Mediation of Financial Disputes

15 Pages Posted: 2 Aug 2018 Last revised: 24 Nov 2018

See all articles by Forestieri Ilaria

Forestieri Ilaria

University of Florence - Law Department

Philipp Paech

London School of Economics - Law Department

Date Written: July 14, 2018

Abstract

In recent years, a fragmented global picture of legislation supporting mediation in finance has emerged and a number of ADR service providers have started to offer mediation services specifically for the financial market. Although academics and professional express great appreciation for alternative resolution procedures in finance, mediation is said to lag behind its potential. This [chapter] shows that a number of characteristics of financial transactions suggest that mediation in finance could increase efficiency to an extent that would not be possible otherwise. However, there are clear limitations to mediation in finance: the main characteristic of financial transactions consists of the preparedness to take and manage counterparty risks. The financial industry has developed a framework to manage counterparty risk, in accordance with existing laws in nearly all developed financial markets. However, the main idea underlying mediation, that is to form a new agreements adjusting contractual obligations, is largely irreconcilable with risk management as practiced at the moment. Hence, only those disputes that do not touch upon issues associated with transfers of value can be the object of mediation, whereas all transactions that are ‘financial’ in nature must remain subjected to insolvency or bankruptcy procedures.

Keywords: Financial transactions, wholesale finance, ADR, mediation

JEL Classification: K22, G28, G32

Suggested Citation

Ilaria, Forestieri and Paech, Philipp, Mediation of Financial Disputes (July 14, 2018). Available at SSRN: https://ssrn.com/abstract=3213847 or http://dx.doi.org/10.2139/ssrn.3213847

Forestieri Ilaria (Contact Author)

University of Florence - Law Department ( email )

via delle Pandette, 35
Firenze, Firenze 50127
Italy

Philipp Paech

London School of Economics - Law Department ( email )

Houghton Street
London WC2A 2AE, WC2A 2AE
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
52
rank
373,187
Abstract Views
238
PlumX Metrics