In international and high-value commercial contracts, disputes are rarely simple. By the time a conflict reaches formal arbitration, positions are entrenched, legal costs are mounting, and the relationship between the parties may already be damaged. Yet in many of these cases, the underlying issues could have been narrowed—or even fully resolved—long before an arbitral tribunal was ever appointed.
That is exactly where pre-arbitration mediation comes in.
More and more companies across Saudi Arabia, Egypt, the wider GCC, and international markets are using mediation before arbitration as a strategic step to save time, reduce costs, and protect long-term business relationships. Instead of waiting for arbitration to “fix everything,” sophisticated parties are building multi-tier dispute resolution clauses into their contracts: negotiation, then mediation, and only if those fail, arbitration.
LEXARB, an international law firm specializing in arbitration and cross-border disputes, helps clients design and implement effective pre-arbitration mediation strategies that align with their legal rights and commercial objectives. With a multilingual team (Arabic, English, French, Russian) and deep knowledge of regional and international arbitration practice, LEXARB’s approach turns what many see as “just another procedural step” into a powerful opportunity to settle or streamline disputes.
What Is Pre-Arbitration Mediation?
Pre-arbitration mediation is a formal, structured mediation process that takes place before the parties commence arbitration—or in the very early stages of the arbitration process—usually because:
- The contract requires mediation as a condition precedent to arbitration (a step that must happen first), or
- The parties voluntarily agree to try mediation before proceeding further with arbitration.
In many commercial contracts today, especially in construction, energy, infrastructure, logistics, and long-term supply contracts, you will see dispute resolution clauses structured as:
- negotiation → 2) mediation / conciliation → 3) arbitration.
This structure is particularly common in cross-border deals involving parties from Saudi Arabia, Egypt, the GCC, Europe, and Asia, who wish to combine the finality of arbitration with the flexibility of mediation.
Why Pre-Arbitration Mediation Is So Valuable
Pre-arbitration mediation offers all the classic benefits of mediation, plus additional advantages linked specifically to the arbitration process.
- Saving Time and Costs Before They Explode
Once arbitration starts, legal teams prepare detailed pleadings, document production requests, expert reports, and witness statements. This is time-consuming and expensive. If mediation can resolve the dispute—or at least narrow the issues—before that phase, both sides can preserve significant resources.
Even if only part of the dispute is settled (for example, quantum but not liability, or some claims but not others), the arbitration that follows becomes faster, more focused, and less costly.
- Preserving Relationships and Ongoing Projects
In industries like construction or energy, parties often need to keep working together while a dispute is ongoing. Pre-arbitration mediation provides a confidential, controlled space for them to renegotiate timelines, scope, or payment schedules without destroying the overall project or relationship.
- Reducing Legal and Procedural Risk
If the contract makes mediation a mandatory precondition to arbitration, skipping it can lead to jurisdictional objections later. A respondent might argue that the tribunal does not have jurisdiction because the mediation step was never taken. Conducting proper pre-arbitration mediation helps avoid this risk.
- Creating a Foundation for Any Subsequent Arbitration
Even when mediation doesn’t result in a complete settlement, it can:
- Clarify what the real issues are
- Narrow the scope of the dispute
- Identify common ground
- Influence the overall strategy in arbitration
LEXARB often sees that mediation sessions provide insight that is invaluable if the case proceeds to arbitration—without breaching confidentiality obligations.
Regional Context: Pre-Arbitration Mediation in Saudi and Egyptian Practice
In Saudi Arabia, multi-tier dispute resolution clauses are increasingly common in major commercial and infrastructure contracts. Companies often refer to mediation or amicable settlement as a first step, followed by arbitration under rules of regional or international arbitral institutions. Pre-arbitration mediation fits naturally into this framework, aligning with the broader policy of encouraging alternative dispute resolution.
In Egypt, many contracts—especially those involving regional or international investors—include mediation or conciliation clauses leading into arbitration under rules such as CRCICA or other institutions. Early mediation can be particularly useful where state entities, public bodies, or large corporates are involved and want to avoid public litigation while maintaining control of the settlement process.
LEXARB’s familiarity with these regional practices allows it to guide clients on how far they must go in pre-arbitration mediation to satisfy contractual conditions, and how to do so without compromising their position if arbitration remains necessary.
LEXARB’s Legal Approach to Pre-Arbitration Mediation
LEXARB treats pre-arbitration mediation as both a legal requirement (where mandated by contract) and a strategic opportunity to reshape the dispute.
