Examining Mediation as the Opportunity Cost of Litigation: Can it be Sustained in the Long Term?

Abstract

Provision for appropriate dispute resolution clauses in international commercial contracts has evolved to become an essential ingredient in contemporary competitive markets. They also serve as a pre‐emptive remedy, necessitating further demands for cheaper remedies in dispute management, specifically alternative dispute resolution2 processes such as arbitration, conciliation and mediation. Further, there is the question whether the business community could sustain the average commercial fees for dispute settlement without becoming a source of resentment or revolt in the long term. This essay examines the economic cost of dispute settlement with a bias towards mediation, as well as other issues concerning creative management of disputes. This informs a more compelling need to reconsider the costs of disputes in economic terms: analysing comparative merits/utilities of mediation and determining what the opportunity cost of mediation in international commercial contracts is and whether it is cost efficient i...