Four Mediation Principles and the Jalebi-Fafda Analogy
A case was made mirroring the real-world tensions so that students learn the ways to resolve them. It focused on energy policies, foreign investments, and sovereign authority. Aurora Renewables had invested USD 420 million in solar infrastructure under a framework that guaranteed a fixed tariff and payment in euros for 25 years. Kalmora’s unilateral actions destroyed Aurora’s revenue model:
- A 35% retrospective tariff reduction, converting all payments to Kalmora’s local currency, exposing Aurora to severe foreign exchange losses.
- Repeated unannounced inspections, delayed regulatory approvals, and selective curtailment of Aurora’s output while state-owned enterprises received preferential treatment.
- A Most Favoured Nation (MFN) violation: domestic players received renegotiated Power Purchase Agreements on preferential terms while Aurora bore market risks unilaterally.
- Aurora’s total financial claim: USD 385 million covering NPV losses, foreign exchange indemnity, contingent carbon credit rights, and regulatory compliance costs.
Four Mediation Principles and the Jalebi-Fafda Analogy
Both mediating teams established ground rules anchored in four foundational principles. Voluntariness: both parties participate by free will and are accountable for every word. Confidentiality: all discussions are strictly private, no recording, nothing leaves the room. Neutrality: mediators hold no personal interest and favour neither party. Party Autonomy: each party retains full responsibility for their choices, and nodding does not constitute agreement.
The analogy that captured the spirit: mediation is like Jalebi and Fafda. Totally different in taste, one sweet, one sour. But when they come together on a plate they create the most beloved combination. Mediation brings two different minds together like that.
Caucus: What Each Side Revealed Privately
After the joint session, the mediators conducted private caucuses to understand each party’s true priorities and reservation positions. Aurora revealed its primary concern was cash flow restoration from the tariff cut, followed by compensation for regulatory obstruction and international default penalties. Its stated settlement position was USD 260 million, a 35% reduction from the original claim, contingent on tariff reinstatement and regulatory reform. Privately, Aurora signalled willingness to accept as low as USD 240 million if meaningful structural reforms were guaranteed..
Kalmora acknowledged its economic constraints but expressed genuine willingness to adjust the tariff framework incrementally and improve approval timelines. The session concluded without a signed settlement, but both parties had meaningfully moved toward each other. The process was left on constructive ground. As one participant noted: a solar panel does not generate power because the sun shines once. It generates power because the sun shines predictably, day after day, year after year.
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FAQ: PIMC 2026 Final Round
What was the PIMC 2026 final round dispute?
Aurora Renewables (Netherlands) vs Kingdom of Kalmora. USD 420 million solar investment under a 25-year fixed tariff. Kalmora unilaterally cut tariffs by 35% and forced currency conversion. Aurora claimed USD 385 million. Through mediation, both sides moved toward a USD 240-260 million settlement range with structural reforms.
What is caucus in mediation?
A private meeting between the mediator and one party, separate from the other. What is discussed in caucus is confidential unless the party permits disclosure. It allows each side to reveal true priorities, reservation positions, and flexibility that they would not share in joint session. Used extensively in PIMC 2026's final round.
