Arb-Med-Arb). If parties agree, a dispute can be referred to mediation even without a pre-dispute mediation clause.

The  Mediation  Bill includes provision to empower a court at its discretion upon a consideration of all relevant circumstances, to refer a  dispute or any part thereof to mediation. Court referred mediation may be seen as mandatory mediation, but the court only  decides to  refer the dispute to mediation, and the parties are obligated to enter the mediation process and attempt settlement in good faith as in a voluntary mediation and they have complete and unfettered discretion and control over the decision to settle or not to settle. The fact that a dispute is court referred does not impose a heavier burden on the disputants to settle. Hence mandatory reference by court or by virtue of a statutory provision, does not detract from the principle of voluntariness.

Reference by courts  to mediation is a universally accepted phenomenon. In the recent Churchill case (November 2024) , the UK Court of Appeal  determined that the courts of England and Wales can lawfully stay proceedings and or order the parties to engage in non-court-based dispute resolution processes which includes mediation, provided that order does not impair the essence of the claimants right to a fair trial, is made in pursuit of a legitimate claim, and is proportionate to achieving that legitimate claim.

The  mediation process is informal, structured, non-adversarial and disciplined. The Bill sets out how a mediation can be initiated in different circumstances, ie. when there is a mediation agreement and also when parties agree to mediate after a dispute arises even without a prior mediation agreement. The concept of the ‘Mediation Service Provider’ (MSP) is recognized. An MSP is an important player in the process because it is the MSP that provides administrative support. An MSP can be a single individual or an entity. The  obligations of an MSP is provided for in the Bill itself to ensure that important global standards are complied with. This provision is one of those that seeks to ensure that internationally accepted standards are complied with.

Disputants must engage directly and voluntarily in good faith  and must  be present at the mediation sessions. The  good faith principle is important to ensure that disputants are sincerely committed to a settlement and must provide full disclosure of matters that are relevant to a sustainable solution. The process ensures party autonomy which means that the parties take all decisions regarding the settlement or the refusal to settle. The process has no focus on adjudication of legal rights and wrongs and has a focus on assisting parties to identify and satisfy their concerns.

Legal representation is not essential but Lawyers and other professionals (Engineers, Doctors, Architects, Family Counselors, Surveyors, Actuaries) can attend the sessions to assist the disputants and advise on settlements. Lawyers do have a role in mediation and must engage as strategic partners. Globally, Lawyers are trained in mediation advocacy to equip them with the skills necessary to perform a niche role in mediations, which role is very different to the one Lawyers assume in an adversarial process.  

The Mediator must be independent, impartial and have no conflict of interest. Professional Mediators are trained in the core skills and techniques that are relevant to assist parties to better  understand their concerns, to communicate effectively and to identify creative solutions that satisfy their concerns. The Mediator functions as a Communicator, a Negotiator, and a Manager. These roles require specific skills and hence specialized training is of the essence as in any other profession.

Confidentiality  must be  maintained by all parties and by the Mediator with regard to matters discussed and submissions made during the mediation. The without prejudice rule also applies and  serves to assure to the disputants the space to discuss matters freely and creatively without fear that thoughts generated and solutions suggested at the mediation sessions will be used against them as a surrender of rights or an admission of a position,  in the event that any other dispute resolution process is pursued thereafter.

Where a settlement is reached, the terms and conditions are incorporated in a Settlement Agreement and signed by the parties. Such an agreement has the same sanctity as any other agreement entered into by parties and is valid in law and enforceable in a court of law. If a settlement is not reached, a certificate of non-settlement is issued to the parties. Although a  decree of court is not necessary to provide validity to the agreement, if a party desires to obtain a decree based on the terms of the settlement, an application may be made to the High Court. The Bill provides of the procedure to be followed to obtain a decree and includes provisions to ensure speedy disposal of such applications. Grounds for refusal to grant a decree are included and adopt some of the UN Convention grounds. These include incapacity of a signatory, Mediator malfeasance without which the party would not have entered into the agreement, that the grant of a decree would be contrary to public policy of Sri Lanka and that the subject matter is not capable of settlement by mediation.

Why ADR and why Mediation?

Laws Delays - Globally, ADR mechanisms including mediation, have been resorted to by Governments and by disputants, due to the serious issue of laws delays. In Sri Lanka the number of cases pending in all courts in the country at the end of 2024 amounted to just over 1 million.  It is clear that laws delays have reached phenomenal levels and that costs of litigation are overwhelming for many litigants. The cost of maintaining the administration of justice system in a country is significant and is a burden on the State. For trade, business and investment, delays in resolving business disputes detract from their corporate objectives, retard the achievement of business targets, and consume the time of executives.

Contract enforcement must improve - Sri Lanka has a weak contract enforcement record and its performance was marked as being below  the South Asian average[9]. This impacts adversely on business and is a deterrent to investors. Henceforth the World Bank will use its B-READY index to measure the business climate of economies. The indicators will provide important data that investors will look at, to make investment decisions and which businesses will examine to make better business decisions. If Sri Lanka desires to offer itself as an attractive investment destination, the dispute resolution regime must be improved.

