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ACCA Applied Skills · Corporate and Business Law (Global) · Alternative dispute resolution mechanisms

A contract between Harlow Ltd and Tessin GmbH provides for 'med-arb': the dispute goes first to mediation and, if no settlement is reached, to arbitration. Which statement best describes the main feature of this hybrid process?

In med-arb, the parties first try mediation, and if that fails the dispute proceeds to arbitration, where a binding award can be made. The hybrid therefore combines a voluntary settlement stage with a binding fallback, avoiding the need to start court proceedings.

  1. AAny mediated settlement is automatically binding without the parties' agreement
  2. BArbitration is available only if a court first refuses jurisdiction
  3. CMediation is mandatory only if the arbitrator orders it after the award
  4. DIf mediation fails, the dispute moves on to arbitration, which can produce a binding awardCorrect

Explanation

Med-arb combines a consensual first stage with a binding second stage. Mediation alone cannot bind parties unless they agree a settlement. The arbitration stage is what gives a binding award if mediation fails.

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