THE IMPORTANCE OF MEDIATION IN THE PROCESS OF RESOLVING INTERNATIONAL PRIVATE DISPUTES

Abstract

The normal functioning of the justice system existing in the state, which should ensure the satisfaction of the private interests of the sub- jects of law, should be evaluated as an expression of public and private interests. After all, the well-being of the subjects of law is significantly determined by the existence of a flexible dispute resolution system and mechanisms, the correct formation and implementation of which guarantees the stability of the civil turnover and the satisfaction of the interests of legal subjects. Despite the importance of the issue, ensuring that the legal subjects are offered fast and affordable forms of dis- puteresolution, remains to be a challenge. Achieving the mentioned goal becomes more difficult, when the dispute is loaded with international private law elements, is characterized by complexity in this way and its resolution is connected with a number of peculiarities. That is why, on the one hand, it is considered important to make changes in the law of Georgia “On Private International Law”, which will eliminate the risks of its misinterpretation. On the other hand, it is important to emphasize the role and importance of mediation in the process of resolving international private law disputes. Accordingly, following the legislative amendments, it is also considered important to raise public awareness in this direction and improve legal culture. The above-mentioned, significantly helps the formation of a chain of effective means of dispute resolution, where, on the other hand, an important place shall be given to the form of remote proceedings.

Keywords: alternative dispute resolution, mediation, legal proceedings

Introduction

Human history shows, that the existence of conflicts between people are inevitable. Therefore, one of the purposes of the existence of legislation is to neutralize them in order to ensure public order and peace.[1] Accordingly, the perfect functioning of the justice system operating in the state should be evaluated as a matter of interest for both - public and private law subjects. Regardless of the importance of the issue, which is related to the right to a fair trial, the overcrowdedness of the judicial system has historically been an actual issue and remains to be a challenge in the modern Georgian reality. The resolution of each dispute within the court system is associated with a long waiting period and the risks of violating the terms stipulated by the Civil Procedure Code of Georgia.

At the same time, it is recognized, that the internationalization of people’s relations in the modern world led to the rapid development of directions of law, which regulate legal relations  “burdened with foreign law”. In private law, international private law has a dominant role in the process of regulating the relationship having the foreign element.[2] In some cases, the term “conflict of law” or the term “choice of law” is used as a synonym for private international law. It should be also noted that in the case of an international private law disputes, a decision must first be made - which state's law should be applied in relation to a specific case.[3] After all, there are various legal systems in the world, which are more or less different from each other. And each system of law operates in a specific area. For example, French law applies to the territory of France, not England. And English law applies in England, not in France.[4]

Accordingly, in case, when there is a dispute loaded with a foreign element, which is subject to the sphere regulated by the international private law, its resolution becomes even more complex. First of all, the subjects of law have to determine the following issue: which state's law should be applied to regulate the conflict; And only after that, the issue is assessed from a substantive point of view.

Therefore, in case of international private law disputes, the goal of offering legal subjects the means of quick and effective dispute resolution alternatives, becomes even more important. Achieving the mentioned goal should be considered possible through the development of alternative dispute means, among which mediation is the dominant form. Therefore, with legal regulation of mediation, the presentation of its importance in the process of resolving international private disputes should be considered a necessity for the development of the practice.

Considering the importance of the issue, the article discusses the importance of using mediation as a means of dispute resolution in the process of resolving international private law disputes and the existing challenges. At the same time, necessity of the changes in the law of Georgia “On Private International Law” is emphasized, because at the present time, the existence of defective regulation is evident, which can be used as a basis for its misinterpretation in practice.

As a methodological basis of the article, both general scientific- historical, as well as special- normative and comparative legal research methods are used.

