Mediation Furthers the Principles of Transparency and Cooperation to Solve Disputes in the NAFTA Free Trade Area

By Diaz, Luis Miguel; Oretskin, Nancy A. | Denver Journal of International Law and Policy, Winter 2001 | Go to article overview

Mediation Furthers the Principles of Transparency and Cooperation to Solve Disputes in the NAFTA Free Trade Area


Diaz, Luis Miguel, Oretskin, Nancy A., Denver Journal of International Law and Policy


INTRODUCTION

The authors intend to introduce mediation as a legal tool to prevent and solve international business disputes between private parties in the free trade area created in the North American Free Trade Agreement (NAFTA). (1) We will demonstrate that the use of the principles of transparency and cooperation to solve international disputes in the NAFTA area are key objectives, and that mediation furthers those principles concerning private disputes. (2)

THE TRANSPARENCY PRINCIPLE AND CONSULTATIONS

The transparency principle guided the negotiators in their deliberations throughout NAFTA negotiations and permeates all aspects related or derived from NAFTA. (3) The purpose of the transparency principle is that all measures advocated by all Parties must be crystal clear and should not cover objectives contrary to free trade. (4)

Therefore, it was agreed that any law, regulation, procedure, requirement or practice, (5) related or derived from NAFTA, should be duly motivated, be congruent with free trade, and to the possible extent, announced and explained to the other Parties in advance. (6)

The transparency principle was also considered as a principle for the prevention of disputes in the form of an obligation for the governments to consult each other regarding measures and conflict prevention and conflict solution. Consultations are obligatory under diverse circumstances. (7)

The obligation to consult (the act of consulting, considering, having regard, conferring, deliberation) may bring two very important benefits. The first is that it prevents disputes through an early identification and solution of conflicting views. (8) The second is that it opens direct communication channels between the Parties for the solution of an existing dispute. (9)

The word consultation as used in NAFTA means direct talks between the governments or the governments and a private party to agree on a course of action to reach a goal or to find a solution to a problem. (10)

THE COOPERATION PRINCIPLE AND CONSULTATIONS

The principle of cooperation between the NAFTA Parties (Canada, Mexico and the U.S.) is embodied as the cornerstone of dispute settlement. It is also an expression of the principle of transparency regarding conflict solution. The cooperation principle is presented in NAFTA as a legal obligation:

   The Parties shall at all times endeavor to agree on the interpretation and
   application of this Agreement, and shall make every attempt through
   cooperation and consultations to arrive at a mutually satisfactory
   resolution of any matter that might affect its operation. (11)

However, if a matter is not solved through cooperation or consultations, a Party to NAFTA may make a request for the intervention of the Commission to solve the matter. (12) The Commission may use good offices, conciliation and mediation. (13) If the Commission has not solved the matter within a certain time period, a Party may then request in writing an arbitral panel. (14)

Thus, prior to requesting an arbitral panel, Parties are obligated to engage in consultations and, in the absence of an agreement the Parties then proceed to request assistance from the Commission. If the Parties do not reach an agreement using these two processes, an arbitral panel decides the dispute between the Parties.

Chapter Twenty establishes the recourse to dispute settlement procedures using an arbitral panel. (15) This Chapter applies to disputes between Parties that address the interpretation or application of NAFTA, specifically those disputes in which one Party considers an actual or proposed measure of another Party is or will be inconsistent with the obligations of NAFTA or where an action by one Party causes nullification or impairment of an existing NAFTA obligation. (16) Chapter Twenty does not apply to matters covered by Chapter Nineteen that refer to Dispute Settlement in Antidumping and Countervailing Duty Matters. …

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Mediation Furthers the Principles of Transparency and Cooperation to Solve Disputes in the NAFTA Free Trade Area
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