Benefits of Mediation –  The widely accepted benefits of Mediation  are that  it is cost effective, time efficient, has the potential to reduce the instances when a dispute  leads to the termination of a business relationship, and produces savings in the administration of justice for States. These benefits are articulated in the preamble of the UN Mediation Convention and are articulated by international bodies such as WIPO, ICC, ICSID, IBA, to name but a few. It is because the practice of mediation has generated these benefits over several years of use  that its popularity has grown.

Mediation is popular globally  -  In 2018 the United Nations adopted the Convention on International Settlement Agreements Resulting from Mediation (the Singapore Mediation Convention) responding to a call for a uniform framework to enforce mediated agreements across borders. The need for such a framework was due to the increasing use of mediation for the resolution of cross border trade and business disputes. Sri Lanka signed the Convention in 2019 and enacted domestic legislation in 2024. International Organisations that previously offered only arbitration services such as WIPO, ICC, ICSID, IBA had adopted mediation Rules and have been providing mediation services for many years.

Mediation in domestic regimes - Many countries  have institutionalised  mediation in their domestic laws including for mandatory use at the pre trial stage. Some jurisdictions provide for court annexed mediation which means that mediation is integrated into the judicial system. Other jurisdictions provide for court referred mediation.

UKs civil justice reforms of 1999 which were inspired by Lord Woolf’s review of the civil Justice system contained a recommendation that ADR be pursued prior to litigation.  Many amendments were made to the Civil Procedure Rules including as recently as 2024 to provide for courts to exercise greater powers to mandate mediation.

India enacted the  Mediation Act 2023 which provides a framework for the conduct of mediations and also encourages pre-trial mediation by stating that whether any mediation agreement exists or not, the parties before filing a civil or commercial action, may voluntarily and with mutual consent take steps to settle the disputes by pre-litigation mediation.  This clearly articulates a pre-trial, pro mediation bias.

Some other countries in the Asian region that have institutionalised mediation include -  Hong Kong (Mediation Ordinance 2013), Singapore (Mediation Acts of 2017 and 2020), Malaysia (Mediation Act, 2012 and AIAC (Malaysia) 2018), Pakistan (CPC as amended and the ADR Act, 2027), Japan (Civil Mediation Act, 1951). Singapore in particular is a leader in the provision of mediation services.

The EU adopted the EU Mediation Directive in 2008 and many European countries have institutionalised mediation.

USA, Canada, Australia and New Zealand are some countries that have a long history of the use of mediation.  

The International Mediation Institute (IMI) is a body with a global reach, dedicated to driving transparency and standards in mediation worldwide. Its vision is “Professional Mediation worldwide: promoting consensus and  access to justice.”

Is Sri Lanka ready to provide mediation services?

Yes. A number of persons including Lawyers and other professionals have been trained at international Training Institutes, received accreditation and are available to provide services.  Trained Mediators have already conducted mediations and the number of disputes being referred to mediation is increasing. Opportunities to obtain training and accreditation from international accreditation Institutes are offered, aided  also by Institutions such as UDecide that facilitate training opportunities. The International ADR Center which is a purely private sector non-profit Company has its own Institutional Rules for Mediation and provide services and infrastructure facilities of international standards, including for virtual mediations which have already taken place. The International Chamber of Commerce (Sri Lanka) and the Sri Lanka National Arbitration Centre also have the capability to provide mediation services.

A majority of the trained  group includes Lawyers. Trained Mediators continue to develop their learnings and skills and an Association of Trained Mediators is being established. Following global trends, a group of Lawyers have been  trained in mediation advocacy to learn the skills to perform their niche role in the  mediation process and the trainings will continue.

Is Regulation necessary ?

While accreditation for Mediators and MSPs is vital to ensure that standards are maintained, the need for regulation should be addressed with care. Given that Arbitrators have no regulatory regime, the argument is often advanced as to, Why then for mediators and MSPs? Given that the Mediation Bill itself sets down standards for Mediators, MSPs, disputants and sets out the procedure,  a regulation framework, if found necessary,  must be designed to ensure efficiency and value addition, rather than to provide for regulation for the sake of regulation.

Conclusion

The challenge today  is to provide  disputants with  access to meaningful dispute resolution  processes that may be pursued with confidence and which, in their judgment will offer them a result that will satisfy their requirements. This issue assumes a greater degree of importance given the state of the litigation overload in the country and the resulting delays, expense and unpredictability that deny disputants the justice that they seek. It is this context that the initiative to institutionalise Mediation as a mechanism that has proved successful globally and to sustain it in its purest form, assumes  relevance.

The Bill before Parliament is timely and will contribute to establishing a comprehensive eco system for the use of mediation in its purest  form in Sri Lanka. In time, given the geopolitical imperatives, Sri Lanka  can develop into an ADR hub that can be accessed by international partners with confidence.