India and European Union FTA adds detailed mediation procedures to speed up trade dispute resolution

The newly concluded free trade agreement (FTA) between India and the European Union includes a detailed annexure outlining “model mediation procedures” to help resolve trade disputes through an expedited and mutually agreed process.

“These FTA texts may undergo further modifications as a result of the process of legal revision/scrub. The texts will be final upon signing,” the agreement text states.

“A Party (India or EU) may at any time request to enter into a mediation procedure with respect to any measure by a Party alleged to adversely affect trade between the Parties,” the document reads.

However, the procedure can begin only if both sides agree.

The request must clearly identify the measure in question and detail the alleged adverse effects on trade. If the two sides cannot agree on a mediator within a specified period, the request “shall be regarded as rejected.”

The mediation process would take place in the territory of the responding party, unless both sides agree on another location or method.

The agreement also provides that the parties “shall endeavour to reach a mutually agreed solution within 60 days after the appointment of the mediator” and may consider interim solutions during the process.

“The objective of this Chapter is to provide an effective and efficient mechanism for the avoidance or prompt settlement of any dispute arising between the Parties concerning the interpretation and application of this Agreement,” the text states.

It further notes that the parties may opt for alternative dispute resolution methods such as “good offices, conciliation or mediation” to facilitate mutually agreed solutions.

Under the pact, 93% of Indian shipments will receive duty-free access to the 27-nation EU bloc, while tariffs on luxury cars and wines imported from the EU into India will be reduced.

Together, India and the EU represent about 25% of global GDP and roughly one-third of international trade, creating a combined market of nearly 2 billion people.

The agreement comprises 20 chapters, including one focused on digital trade. That chapter includes provisions to promote paperless trading and cooperation on regulatory and technical issues.

“Generally EU has detailed mediation chapter in its FTAs — such as with Singapore and Vietnam. For India, such a detailed procedure is new,” said GTRI Founder Ajay Srivastava.

The structured mediation framework is expected to provide a faster and less adversarial route for resolving trade disagreements under the landmark agreement.