Mediation is becoming an increasingly popular method of resolving commercial disputes.
The technique clearly falls into the category of Alternative Dispute Resolution (ADR), which the United States Code says “includes any process or procedure, other than an adjudication by a presiding judge, in which a neutral third party participates to assist in the resolution of issues in controversy, through processes such as early neutral evaluation, mediation, minitrial, and arbitration…”
The beauty of mediation lies in the fact that a mediator cannot impose a decision on disputing parties. Instead, the mediator offers a neutral view and helps the parties explore the issues below the surface of the disagreement, thus enabling them to find an amicable solution. Mediation offers disputants a chance to avoid the generally arduous and expensive process of taking a case through the judiciary system. Contrasted with bringing an issue to the courts, mediated solutions are generally speedier, cheaper, and more likely to allow parties to return to doing business with one another.
As in all commercial disputes, mediation can be an appropriate and effective way of resolving banking disputes — an area where it can be used to, among others things, address debt recovery and insolvency of customers, professional negligence by advisers, and customer complaints.
Although it is not a prominent aspect of the current reform agenda, mediation in banking disputes has the potential to become popular in Egypt over the coming years. The rise of mediation may occur through the recently-established Economic Courts, whose mandate includes disputes arising under the law of the central bank, the banking sector and money.
The law governing economic courts contains an advantageous feature that allowed for the establishment of preparation panels, which have a role akin to that of mediators insofar as the panels have a duty to promote settlements between disputing parties. In order to facilitate settlement of a dispute, a preparation panel may hold joint and private sessions with disputants in order to explain to them the subject matter of the dispute and examine solutions — as well as to help them develop an agreement acceptable to both parties.
A number of features make preparation panels ideally suited to solve commercial disputes. A preparation panel must give disputants equal opportunity to present their claims. As confidentiality is a cornerstone of mediation, fortunately these panels are also obliged to protect the confidentiality of any information disclosed during private sessions.
Additionally, preparation panels are entitled to rely on expertise and specialists in technical matters — a feature that hopefully will help guarantee efficiency and expediency. It is worth mentioning that the mandate of preparation panels does not include criminal or urgent matters.
The extent to which the Economic Courts will be successful in resolving banking disputes through preparation panels has yet to be seen. Some argue that other initiatives, not including these courts, could be equally successful in addressing this type of dispute — as long as confidentiality and neutrality are preserved during these proceedings.
But the need — and indeed the desire — for mediation in banking disputes is clear. During a recent seminar organized by IFC (International Finance Corporation) and the Egyptian Banking Institute on the subject of mediation and banking disputes, the audience showed great interest in the topic.
Fatma Ibrahim is a project officer in the IFC Alternative Dispute Resolution (ADR) Program – MENA. Ibrahim is responsible for the managing Egypt’s ADR project. Prior to that, she was a practicing lawyer in the field of dispute resolution. This article was written exclusively for Daily News Egypt.
The findings, interpretations and conclusions expressed in this article are the author’s own and do not necessarily reflect the views of IFC, a member of the World Bank Group.
