IADRC urges greater use of commercial mediation to boost Sri Lanka’s FDIs

 PIX BY Nimalsiri Edirisinghe

By Nuzla Rizkiya

The International ADR Center (IADRC) recently called for greater use of commercial mediation to resolve business disputes in Sri Lanka, citing its potential to attract more Foreign Direct Investments (FDIs) into the country.

Sri Lanka should actively work on improving its dispute resolution framework as it currently holds one of the lowest rankings in South Asia for contract enforcement, as per World Bank’s Ease of Doing Business index. 

Therefore, promoting mediation could improve Sri Lanka’s appeal as an investment destination and support its economic growth, according to the IADRC.

Hosting a special media briefing this week, the center highlighted commercial mediation as a widely regarded alternative to traditional litigation for resolving business disputes. According to the center, global organisations such as the International Chamber of Commerce (ICC), World Intellectual Property Organization (WIPO), and the International Bar Association, as well as countries such as Singapore, Hong Kong and India, have institutionalised mediation to facilitate a friendlier business environment.

“Business disputes pose challenges that businesses do not need, creating additional risks and complications. The cumulative impact of unresolved disputes affects their bottom lines and investor confidence,” IADRC Director and Secretary General Attorney-at-Law Dhara Wijayatilake said. 

Unlike litigation, which is often time-consuming and expensive, she pointed out that commercial mediation provides a cost-effective and time-efficient approach that encourages constructive dialogue that actually helps preserve business relationships.

Additionally, mediation often leads to settlement agreements, allowing disputing parties to reach collaborative resolutions within days or weeks rather than years.

Wijayatilake also noted Sri Lanka›s recent ratification of the UN Convention on Mediation (New York, 2018) and the enactment of the Recognition and Enforcement of International Settlement Agreements Act in January 2024. With these efforts, and its strategic location, Sri Lanka could become a hub to attract international investments if it improves its business environment and investment climate, according to the IADRC.

“Commercial mediation has a very different approach. Advisors help clients understand their real issues and choose the best method to resolve them, which can lead to a stronger partnership between the parties,” Wijayatilake said.

To raise more awareness on the avenue, the IADRC is set to host its third annual Symposium on Mediation for Commercial Dispute Resolution on 29 January. 

The event will be conducted under the Support to Justice Sector Project (JURE), funded by the European Union (EU) and implemented by UNDP and UNICEF Sri Lanka, in collaboration with the Ministry of Justice.

“Our objective is to encourage the business community to be smarter in resolving disputes. We are working towards having the corporate community accept a pledge to include mediation as a part of their dispute resolution repertoire,” Wijayatilake asserted.