An advantage of using mediation to resolve a dispute is that, when successful, it results in an outcome that both parties are willing to accept.  This is because mediation is a process which seeks to find a solution that is better for both parties than their alternative of continuing to fight each other.

Because of this, it might be thought that a mediated solution isn’t very effective – that it relies on the parties’ goodwill, but isn’t legally binding.  While understandable, that view is wrong. Once a solution is found through mediation, it is recorded in writing and signed by the parties. It becomes a contract between them;  and, like any other contract, it is binding. If one party does not keep its promise, the other party can ask a court to make them do so.

That all sounds well and good, but what about an international dispute?  How could a mediated solution with a party outside Australia be enforced?  Until recently, the answer was: with great difficulty, if at all.  Fortunately, however, the Australian government recently agreed to join an international treaty that solves this problem for commercial disputes.

The UN Convention on International Settlement Agreements Resulting from Mediation requires countries to recognise and to enforce in their local courts an international mediated settlement agreement. This is so even where one or both parties are from another country.  On 10 September 2021, Australia joined 54 other countries as signatories to that Convention.  Once enacting legislation is passed by the federal parliament, the Convention will take force in Australia.

So, if your commercial dispute is with a foreign entity, consider the option of mediating for a resolution.  Enforcement of a mediated outcome is about to get a whole lot easier.