Mediation of IS Disputes: Opportunities, Challenges, Future Prospects

From left to right: Wolf von Kumberg, Birgit Sambeth Glasner, Laura Halfpop, James South, Will Thomas KC

Summary

The event focused on the growing relevance of mediation in resolving Investor-State (IS) disputes, exploring both its promise and its practical challenges. The panel, moderated by Will Thomas KC ( Freshfields), featured speakers James South [ I ](CEDR), Laura Halfpop (De Beers), Wolf von Kumberg (CEDR mediator and ICSID Conciliator, and Birgit Sambeth Glasner ( Mediator and ICSID Conciliator) - each offering expert perspectives on the unique role mediation can play in this increasingly important area of international dispute resolution.

Key Themes and Talking Points

1. Understanding Mediation in the IS Context 

I opened the discussion by highlighting the foundational role of confidentiality in mediation. There is a recent aviation sector case that demonstrates two layers of confidentiality: firstly, the overall process being private and offering a side-step from litigation or arbitration; and the second level, the mediator's role in managing private discussion and then exchanges between parties of their wider commercial interests. These confidential discussions often allow for creative, interest-based solutions that litigation would not accommodate, such as rebuilding commercial relationships.

Based on her experience as a party in an IS mediation, Laura Halfpop emphasised mediation’s appeal to clients as a low-risk, high-reward process. The presence of a neutral third party can prompt reflection, help parties test entrenched positions, and expedite settlements, especially when there may be external pressures like elections or regulatory deadlines.

Wolf von Kumberg and Birgit Sambeth Glasner, both who have mediated IS disputes underlined the importance of process design, especially with States as parties. Mediation processes must be carefully structured to include appropriate representatives and stakeholders, such as NGOs or other levels of government, and to account for necessary approvals.

2. Advantages of Mediation in IS Disputes

The panel noted several key benefits:

• Greater creativity in solutions than arbitration allows.
• Potential to preserve or even rebuild long-term relationships between investors and States.
• Confidentiality, cultural sensitivity, and the potential involvement of expert third parties.
• Flexibility to engage multiple stakeholders in the resolution process.

All stressed mediation’s ability to produce comprehensive settlements that go beyond legal judgments to address root causes and broader community or governmental concerns.

3. Challenges in IS Mediation

The panel discussed the following challenges specific to IS disputes:

• Ensuring that State representatives have the authority to settle.
• Balancing confidentiality with transparency obligations, especially in disputes involving public funds or interests.
• Political instability, which could cause a signed draft settlement being rejected due to a government change.
• Fear among State negotiators of personal liability or allegations of corruption.

4. Mediator Skillsets

Laura argued that successful IS mediators need emotional intelligence, cultural awareness, institutional knowledge, and ideally co-mediation arrangements to blend subject matter and mediation expertise. I emphasised that being a good arbitrator doesn’t make someone a good mediator. Proper training and experience in IS-specific dynamics, such as process design and multi-party involvement, are critical. CEDR’s training programmes with ICSID and ECT are great examples of this. 

5. Future Directions

The discussion closed on future prospects:

• Mediation timing is flexible, including during cooling-off periods or in parallel with arbitration.
• Greater harmonization with IS arbitration could come via BIT clauses mandating or encouraging mediation.
• Institutions like CEDR. ICSID and others playing a key role in awareness, training, and panel creation.
• Counsel and States must actively encourage and be prepared for mediation to truly mainstream it.

Conclusion

The panel underscored that mediation is no longer a peripheral option in Investor-State dispute resolution—it is emerging as a credible, adaptable, and often preferable alternative to arbitration. While challenges remain, particularly around process design, authority to settle, and institutional readiness, the advantages of mediation—confidentiality, creativity, relationship preservation, and stakeholder inclusiveness—are compelling.

As frameworks evolve and training initiatives expand, mediation’s role in IS disputes is poised to grow. Realising its full potential will require continued collaboration among institutions, counsel, States, and mediators to ensure that the practice is not only available, but also trusted, supported, and strategically employed.