Med-Arb in International Commercial Contracts (with Focus on Iran’s Legal System)

Med-Arb is one of the hybrid and integrated dispute settlement mechanisms which embodies flexibility, non-judicial and negotiate-oriented benefits of "mediation" and finality advantage of "arbitration" simultaneously and in a single process. In this article, med-arb nature is identified through a comprehensive comparative legal study including major legal systems and procedural rules of leading dispute settlement institutions. Opportunities and challenges of adopting med-arb in terms of legal, economic and managerial perspectives is analyzed. Although this method provides parties with a huge flexibility, control over the process and great efficiency (in relation to other dispute settlement mechanisms), some serious challenges regarding enforcement of awards in international contracts exist. In light of International Commercial Arbitration Act of Iran and Civil Procedure Code (regarding domestic arbitration rules), in case that parties reach agreement in the first phase (mediation), it is not possible that mediator only serve as arbitrator so that be powered to change the mediation agreement into an arbitral award. However, if parties fail to reach agreement in the first phase and arbitration initiates accordingly, their settlement in this stage can be regarded as consent award and be subject to benefits of enforcement of international arbitration awards.