Business mediation

Author: | Published: 20 Jul 2010
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Consortium Legal

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67 Av. Sur, Pasaje 2, # 26, Colonia Escalón San Salvador, El Salvador

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Oscar Samour

In practice, mediation in El Salvador is mostly used in family and labour disputes. Even though business mediation is contemplated under the Ley de Conciliación, Mediación y Arbitraje (Law of Conciliation, Mediation and Arbitration, or LMCA) it is seldom or never used for solving business disputes. Nevertheless, the international projection that El Salvador is going through, especially after the ratification of the DR-CAFTA in 2005, has lead Salvadoran businesses to notice the importance given to mediation by their international peers. Consequently, interest in this subject matter has increased.

Ratified in July 2002, the LMCA establishes the parameters for the practice of mediation. The process starts with the filing of a request for mediation before the Arbitration and Mediation Centre of the Chamber of Industry and Commerce of El Salvador. Additionally, the parties may arrange for mediation without the intervention of the Centre, giving the same recognition to the agreement reached therein, if any.

The LMCA requires all entities to be represented by its duly accredited legal representatives or any other person with sufficient decision power with the purpose of avoiding unnecessary delays and thus ensuring the effectiveness of the process. The agreement reached by the parties must be in writing and is enforceable before the courts.

The matter of confidentiality is addressed with particular concern in the LMCA. All declarations from the parties are qualified as strictly confidential and records cannot be kept. Furthermore, the notes taken by the mediator cannot be copied or given to third parties and will not be admitted as evidence by courts.

In addition, there is a strong prohibition for mediators, experts and any other person that may have been involved in the mediation process, to participate in any court proceeding that may take place after the mediation. This prohibition is not applicable to the attorneys of the parties involved in the process. Mediators may also excuse themselves or be challenged by the parties from the process without motivating their decision. In both cases, the Centre will appoint a new mediator for the case.

While mediation is not a new practice in some jurisdictions (ie American companies started using business mediation in the early 1970s), its use had not been adopted by Latin American countries until the late 1990s. Throughout the years, it has been confirmed that the use of mediation in business disputes brings speed and more satisfactory results than litigation, as well as a significant reduction of costs and expenses.

The benefits of using business mediation as the preferred dispute resolution mechanism for companies are many. However, there is no real promotion of an Alternative Dispute Resolution (ADR) culture among Salvadoran businessmen and therefore there is no real trust in the process.

For now, the hope for the implementation of a solid mediation practice relies on the continued expansion of the country's international projection. Salvadoran companies will be required over time by their international peers to mediate before going through other types of adjudicative processes and that is the best way to experience the benefits of business mediation. Confidently, Salvadoran companies will try to emulate such practices in the national realm.

Oscar Samour