- Clause Review and Compliance Strategy
The first step is to analyze the dispute resolution clause:
- Is mediation mandatory or optional?
- Are there specific timelines (e.g., mediation must occur within 30 or 60 days of a notice)?
- Is there an institution or set of mediation rules named?
- What happens if mediation fails—how is arbitration triggered?
LEXARB advises clients how to comply carefully with these terms so that no jurisdictional objections can later be raised in arbitration.
- Case Assessment and Mediation Objectives
LEXARB works with the client to answer key questions:
- Is our goal a full settlement, or are we open to a partial settlement?
- Which issues are negotiable, and which are not?
- What are the client’s “must-haves” and “nice-to-haves”?
- What would be an acceptable walk-away settlement compared to the likely outcome and cost of arbitration?
This analysis shapes the negotiation strategy.
- Selection of Mediator and Rules
LEXARB helps identify an appropriate mediator or institution, considering:
- Language capabilities (Arabic, English, French, Russian)
- Industry knowledge (construction, oil & gas, finance, etc.)
- Cultural fit
- Experience with cross-border disputes
Where no institution is specified, LEXARB can design an ad hoc mediation framework that respects local laws and international standards.
- Preparation of Position Papers and Evidence
Unlike arbitration, mediation is not about proving your case to a tribunal. It is about persuading the other side that a reasonable settlement is better than a prolonged fight. LEXARB prepares concise position papers that:
- Explain the factual and legal position,
- Highlight key strengths (and anticipate weaknesses),
- Emphasize business impacts, not just legal rights,
- Open the door to realistic solutions.
- Conducting the Mediation: Legal Insight Meets Negotiation Technique
During mediation, LEXARB:
- Represents the client in joint and private sessions,
- Manages offers and counter-offers strategically,
- Uses “reality testing” to show the other side the risks of arbitration,
- Keeps communication focused, respectful, and problem-solving.
The team combines legal expertise with negotiation psychology, particularly important where parties come from very different legal and cultural backgrounds.
- Drafting a Robust Pre-Arbitration Settlement—or Protecting the Next Step
If an agreement is reached, LEXARB drafts a clear, enforceable settlement agreement, carefully addressing:
- Payment terms,
- Future performance obligations,
- Releases and waivers,
- Confidentiality,
- Consequences of any breach.
If mediation does not fully resolve the dispute, LEXARB ensures the process has been properly documented to satisfy contractual preconditions, and uses insights gained to refine the arbitration strategy.
A Practical Scenario: Turning a Multi-Million Dispute into an Early Business Solution
Imagine a Saudi developer and an international contractor locked in a dispute over delays and variations on a major project. The contract requires mediation before arbitration.
Initially, both sides see mediation as a formality. But with LEXARB guiding the process:
- The developer’s real concern (cash flow and project completion) is clearly articulated.
- The contractor’s main worry (unpaid variations and acceleration costs) is broken down and supported by targeted evidence.
- Through structured negotiation, they agree on a revised program, partial payment of undisputed sums, and a mechanism to deal with remaining disputed items within arbitration if needed.
The result: the project continues, the immediate crisis is defused, and any remaining arbitration is narrower, cheaper, and less risky for both.
Why Companies Choose LEXARB for Pre-Arbitration Mediation
- Specialization in international arbitration and ADR
- Deep knowledge of multi-tier dispute clauses and their enforcement
- Experience with Saudi, Egyptian, GCC, and international commercial practices
- Multilingual communication: Arabic – English – French – Russian
- Strategic mindset focused on business outcomes, not just legal theory
- Strong drafting skills for settlement agreements that actually work in practice
LEXARB transforms pre-arbitration mediation from a procedural checkbox into a decisive advantage.
Conclusion
Pre-arbitration mediation is more than a preliminary step—used correctly, it is one of the most powerful tools to accelerate dispute resolution, reduce cost, and protect relationships in high-stakes commercial matters.
Whether your contract already includes a mediation clause, or you are considering proposing pre-arbitration mediation to a counterparty, LEXARB can guide you through every phase: from clause interpretation and mediator selection to negotiation strategy and settlement drafting.
For confidential advice on pre-arbitration mediation or to discuss a current dispute, contact LEXARB today. Our team is ready to help you turn potential litigation into a controlled, commercial solution.