The Alternative Dispute Resolution (ADR) Program is a three year project financed by the Government of the Netherlands. To help SMEs cut through judicial red tape and unlock blocked assets, IFC is building on successful ADR programs previously launched in Albania, Bosnia and Herzegovina, FYR Macedonia, and Serbia and Montenegro.
The Program aims to enable quicker, cheaper, and better access to justice for companies and individuals through mediation, by establishing a network of sustainable mediation centers.
The core activities of the Program include:
· Putting in place the legal and regulatory framework to allow the broad introduction of mediation across the region;
· Establishing a regional network of 10 mediation centers, which will become financially self-sustainable in the medium term;
· Developing a cadre of world-class mediators through customized seminars, trainings, and mentoring programs;
· Supporting the development of sustainable civil society institutions committed to the expansion of mediation in the region, such as associations of mediators;
· Establishing the mechanisms for the continuous education of judges, lawyers, and prosecutors about mediation as a complement to the formal legal system;
· Facilitating a public awareness campaign throughout the region to increase the understanding of mediation and create demand for mediation services.
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The term Alternative Dispute Resolution (ADR) is often used to describe a wide variety of dispute resolution mechanisms that are alternative to full-scale court process. The term can refer to everything from facilitated settlement negotiations, to arbitration systems, mini trial, mediation, and other processes. |
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Why Mediation?
The judicial system is a major impediment to conducting business in South East Europe. Even though there is now a high level of macroeconomic stability in these countries, there is still a need for more economic growth resulting from a favorable business climate. A well functioning and impartial judicial system is one of the key prerequisites for establishing a strong market economy. According to the World Banks’
Doing Business Report, companies in the region who seek help from the judicial system to enforce a contract wait an average of 501 days for a court decision. The high cost of litigation can tie up company assets that might otherwise be directed to new business development and operational upgrades.
In order to support small and medium enterprises (SMEs) who suffer the most from having their time and money tied up in legal disputes, IFC has focused its efforts in the introduction of mediation. Nowadays, SMEs in the region are using a faster, cheaper and more efficient way to resolve their issues, while at the same time preserving business relations.
Mediation should:
· Foster economic development by facilitating resolution of business disputes in a timely fashion;
· Lower the high direct and indirect costs of resolving disputes;
· Release SMEs blocked funds in litigation;
· Provide better solutions than the formal court system;
· Reduce the number of court cases, some of which linger for many years.
What is Mediation? |
Mediation is a process in which the neutral third party – the mediator – assists parties in an effort to reach a mutually acceptable solution to a dispute. The mediator uses a variety of skills and techniques to help the parties reach an agreement. The mediator has no power to make a decision, because the parties take the decision themselves. |
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Benefits of Mediation:
1. Voluntary process. Parties in dispute initiate the mediation procedure and participate in reaching a mutually acceptable agreement on a voluntary basis.
2. Agreement mutually reached. Because the agreement is negotiated, it can often be more creative than a judgment imposed by the court, allowing a greater probability of a “win-win” resolution.
3. Cheaper than court! Mediation can drastically reduce the overall costs for those involved. Lengthy and burdensome procedures are more expensive then mediation process. For businesses, mediation can quickly free assets tied up in legal disputes, which can mean the difference between solvency and bankruptcy for small and medium enterprises.
4. Faster than litigation. A litigated case may take years! By reducing the time, mediation allows the resolution of an issue to be much easier.
5. Preserves business relationships! Mediation gives parties a way to resolve their disputes together.
Who Can Benefit from Mediation?
Companies - For businesses, mediation can quickly free assets tied up in legal disputes, which can mean the difference between solvency and bankruptcy for small and medium enterprises (SMEs). Through mediation SME’s are in a position to utilize released funds in a shorter and cheaper way and reinvest money into its business.
IFC’s experiences - For SME’s that successfully completed mediation, once funds were released they were used mostly to meet current liabilities e.g. salaries, loan repayment, procurement working capital etc. Some SME’s used released funds for development activities, investments, and research.
Judges - Mediation has the potential to reduce the amount of work for judges and to make a dent in their case backlogs.
Lawyers – Through mediation lawyers will increase their client satisfaction, and have much better control over the process and time.
Anyone - Mediation enables quicker, cheaper, and better access to justice for all groups and individuals.
IFC’s ADR program will put the emphasis on commercial cases, but mediation is applicable to a wide variety of potential cases.
About Donor - the Netherlands Minister for Development Cooperation
The Netherlands aims to promote the local business climate in developing countries because economic growth is crucial in the fight against poverty. Business investment creates more jobs, so that people can earn a living and take care of themselves.
A good business climate cannot be created in the short term, because it is so closely connected to local policy and governance. That is why the Netherlands works to improve local governance, market access, the functioning of the banking system and infrastructure and basic vocational education. This is achieved through the embassies, within international organizations and by supporting enterprises and private organizations operating in developing countries.
