The Willem C. Vis International Commercial Arbitration Moot has been held in Vienna for 31 years, The 32d Moot takes place 11-17 April, 2025. By now the Vis attracts over 1,000 law students and over 350 law schools from around the world. All of them, this year, are studying the legal ramifications of a dispute resolution clause that calls for mediation prior to commencement of arbitration.
This year’s Problem involves an agreement to design, build and service a plant for the purpose of manufacturing “green hydrogen.” The Buyer and Seller agreed on a Dispute Resolution provision of the Purchase and Service Agreement that provides, in part:
“Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination, or validity thereof, shall first be submitted to mediation in accordance with the Mediation Rules of the Finland Chamber of Commerce…. [and] shall be finally be settled by arbitration in accordance with the Rules of Expedited Arbitration of the Finland Chamber of Commerce.“
The Buyer is a state owned enterprise and, upon a change in government and restatement of policy, terminated the Agreement. The Seller attempted to negotiate a return to work, but confronted onerous and commercially unreasonable demands, and initiated arbitration seeking specific performance of the Agreement.
Buyer argues that the arbitration tribunal lacks jurisdiction because of the Seller’s failure to exercise a condition precedent to arbitration — mediation. It claims that it did not agree to arbitration in every instance — it agreed only conditionally, after the disputants first engaged in mediation. Seller says that it engaged in efforts to negotiate, which only made clear that mediation was futile. In any event, a challenge to an arbitration based upon the alleged failure of a purported condition precedent implicated the discretionary powers of the tribunal to admit the claim, not its jurisdiction to convene in the first instance.
In the United States, “stepped clauses” such as the one in this year’s Vis problem have been encouraged for years. They are effective ways to manage the risk of contractual disputes early, cheaply, and consensually. I’m unaware of any robust body of American law arising from jurisdictional challenges to arbitration tribunals based upon a failure to mediate prior to commencing arbitration. Is that because parties usually abide by stepped agreements, and mediate before they commence arbitration? Or is it because mediation often dispenses with the issue, rendering arbitration unnecessary?
The Vis Problem may be found HERE.