1. Characteristics of international private law disputes

            It is recognized that private international law as a branch of law, regardless of its name, is part of the national legislation of the states.[5]  It answers the question of which state's law should be used for the purposes of settling a specific legal relationship. According to the recognized approach, in order to qualify the relationship as an international private legal relationship, there needs to be a private legal relationship containing a “foreign element”. Such a relationship can exist in the following cases: a) if the subject of legal relationship is connected to a foreign element; b) the object of legal relationship is connected to a foreign element; c) legal facts, which must be confirmed, are connected to the foreign element.[6] The conclusion that the private international law belongs to the private law and not to the international law was finally solidified in the early the 1900s,[7] that is completely natural - international private law regulates the existing relations between subjects of private law.[8]

It should also be noted that mainly around the world and also in Great Britain, the term “private international law” is used as an alternative to the term “conflict law” used in the United States of America,[9] which is defined as the law on the applicable law.[10] And yet, when does the need to apply the law on private international law arise? It is clear that in the geographical area where the law is unified, there may not exist a coflict of laws and the need to resolve the relevant issue.[11] As mentioned, the necessity of private international law arises, when there exists a conflict of laws.

    In any case, current events in the world, including the diversity of economic turnover, the development of modern technologies, or other circumstances affect the content and characteristics of the relationships between legal entities. In the world legal sphere, the number of cases where the foreign element exists, is increasing, which first of all raises the question of which country's law should be used for the purpose of settling a specific legal relationship. And only after this issue is resolved, the dispute can be settled from a material-legal point of view. That is why, in the mentioned case, subjects of law have to solve a complex issue, the search for the possibility of timely resolution of disputes becomes even more urgent. The issue is important to the extent that an unified chain of dispute resolution mechanisms operating throughout the state should ensure the implementation of interests of the subjects of law. And in this direction, in the process of discussing international private legal disputes, it is important to highlight the role of mediation as a means of dispute resolution and its importance, because it is a form of dispute resolution that, considering its fundamental ethical values, has the ability to transform the existence of the society.

2. The essence of mediation as a means of dispute resolution and the expediency of its use in the process of resolving international private law disputes

For the purposes of determining the expediency of using mediation as a means of dispute resolution, in relation to the international private law disputes, it is important to represent the peculiarities of the case consideration through mediation.

What is mediation? Mediation is defined as a process in which a neutral third party helps disputing parties to resolve a dispute.[12]  Since the 1980s and 1990s, different approaches have been formated in relation to alternative means of dispute resolution, namely mediation. According to the opinion of a part of the society, its functioning is evaluated positively, while the opinion of another part of society - is negative.[13] In any case, it is a fact, that in modern society, court proceedings are considered to be expensive and in most systems - an ineffective method of dispute resolution. The overcrowdedness of the city courts results in the fact that each civil legal dispute is being heard in court for years.[14] And the cases when mediation is completely unsuccessful are extremely rare. Even when mediation does not end with an agreement, it has positive results - it is possible to narrow the range of issues to be discussed and/or neutralize mutual resentment.[15] One of the advantages of mediation is that parties have the opportunity to make a creative decision.[16] They are not bound by the claims.

            However, mediation is always considered confidential in contrast to the court proceedings, as court proceedings are usually held in public. In mediation, there is always a presumption of confidentiality.[17] Confidentiality is a prerequisite for successful mediation. This principle helps to create an environment where parties can freely talk about their relationship. They know that information cannot be used against them.[18]  It is also important to note that two standards of confidentiality are distinguished in the mediation process: internal and external confidentiality. The meaning of each is as follows: 1. Internal confidentiality involves the mediator's obligation to keep the information secretly from the other party, unless the relevant party has explicitly stated  desire to disclose. 2. As for “external confidentiality”, in accordance to the mentioned standard, any information disclosed during the mediation process must be protected from third parties. The mentioned requirement applies not only to the mediator, but also to the parties or participating third parties.[19] 

It should be noted that the above-mentioned advantages of mediation, which have been indicated in an incomplete form, apply equally in case of implementation of any form of mediation. In theory and practice, three main forms of mediation are distinguished - judicial, private and court – annexed mediation forms.[20]  In any case, nowadays mediation is recognized as one of the fastest means of dispute resolution, which at the same time ensures saving of financial resources of legal subjects.

 It should also be noted, that from 2020, which was related to the pandemic situation and its consequences, the mentioned issue - timely resolution of disputes has gained special relevance. In addition, under the threat of a spread of the coronavirus, the issue of online dispute resolution has become more relevant, because in the presence of force majeure, whether it is caused by a pandemic or another reason, further delay of court proceedings can cause significant damage to the subjects of law.

