Belgian contract says binding arbitration; can we still mediate to reach a settlement before arbitration proceeds?

Thank you for your important inquiry. Our firm has extensive experience in arbitration practice both regionally across Egypt and the Gulf, as well as internationally. To provide an accurate legal opinion, several key factors must first be clarified including the governing law of the dispute, whether the arbitration is institutional or ad hoc, and, if institutional, which arbitration center’s rules apply. Clarifying these points will enable our firm to assist you precisely.

Thank you for your important inquiry. Our firm has extensive experience in arbitration practice both regionally across Egypt and the Gulf, as well as internationally. To provide an accurate legal opinion, several key factors must first be clarified including the governing law of the dispute, whether the arbitration is institutional or ad hoc, and, if institutional, which arbitration center's rules apply. Clarifying these points will enable our firm to assist you precisely.

Hello, good morning

Yes, under Belgian law, you can mediate to reach a settlement before arbitration proceeds, even if your contract specifies binding arbitration. Initiating mediation will not negatively affect the upcoming arbitration or the validity of any resulting award; in fact, Belgian law encourages this approach.

Mediation Prior to Arbitration: In Belgium, the principle of contractual freedom allows parties to agree to mediation at any point, either before or after a dispute has begun. The Belgian Judicial Code formally recognizes mediation as a valid method for dispute resolution.

If your commercial agreement includes a clause requiring an attempt at mediation before commencing arbitration, Belgian courts and arbitral tribunals will generally enforce this. An arbitral tribunal is likely to suspend its proceedings if a party highlights a pre-existing agreement to mediate.

Confidentiality and Influence on Arbitration: The mediation process in Belgium is confidential. All documents, statements, and communications made during mediation are protected and cannot be used as evidence in subsequent arbitration or court proceedings. This ensures that the negotiations and willingness to compromise during mediation will not prejudice your position if the dispute proceeds to arbitration. However, it is worth noting that the costs associated with a failed mediation are typically not recoverable in a later arbitration.

Enforceability of a Mediated Settlement: Should the mediation prove successful, the outcome is a binding settlement agreement. This agreement can be enforced as a standard contract. For enhanced enforceability, particularly for international purposes under the New York Convention, parties can ask an arbitral tribunal to formally record the settlement as a "consent award". To streamline this, it is often recommended to have the arbitration technically commenced before mediation begins so the tribunal is in place to issue such an award. If mediation does not resolve the dispute, the parties can simply proceed with the arbitration as originally planned