NAFTA: Mediation and the North American Free Trade Agreement

Article excerpt

The following article investigates why mediation is not being used with greater frequency to resolve disputes involving private parties that operate under the North American Free Trade Agreement (NAFTA). Steven Andersen looks at the barriers to mediation that currently exist within the participating NAFTA countries-such as cultural differences, language barriers,and legal traditions-and offers practical solutions to overcome these barriers.

The emergence of the North American Free Trade Agreement (NAFTA) brings with it increased private-party business dealings.1 Accordingly, there is greater likelihood that private-party disputes will arise in business relationships between parties under NAFTA.2 Not only will these disputes arise, they will be much more complicated and delicate because of the cultural dynamics, language barriers, and traditions of law.

Mediation is an effective method of dispute resolution. Mediation, as defined synonymously with the process of conciliation, is a "... nonbinding intervention by a neutral third party who helps the disputants negotiate an agreement."3 It can be especially effective when dealing with private companies that have a myriad of additional issues when doing business under the NAFTA agreement.4

Presently, NAFTA now consists of not only three countries (U.S., Canada, and Mexico), but also various cultures, languages, nationalities, and legal systems. Each of these factors plays a unique role in how one private business entity does business with another. Additionally, these diversities complicate the resolution of their disputes. It is because of these unpredictable variables that mediation has not yet come to be the preferred method of resolving NAFTA disputes. Parties often avoid change by choosing a dispute resolution method that they have used in the past. These inhibitions delay the use of a process that would actually provide a more compatible resolution. So, the question is, what changes are necessary to increase the use of mediation in the resolution of disputes between private parties that are operating under NAFTA?

The Status Quo

Arbitration is the chosen method of dispute resolution in the international forum.5 This acceptance of arbitration in the international forum has paved the way for its use under the NAFTA agreement. The quantity of cases being mediated under the NAFTA agreement is comparatively small.6 Leading alternative dispute resolution (ADR) providers have created a forum called the Commercial Arbitration and Mediation Center for the Americas, as well as accompanying procedures which have been specifically adopted for disputes that arise under the NAFTA agreement. Yet, despite the prestige of the founding institutions-the American Arbitration Association (AAA), the British Columbia International Commercial Arbitration Centre, Camara Nacional de Comercio de la Ciudad de Mexico, and Centre d'arbitrage commercial national et international du Quebec-the expected intake of mediation cases within the NAFTA forum7 has been slow to materialize.

In 1994 the NAFTA Commission established the Advisory Committee on the Private Commercial Disputes, which provides recommendations to the commission about the effectiveness of arbitration and other ADR procedures. The actual language in the NAFTA agreement encourages resolution, but does not mention the process of mediation in relation to the resolution of private-party disputes:

Each party shall, to the maximum extent possible, encourage and facilitate the use of arbitration and other means of alternative dispute resolution for the settlement of international commercial disputes between private parties in the free trade area.8

The focus, therefore, seems to be on arbitration, even though mediation has the potential for increased growth in the NAFTA community.9 Subcommittee V of the same advisory committee oversees conciliation and mediation issues. However, this increased focus on the process of mediation is not enough; there needs to be a concerted effort from the NAFTA constituents, ADR providers, and actual disputing parties to allow this process to effectuate its intrinsic successful results. …