That is why, recently, online means of dispute resolution have gained special importance. The use of technology has become necessary in order to maintain existing relationships between the subjects.[21]  In fact, online mediation has been recognized as a fair, effective, convenient and inexpensive mean of dispute resolution accepted in the global e-commerce market.[22]

Therefore, nowadays, online mediation is widely used in the process of resolving various types of disputes, especially in relation to property disputes. For example, a website like TaoBao offers customers a solution to resolve sales issues through online negotiation. Pages - Ebay, Paypal are also considered to be the leaders in the field of online dispute resolution.[23] It is recognized that in addition to a number of advantages of online mediation, such as their convenience and availability, its impersonal nature is also considered as an advantage.[24]

 However, of course, there exist opposite opinions as well - according to skeptics, mediation societies develop mediators’ skills, that are related to direct communication. In their view, active listening, questioning skills, negotiation skills, body language or other means of non-verbal communication are considered to be critical for the success of mediation and may not be achieved in the online proceedings.[25]

In response to this, it is possible to say that online mediation involves the use of standard mediation techniques, only in virtual space.[26] However, considering its nature, online mediation can be used with success in the process of resolving business disputes and disputes between corporations. After all, transnational societies represent the leading force of economic globalization.[27]  And for them, the wise use of time and financial resources is very important.

In any case, in Georgia, the institution of mediation is supported by state policy. Following the legislative support of mediation, a number of important projects have been implemented. Therefore, its successful functioning across the state, along with other means of dispute resolution, in the chain, should be evaluated as a significant issue. Therefore, it is considered important to ensure effective use of its resources in relation to any category of dispute. More significantly, to resolve the disputes which are loaded with the international private law element, which, as mentioned, increases their complex nature and parties have to additionally determine - which state’s law can be used while resolving a specific dispute. It should also be noted that in case of international private legal disputes, there is a high probability that the subjects of law may belong to different states and be in different countries physically, which further increases the costs related to litigation. Therefore, in such  cases, the ability to conduct online mediation can acquire special importance. In this way, the time and financial resources of the conflict participants will be saved even more.

This approach echoes the reality that in recent years, both in Europe and globally, significant efforts have been made to develop means of non-judicial dispute resolution. Among them, online dispute resolution has been thought to have significant resources for resolving smaller disputes.[28] In addition, mediation has been recognized as a major force in the process of resolving international business disputes.[29]

3. About the existing regulation in Georgia

 It should be noted that, on the other hand, international private law includes many legal issues in the field of private law, including: business law, family law, bankruptcy law and others.  It is the structure, that the Law of Georgia “On International Private Law” has been formed, which has not undergone significant changes since its adoption, and by objective evaluation, it is possible to recommend improving a number of its articles. For example, the following legal gap is noticeable: according to Article 68, Part 5 of the mentioned law, “The issue of recognizing a foreign court decision shall be considered by the Supreme Court of Georgia”. And according to Article 73 of the same law, it is provided that “the decisions (rulings and resolutions) adopted by a court of first instance according to provisions of this Chapter shall be subject to appeal under the procedures established by law”. Obviously, the existence of such regulation is contradictory and needs to be harmonized. In particular, if only the Supreme Court of Georgia, the court of the third instance, considers the issue of recognition of a foreign court decision, the court of the first instance, obviously, cannot provide decisions that can be regulated by the mentioned law. 

Taking into account the above, it is considered important to harmonize the conflicting regulations in the law of Georgia “On Private International Law”, to eliminate the existing inaccuracies.

Conclusion

The goal of the existence of the law is to protect the parties from harm caused by the conflict between them. In addition, in the modern world, the number of legal relations, which are  characterized by a foreign element, is growing and, therefore, before resolving the dispute from a material and legal point of view, the law “On Private International Law” must be applied.

