Potential For Implementing Modern ADR Solutions Into An Obsolete Arbitration Setting – The Case Study Of Arb-Med-Arb

It is as difficult to define law as it is to draft legislation that keeps pace with constant societal change. Arbitration in Bosnia and Herzegovina is no exception. For many years, its legal framework has remained largely unchanged, offering limited solutions to the challenges of modern alternative dispute resolution (ADR). This is primarily due to the limited use of arbitration, as commercial disputes are still resolved almost exclusively before the state courts. This has created something of a “chicken-and-egg” problem. The lack of practice discourages legislative innovation, while an outdated legislative framework provides little incentive for parties to choose arbitration. Breaking this cycle requires bold and progressive reform. Bosnia and Herzegovina should therefore look beyond traditional arbitration models and consider modern ADR mechanisms that could strengthen both its dispute resolution framework and its position as a regional ADR venue.

As arbitration continues to gain importance, national legislation must evolve accordingly. Legal systems cannot remain static in a rapidly changing commercial environment and must continuously adapt to new circumstances and emerging challenges. This is particularly true in arbitration, where developments in international commerce, technology and cross-border investment continue to reshape how commercial disputes are resolved. Legislators should therefore regularly review and update arbitration legislation to ensure that it remains effective, relevant and capable of meeting the expectations of arbitration users. Failure to do so risks creating a legal framework that no longer reflects contemporary arbitration practice or adequately addresses the needs of commercial parties.

This is precisely the role of lex arbitri. It establishes the legal framework governing arbitration and defines the relationship between arbitration and the courts of the seat. Bosnia and Herzegovina does not have a standalone arbitration statute. Instead, arbitration is regulated through separate chapters of the entity-level civil procedure legislation. As a result, the country has long been awaiting a comprehensive legislative overhaul in this area. The scope and direction of such reform raise broader questions that fall beyond the scope of this article. Rather than discussing arbitration reform in general, this article argues that simply modernising the existing legislative framework may not be sufficient.

As arbitration reform increasingly becomes a topic of discussion, Bosnia and Herzegovina should look beyond traditional forms of ADR and consider more innovative mechanisms to attract international users. One such mechanism is Arb-Med-Arb (AMA), which is briefly examined in this article.

The discussion is not merely academic. As Bosnia and Herzegovina continues to attract cross-border investment, particularly in sectors such as energy, infrastructure and finance, efficient and internationally recognised dispute resolution mechanisms are becoming increasingly important. Any future reform of the country’s arbitration framework will therefore be of practical significance not only for domestic users, but also for foreign investors and commercial parties doing business in the jurisdiction.

Bosnia and Herzegovina continues to experience a considerable judicial workload, which is not evenly distributed among its courts. Those located in larger, economically active urban centres continue to bear the greatest burden. Governmental and international organisations have made considerable efforts to encourage court settlements and other forms of amicable dispute resolution. Nevertheless, ADR remains underdeveloped in practice and even basic mechanisms such as mediation have yet to gain significant commercial acceptance.

Arb-Med-Arb is an abbreviation for Arbitration-Mediation-Arbitration, a hybrid dispute resolution mechanism combining the two most widely recognised forms of ADR. To understand the advantages of Arb-Med-Arb, it is necessary first to examine the relationship between these two mechanisms.

Basics of the correlation between mediation and arbitration

At its core, mediation is an assisted negotiation; it is facilitated by a neutral third party who remains impartial both in conducting the process and in relation to its outcome. The mediator is freely selected by the parties, typically after several rounds of proposals until a mutually acceptable candidate is identified. The selection usually depends on the mediator’s professional reputation and, where relevant, on the mediation style considered most appropriate for the dispute.

Mediation styles are commonly grouped into three categories: facilitative, evaluative and transformative. Facilitative mediators focus primarily on the process, seeking to reopen blocked channels of communication and assist the parties in reaching their own solutions. Evaluative mediators place greater emphasis on the substance of the dispute and are often engaged where parties require a more structured assessment of their respective positions. Transformative mediators seek to empower the parties by demonstrating that they retain control over both the process and the ultimate outcome. Although less frequently encountered in commercial disputes, this approach focuses less on achieving settlement itself and more on improving the relationship between the parties and encouraging constructive future interaction.

Mediation is also one of the most private forms of ADR due to its informal nature and the flexibility afforded to the parties. Unlike arbitration, mediation is influenced by legal rules rather than governed by them in the same procedural sense.

Its effectiveness, however, depends almost entirely on the parties’ willingness to negotiate in good faith. This is both mediation’s greatest strength and its principal limitation. It provides an opportunity not only to resolve disputes but also to preserve commercial relationships, making it an attractive option for parties wishing to continue doing business together. At any time, either party may terminate the process if negotiations cease to be productive. Legislators have therefore sought various methods of encouraging parties to demonstrate a stronger commitment to amicable dispute resolution.

Mediation and arbitration are closely related and Arb-Med-Arb is by no means the first attempt to combine them. Arbitration-mediation models have existed for some time, while Med-Arb has long been recognised as a hybrid process that allows parties to attempt mediation before unresolved issues are determined through arbitration.

Under a traditional Med-Arb model, if mediation does not result in a settlement, the parties may agree that the mediator will assume the role of arbitrator and issue a final and binding arbitral award on the outstanding issues. In some cases, different individuals serve as mediator and arbitrator, allowing the mediator to explore commercial interests and broader concerns that extend beyond the legal issues formally presented by the parties. The principal distinction between these approaches lies in the sequence of the proceedings and the role assumed by the neutral third party.

