When a business dispute arises, litigation is still the default option in the Maldives. In reality, court proceedings are often time-consuming, expensive, and disruptive to commercial relationships.

There is another approach: Mediation.

As the Maldives explores reforms to modernize its dispute resolution system, mediation has the potential to become a powerful and practical tool for businesses operating locally and internationally.

What Is Mediation?

Mediation is a structured and confidential process in which the mediator who is an independent, neutral third party, assists disputing parties in reaching a mutually acceptable solution.

Unlike a judge or arbitrator, the mediator does not impose a decision. The outcome is entirely controlled by the parties.

It is important to maintain the neutrality of the mediator rather than the mediator playing an active role in identifying the issues in dispute or suggesting settlement options. Parties are expected to have their own legal counsel who will provide them with legal advice and review the draft settlement agreement.

In simple terms, mediation is a professionally facilitated negotiation.

It allows businesses to:

• Resolve disputes faster than litigation

• Reduce legal costs and management time

• Protect confidential commercial information

• Preserve valuable business relationships

• Maintain control over the outcome

In a small and interconnected economy like the Maldives, preserving reputation and commercial partnerships is often just as important as resolving the legal issue itself.

Why Mediation Makes Commercial Sense

Time Efficiency
Court cases can take years. Mediation can resolve disputes within weeks, and sometimes even in a single day.

Cost Control
Litigation costs are unpredictable. Mediation allows businesses to manage and limit expenditure.

Relationship Preservation
In the Maldives, businesses frequently continue operating within the same commercial networks. Mediation allows parties to resolve disputes without permanently damaging future cooperation.

Commercial Flexibility and Control over the Outcome
Courts deliver legal judgments, where the outcome is uncertain. Mediation delivers commercial solutions. Parties can agree to payment plans, revised contracts, future collaborations, or other creative arrangements that courts cannot order.

The Current Position in the Maldives

Mediation is not yet supported by a comprehensive domestic legal framework.

There is currently:

• No Mediation Law

• No established mediation centre

• No formal accreditation system for mediators

• No streamlined enforcement mechanism for mediated settlements

This presents an opportunity to design a modern system that supports businesses effectively.

An Envisaged Mediation Framework for the Maldives

To ensure mediation becomes a meaningful and credible option for businesses, a structured framework is important.

Mandatory Mediation for Certain Disputes
A key feature of the proposed framework is the introduction of mandatory mediation for selected categories of disputes, particularly commercial, family, and employment matters that are capable of settlement.

This would mean:

• Parties must participate in a short, structured mediation process (for example, 2–3 hours) before proceeding to trial.

• A certificate from an approved mediator confirming completion of the required hours in good faith would be necessary before the case continues in court.

• Parties may complete mediation before filing a case, or the court may refer the matter to mediation upon filing.

• Judges would retain discretion to exempt cases that are unsuitable for mediation.

Mandatory mediation does not force businesses to settle. It simply ensures that parties attempt resolution in good faith before entering full litigation.

For businesses, this means disputes are addressed early, when solutions are often easier and less costly.

Choice and Flexibility
Under the envisaged framework, parties would have options:

• Attend mediation at a designated Centre (State Institution) where the mandatory hours are provided free of charge; or

• Appoint an approved private mediator at their own cost.

Beyond the mandatory stage, businesses would remain free to continue mediation voluntarily.

Mediators would not necessarily be limited to lawyers. Professionals with commercial, financial, or industry expertise could also serve as mediators, ensuring sector-specific understanding.

It is important that decentralised mediation services are available by training mediators in various geographic locations, to enhance access.

Institutional Support
An efficient approach would be to expand the role of the Maldives International Arbitration Centre to administer mediation alongside arbitration.

The institution could:

• Maintain a panel of qualified mediators

• Issue procedural and ethical standards

• Administer mediations (including conducting mandatory mediations free of charge)

• Provide training and accreditation for mediators

Importantly, private mediators should also be permitted to operate independently, subject to qualification standards. The availability of mediators operating in various regions of the country would enhance access.

Enforcement and International Disputes
For businesses engaged in cross-border transactions, enforceability is critical.

A modern Mediation Law should provide clear legal force to mediated settlement agreements and establish a framework for international commercial mediation. This would enhance investor confidence and position the Maldives as a credible dispute resolution jurisdiction.

It would also pave way for the Maldives to accede to the United Nations Convention on International Settlement Agreements Resulting from Mediation, which it signed in 2019.

What This Means for Businesses

If properly implemented, a structured mediation framework would:

• Reduce disruption to commercial operations

• Encourage early settlement of disputes

• Lower overall dispute resolution costs

• Protect business relationships

• Improve certainty in cross-border transactions

Most importantly, it would shift dispute resolution from confrontation to solution-focused dialogue.

Implications for the Justice System

• Access to Justice: Mediation provides an accessible, faster, and cost-effective alternative to formal litigation.

• Efficiency in the Justice System: Courts are overburdened. Diverting appropriate cases to mediation can reduce delays and backlogs.

No Bar to Mediation

While there is no structured mediation framework in Maldives yet, it is important to emphasize that there is currently no legal bar to mediation. Parties are free to mediate their disputes at any time.

In practice, disputes already settle through negotiation. Mediation provides structure, neutrality, and professional facilitation to that process, increasing settlement rates. Importantly, settlement agreements reached through mediation are often voluntarily enforced because the parties themselves design the solution. When businesses have ownership of the outcome, they are likely to comply with it.

Our Mediation Services

Our firm provides professional mediation services in commercial, corporate, employment, and other civil disputes.

• As neutral mediators, we facilitate structured and confidential negotiations focused on achieving practical, durable outcomes. Our approach is commercially informed, legally grounded, and solution oriented.

• We advise businesses on incorporating mediation clauses into contracts and on designing dispute resolution strategies that prioritise efficiency and relationship preservation.

• We act as mediation advocates, representing clients in mediation.

As mediation develops within the Maldives, we are committed to both delivering high-quality mediation services and contributing to the development of a structured, credible, and business-focused mediation framework.