 In addition, the perfect functioning of various forms of dispute resolution operating within the state significantly determines the stability of civil relations, ensures the realization of the interests of the subjects of law and should be considered as an expression of public interest. And after the legal regulation of mediation, it should be considered necessary, to show the importance of its use in the process of considering international private law disputes. Among them, it is desirable to focus on the possibility of using the resource of online mediation. In this direction, it is considered necessary to raise the awareness of the public so that the court shall be considered as one of the ways to resolve the dispute and not the only one. In the direction of raising public awareness, it is also important to involve legal professional societies in order to present mediation as one of the effective alternatives for resolving international disputes. On the other hand, it is considered necessary to improve the law of Georgia “On Private International Law” and eliminate the existing gaps.

Taking into account the above-mentioned recommendations, they will ensure the use of the possibility of timely resolution of existing private legal disputes, as well as the encouragement of the use of mediation throughout the state. For the subjects of law, the goal may become more visible - to trust mediation as a process, that allows realization of their best interests.

Bibliography

Normative acts:

1. The Civil Procedure Code of Georgia. https://www.matsne.gov.ge (In Georgian)


2. Law of Georgia “On Mediation”. https://www.matsne.gov.ge (In Georgian)


3. Law of Georgia “On Private International Law”. https://www.matsne.gov.ge (In Georgian)

Used literature:

1. Gabisonia Z., (2016). Georgian Private International law, Tbilisi.


2. Khandashvili I., (2018). Judicial and Non-Judicial Forms of Alternative Dispute Resolution on the Example of Mediation in Georgia,


3. Becker J., (1916).  Elements of Japanese Law, International Private Law Book II: Chapter X.


4. Bookman P., (1931).  Boston University Law Review Online, Is Private International Law International?


5. Burman H., (2009).  Private International Law Tax, Estate and Individuals, International Lawyer (ABA).


6. Ehrman K., (1989). Why Business Lawyers Should Use Mediation ADR: Alternative Dispute Resolution, ABA Journal.


7. Hyde L., (1984).  Mediation, Juvenile & Family Court Journal, Core U.S. Journals.


8. Hessel E., (1953).  The Historic Bases of Private International Law, American Journal of Comparative Law.


9. Juenger F., (1994). Private International Law or International Private Law, King's College Law Journal.


10. Juenger F., (1995).  Private International Law or International Private Law, King's College Law Journal.


11. Kallipetis M., (2014). Mediation Ethics in Europe, Dovenschmidt Quarterly. 


12. Krivis J., (2000). Taking Mediation Online, Law Practice Quarterly.


13. Kovach K., (2004). Mediation Principles and Practice, third edition, “THOMSON WEST”.


14. Lavi D., 2016. Three is not a Crowd: Online Mediation-Arbitration in Busines to consumer Internet Disputes. U. Pa. J. Int’l L., 37(3).


15. Lenz C., (2021). Virtual Mediation - The New Modus? Section II: Alternative Dispute Resolution, Yearbook on International Arbitration.


16. Lande J., (2000). Getting the Faith: Why Business Lawyers and Executives Believe in Mediation


17. Harvard Negotiation Law Review.


18. Lisnek P., (1993). Mediation: Untangling Business Disputes through ADR Feature, Commercial Law Bulletin, p. 12


19. Lombardi E., (2012). Is Online Mediation the Way to Fit the Forum to the Fuss, Maastricht Journal of European and Comparative Law.


20. Macturk Ch., (1995). Confidentiality in Mediation: The Best Protection Has Exceptions, Student Note American Journal of Trial Advocacy. 


21. Parish L., (2003). After the Mediation, What Feature on Alternative Dispute Resolution.   


22. Petsche M., (2013). Mediation as the Preferred Method to Solve International Business Disputes: A Look into the Future.   


23. Posin Q., (2004) Mediating International Business Disputes, Fordham Journal of Corporate & Financial Law.


24. Rigaux F., (2000). Codification of Private International Law: Pros and Cons Conflict of Laws, Comparative Law and Civil Law: A Tribute to Symeon C. Symeonides, Louisiana Law Review.


25. Salmond J., (1902). Territorial and Personal Law, Jurisprudence or the Theory of the Law.


26. Stegner M., (2017). Online Dispute Resolution: The Future of Consumer Dispute Resolution Section V: ADR Yearbook on International Arbitration.


27. Sudini L., (2016). Mediation in the Settlement of Business Disputes in Indonesia, Journal of Law, Policy and Globalization.


