Does the ICC’s 2026 Cost-Credit Mechanism Actually Incentivise Mediation?

On 1 June 2026, the International Chamber of Commerce (“ICC”) 2026 Arbitration Rules (the “ICC Rules”) entered into force. Among the less-discussed provisions sits a structural novelty. Under Appendix III, Article 6(12), parties who attempt ICC mediation before ICC arbitration will have half their mediation administrative expenses credited against the arbitration costs. The ICC frames this as an institutional signal that mediation and arbitration are complementary rather than competing processes for resolution. This raises the question of whether that signal is enough to change anything in practice, and what deficiencies exist in this framework for international commercial alternative dispute resolution.

24-to-1 Ratio: The Numbers Problem Between Arbitration and Mediation

In 2025, the ICC International Court of Arbitration registered 881 new arbitration cases. In the same year, the ICC International Centre for Alternative Dispute Resolution (“ADR”) received 36 requests under the ICC Mediation Rules. That ratio, roughly 24 arbitrations for every one mediation, captures something no amount of institutional goodwill toward mediation has managed to dislodge: arbitration remains the overwhelming default in international commercial dispute resolution, and the advisory fee and contract structures around it have barely changed in decades.

The 2026 ICC Rules attempt a correction. Under Appendix III, Article 6(12), when ICC arbitration follows proceedings under the ICC Mediation Rules, half of the ICC administrative expenses paid for the mediation will be credited toward the administrative expenses of the arbitration. It is the first time the ICC has formally connected the cost architecture of its two flagship resolution mechanisms, and the overdue signal it sends that mediation and arbitration should be treated as complementary rather than competing.

The problem is that the mechanism rests on a premise that does not survive scrutiny, that cost is the primary reason parties skip mediation.

Three Barriers the Credit Does Not Reach

The Double Jeopardy Problem

High-value commercial disputes are almost always time-sensitive. A party managing an unpaid contractual obligation or a stalled construction project cannot easily absorb a mediation attempt that runs for an average of four months from the filing of the request for mediation, and then collapses without a settlement. The financial cost of that attempt is one thing. What really deters sophisticated parties is the timely cost of failure: a party that enters mediation in good faith reveals its reservation price, its commercial flexibility, and its assessment of its own legal position. If and when the attempt fails, and arbitration begins, that information is already in the room. The credit compensates the party financially for the direct expense of the failed mediation. It neither compensates for the exposure nor reduces the total time from dispute to binding resolution.

Counsel Incentive Misalignment

Arbitration is more financially rewarding for legal counsel than mediation. An ICC arbitration involves pleadings, document production, witness preparation, expert evidence, and hearings, all billable across proceedings that can run for years. A successful mediation compresses all of this into a process that, if it settles, eliminates the downstream work entirely. The cost credit runs to the client’s account. It does not change the fee arrangement that shapes the dispute resolution recommendation in the first place. Critically, ICC data shows that party costs, including legal fees, witness preparation, and evidence, account for 83% of the total cost of ICC arbitration. The administrative credit targets the remaining fraction. Until mediation-first approaches generate comparable professional returns, the advisory default toward arbitration will persist regardless of what the ICC does with its administrative fee structure.

The Enforceability Deficit

An ICC arbitral award is enforceable in 172 contracting states under the 1958 New York Convention. A mediated settlement agreement is a contract. The 2019 Singapore Convention on Mediation (the “Singapore Convention”) offers a cross-border enforcement framework for mediated settlements, but as of May 2026, it has only 22 contracting parties, following the recent ratifications by Colombia and Brazil. Major economies such as the United States, China, India, and the United Kingdom have all signed the Convention but have not ratified it. For parties operating in most major trading jurisdictions, the enforceability gap between an arbitral award and a mediated settlement agreement remains significant. As Mahaseth and Kaushik argued, the Singapore Convention and institutional mediation rules are converging toward a more enforceable mediation framework, but that convergence is incomplete. The ICC’s credit assumes the destination has already arrived; it has not.

The SIAC Contrast

The 2025 Rules of the Singapore International Arbitration Centre (“SIAC Rules”) take a structurally different approach. Under SIAC Rules 6.4 and 7.3, parties are required to comment on the adoption of amicable ADR mechanisms when submitting the Notice of Arbitration and the Response. Under SIAC Rule 32.4, tribunals must consult with the parties at the first case management conference on the potential for settlement through mediation. Under SIAC Rule 50.2(l), tribunals are empowered to suspend proceedings to allow the parties to attempt an amicable resolution at any stage.

The contrast is significant. The ICC mechanism operates entirely before arbitration begins. Once ICC proceedings commence, the institution plays no active role in redirecting parties toward mediation. SIAC, by contrast, embeds mediation encouragement within the arbitral process itself, at a moment when the parties are already engaged, and the tribunal carries real authority over their conduct. A party that declines to consider mediation under SIAC Rule 32.4 does so in direct response to a suggestion from the tribunal it has submitted to. That social and institutional dynamic is fundamentally different from a pre-filing price signal sitting in a cost appendix.

The gap between the two approaches also carries practical implications for how dispute resolution clauses are drafted. As previously noted, in-house counsel are increasingly interested in early intervention and procedural off-ramps, but those interests need institutional support to change practice on the ground. A cost credit that remains invisible to parties who never considered mediation in the first place does not provide that support.

The Case for an Obligation to Attempt

Soft incentives have a ceiling. The parties most in need of redirection toward mediation are precisely those for whom arbitration is the unexamined default, where counsel’s financial interests align with arbitration, and where the enforceability of a potential settlement remains uncertain in the jurisdictions that matter. For these parties, the administrative credit is insufficient. They are not avoiding mediation because it is more expensive. They are avoiding it because it does not guarantee a binding outcome, because failure carries temporal and financial costs, and because nobody in the advisory chain has a structural incentive to recommend it.

The more durable answer is a procedural obligation to attempt mediation before arbitration commences. Not an obligation to settle, which would be incompatible with the voluntary nature of mediation, but an obligation to engage in a structured session, with a certificate of non-settlement as a precondition to filing.

The Italian experience under Legislative Decree 28/2010 is instructive. Italy made mediation a mandatory precondition to litigation for specified categories of civil and commercial disputes. The framework has faced challenges and revisions over the years, most recently through Legislative Decree 216 of December 2024 (the Correttivo), in force since January 2025, which further expanded the categories of disputes subject to mandatory prior mediation to include franchising, supply contracts, and subcontracting. The Italian Ministry of Justice reported a settlement rate of 45.8% in mediations commenced before registered institutions in 2021. The mandatory attempt requirement does not compel settlement. It compels a conversation, and roughly half those conversations end the dispute.

Requiring parties to engage in a structured mediation session before commencing ICC arbitration does not undermine party autonomy. It constrains the timing of arbitration, not the right to arbitrate. Parties retain full freedom to walk away after a single session and proceed directly to filing. The cost of that session, under the 2026 ICC Rules, is now partially subsidised.

A Starting Position, Not a Policy

The 2026 cost credit is the ICC acknowledging, for the first time in its cost architecture, that choosing mediation before arbitration should not carry a financial penalty. That acknowledgment matters, and it should be recognised as such.

But a financial nudge directed at the wrong decision point, structured in a way that only reaches the already-converted, and silent on the three structural barriers that actually drive the 24-to-1 arbitration-to-mediation ratio, is a starting position. The ICC administers both rulesets, holds the caseload data, and has the institutional authority to design a mandatory pre-arbitration mediation attempt requirement that is time-limited, procedurally rigorous, and compatible with the high-stakes disputes that define its caseload. The 2026 revision should be read as the beginning of that project.