The potential introduction of arb-med-arb

Arb-Med-Arb was introduced through the joint protocol adopted by the Singapore International Arbitration Centre (SIAC) and the Singapore International Mediation Centre (SIMC). The AMA Protocol establishes a three-stage dispute resolution process that begins with arbitration, pauses for mediation and returns to arbitration only if mediation fails to produce a settlement.

Like other forms of ADR, Arb-Med-Arb is based on party autonomy. The process is initiated through an arbitration agreement, which typically provides that any dispute arising out of or in connection with the contract shall be referred to arbitration administered by SIAC under the SIAC Arbitration Rules. The clause further provides that, following the commencement of arbitration, the parties will attempt in good faith to resolve the dispute through mediation administered by SIMC under the SIAC-SIMC Arb-Med-Arb Protocol. Any settlement reached during the mediation may subsequently be recorded as a consent award by the arbitral tribunal.

The procedure begins when one party files a Notice of Arbitration with SIAC. Within four working days, the SIAC Registrar notifies SIMC that arbitration has been commenced pursuant to the Arb-Med-Arb clause. Once the arbitral tribunal has been constituted, it stays the arbitration proceedings and refers the dispute to SIMC for mediation.

SIMC then administers the mediation in accordance with its own procedural rules. As a general rule, the mediation should be completed within eight weeks, after which SIMC informs SIAC whether the dispute has been resolved.

Where mediation successfully results in a settlement, the parties may request that the arbitral tribunal record that settlement as a consent award. Such an award benefits from the same enforceability as any other arbitral award. If mediation is unsuccessful, the arbitration resumes before the previously constituted tribunal, without the need to initiate a separate proceeding.

This structured interaction between arbitration and mediation distinguishes Arb-Med-Arb from more traditional hybrid ADR mechanisms. Rather than replacing arbitration with mediation, the procedure integrates mediation into an existing arbitral framework, while preserving the enforceability and procedural certainty associated with arbitration.

The procedural differences between arbitration and mediation create a clear distinction between the two mechanisms. Arbitration follows predetermined procedural rules and culminates in a binding decision, whereas mediation remains flexible and largely shaped by the parties themselves. These differences, however, are primarily procedural rather than conceptual. The informal character of mediation is not imposed by law but results from the parties’ preference for a less formal process. As mediation is largely driven by party autonomy, its procedural framework may vary considerably without altering its essential nature.

The same observation applies to arbitration. Arbitral institutions apply different procedural rules, yet they all remain recognisable as arbitral proceedings because they share the same fundamental characteristics. Differences between arbitral rules therefore represent variations within the same legal framework rather than fundamentally different dispute resolution mechanisms.

Another way to compare arbitration and mediation is to focus on their respective outcomes. One might argue that the legal character of Arb-Med-Arb depends on how the process ultimately concludes. If mediation successfully resolves the dispute, the process may appear to have functioned primarily as a mediation. Conversely, where mediation fails and arbitration proceeds to a final award, the process may seem essentially arbitral.

This outcome-based approach, however, is ultimately unconvincing. The legal nature of a dispute resolution mechanism cannot depend solely on the result it produces. If that were the case, the essential characteristics of the procedure would change retrospectively depending on whether settlement was achieved, an approach that lacks both conceptual consistency and practical certainty.

Nevertheless, the final outcome should not be disregarded entirely. Looking retrospectively at an Arb-Med-Arb procedure that concludes with an arbitral award, it is clear that arbitration ultimately provided the binding resolution of the dispute. Where the parties reach a settlement during mediation, the mediation phase becomes the decisive element in resolving the dispute. Even so, the overall procedure remains a single, integrated dispute resolution mechanism that combines arbitration and mediation within a structured framework.

Conclusion

As the global economy becomes increasingly interconnected and international commerce expands, dispute resolution mechanisms will continue evolving alongside it. Traditional court proceedings are increasingly complemented by a broad spectrum of ADR mechanisms, ranging from formal arbitration to more flexible and hybrid procedures. As these mechanisms develop, the legal framework governing arbitration must also evolve to accommodate the changing expectations of commercial parties.

Against this background, Bosnia and Herzegovina should not limit any future arbitration reform to modernising its existing legislative framework. It should also consider whether internationally recognised hybrid ADR mechanisms could be incorporated into its arbitration system. Arb-Med-Arb represents one such mechanism. By combining the procedural certainty and enforceability of arbitration with the flexibility and relationship-preserving advantages of mediation, it offers commercial parties an additional avenue for resolving disputes efficiently.

Unlike more traditional hybrid procedures such as Med-Arb or Arb-Med, where mediation often serves as an accessory to arbitration, Arb-Med-Arb establishes a more integrated and balanced relationship between the two mechanisms. Although the final outcome may be either a mediated settlement or an arbitral award, its defining characteristic is the structured integration of the two processes into a single dispute resolution framework.

Whether Bosnia and Herzegovina ultimately adopts such mechanisms will depend on the direction of future legislative reform. Nevertheless, if the country seeks to modernise its arbitration framework and position itself as a more attractive venue for international dispute resolution, innovative mechanisms such as Arb-Med-Arb deserve serious consideration. In a legal environment moulded by constant commercial and technological change, arbitration law should not merely follow international developments; it should be prepared to anticipate them.