28. Wang G., (2009).  Mediation in the Globalized Business Environment, Asia Pacific Law Review 17 Asia Pac.


29. Zhao Y., (2008). Rethinking the Limitations of Online Mediation, American Journal of Mediation.

Footnotes

[1] Sudini L., (2016). Mediation in the Settlement of Business Disputes in Indonesia, Journal of Law, Policy and Globalization, p. 41.

[2] Gabisonia Z., (2016). Georgian private international law, Tbilisi, p. 30.

[3] Juenger F., (1994). Private International Law or International Private Law, King's College Law Journal, p. 45.

[4] Salmond J., (1902). Territorial and Personal Law, Jurisprudence or the Theory of the Law, p. 599.

[5] Bookman P., (1931). Boston University Law Review Online, Is Private International Law International? p. 9.

[6] Gabisonia Z., (2016). Georgian private international law, Tbilisi, p. 31.

[7] Hessel E., (1953). The Historic Bases of Private International Law, American Journal of Comparative Law, p. 297.

[8]  Becker J., (1916). Elements of Japanese Law , International Private Law Book II: Chapter X, p. 442.

[9] Juenger F., (1995). Private International Law or International Private Law, King's College Law Journal, p. 45.

[10] Rigaux F., (2000). Codification of Private International Law: Pros and Cons Conflict of Laws, Comparative Law and Civil Law: A Tribute to Symeon C. Symeonides, Louisiana Law Review, p. 1321.

[11] Hessel E., (1953). The Historic Bases of Private International Law, American Journal of Comparative Law, p. 298.

[12] Hyde L., (1984). Mediation, Juvenile & Family Court Journal, Core U.S. Journals, p. 57.

[13] Lande J., (2000). Getting the Faith: Why Business Lawyers and Executives Believe in Mediation Harvard Negotiation Law Review, p. 140.

[14] Lisnek P., (1993). Mediation: Untangling Business Disputes through ADR Feature, Commercial Law Bulletin, p. 12.

[15] Ehrman K., (1989). Why Business Lawyers Should Use Mediation ADR: Alternative Dispute Resolution, ABA Journal, p. 74.

[16] Parish L., (2003). After the Mediation, What Feature on Alternative Dispute Resolution, p. 24.  

[17] Kovach K., (2004). Mediation Principles and Practice, third edition, "THOMSON WEST",  p. 262.

[18] Macturk Ch., (1995). Confidentiality in Mediation: The Best Protection Has Exceptions, Student Note American Journal of Trial Advocacy, p. 412.

[19] Kallipetis M., (2014). Mediation Ethics in Europe, Dovenschmidt Quarterly, p. 71.

[20] Khandashvili I., (2018). Judicial and Non-Judicial Forms of Alternative Dispute Resolution on the Example of Mediation in Georgia, p. 183.

[21] Lenz C., (2021). Virtual Mediation - The New Modus? Section II: Alternative Dispute Resolution, Yearbook on International Arbitration, p. 160.

[22] Lavi D., 2016. Three is not a Crowd: Online Mediation-Arbitration in Busines to Consumer Internet Disputes. U. Pa. J. Int’l L., 37(3), p. 940

[23] Zhao Y., (2008). Rethinking the Limitations of Online Mediation, American Journal of Mediation, p. 164.

[24] Zhao Y., (2008). Rethinking the Limitations of Online Mediation, American Journal of Mediation, p. 163.

[25] Krivis J., (2000). Taking Mediation Online, Law Practice Quarterly, p. 19.

[26] Lombardi E., (2012). Is Online Mediation the Way to Fit the Forum to the Fuss, Maastricht Journal of European and Comparative Law, p. 531.

[27] Wang G., (2009). Mediation in the Globalized Business Environment, Asia Pacific Law Review 17 Asia Pac., p. 48.

[28] Stegner M., (2017). Online Dispute Resolution: The Future of Consumer Dispute Resolution Section V: ADR Yearbook on International Arbitration, p. 347.

[29]Posin Q., (2004) Mediating International Business Disputes, Fordham Journal of Corporate & Financial Law, p. 449.