If a Liechtenstein contract says binding arbitration, can mediation first affect my right to arbitrate later?

Hello,

Thank you for reaching out. I understand you have questions about a Liechtenstein-based contract and the interplay between mediation and arbitration. Based on the information you've provided, here is some general guidance on your situation under Liechtenstein law.

Mediation's Effect on Arbitration
Engaging in mediation first should not negatively affect your right to arbitrate later. In Liechtenstein, the legal framework is designed to be flexible, and parties are generally free to structure their dispute resolution process. An arbitration agreement does not prevent the parties from first attempting mediation or even seeking interim relief from a state court. In fact, for some civil law cases that go to the official courts, mediation is a mandatory first step. Therefore, pursuing mediation is a common and often encouraged step that does not invalidate a binding arbitration clause.

Timelines and Statutes of Limitation
Under Liechtenstein law, statutes of limitation are considered a matter of substantive law, not procedural law. This means the specific deadline to bring your claim is determined by the nature of the claim itself. While the general statute of limitations is 30 years, many specific types of claims have much shorter periods. For example, various contractual claims may have a limitation period of only five years, and other specific claims can be as short as three years.

Cost Implications
Generally, mediation is significantly less expensive than arbitration or litigation. Mediation costs typically consist of an administrative fee and an hourly rate for the mediator. For context, the Court of Arbitration for Sport (CAS) charges a flat administrative fee of CHF 1,000 and an hourly rate of CHF 200 for the mediator.

Costs for arbitration, on the other hand, are usually higher and are often determined by the lawyer's tariff. In Liechtenstein, the losing party is typically required to reimburse the winning party for their legal costs in proportion to the outcome of the case.

Enforceability of Arbitration
A final and valid arbitration award in Liechtenstein is considered as enforceable as a judgment from a national court. The law provides a clear framework for the enforcement of arbitral awards, giving them significant legal weight. A party can challenge an award in the Liechtenstein Court of Appeal, but only under exceptional circumstances.

This is general information and not a substitute for formal legal advice tailored to the specifics of your contract. Should you wish to discuss your case in greater detail, I would be happy to offer you a more in-depth consultation via WhatsApp for a small fee.

Under Liechtenstein law, initiating mediation does not normally pause, waive, or invalidate a party’s right to arbitration. As long as you make clear that participation in mediation is “without prejudice,” your contractual arbitration right remains intact. 

Mediation itself does not suspend statutory limitation periods, so the parties should agree in writing to a standstill if needed. 

Mediation typically lasts only a few weeks or months and may cause a short delay before arbitration begins, but it cannot prevent you from proceeding to arbitration unless the contract expressly makes mediation a mandatory precondition. 

Costs for mediation are generally significantly lower than those of arbitration, as arbitration can involve far higher tribunal and legal fees (depending on the chosen lawyer and rules of arbitration). 

A settlement reached in mediation is binding only if recorded in a written agreement and is not automatically enforceable; enforceability usually requires converting it into a court-approved settlement in Liechtenstein or having it issued as a consent award by an arbitral tribunal. 

By contrast, any ensuing arbitral award will be internationally enforceable under the New York Convention.

In case you have further questions, we are happy to assist and schedule a call to discuss the contract, the sepcific clauses and the further proceeding in detail.