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Using mediation to resolve commercial disputes

BY JACOB MUTEVEDZI

Mediation is an informal dispute resolution mechanism in terms of which a neutral intermediary, commonly referred to as the mediator, helps the parties to conclude a settlement of their dispute. Unlike other dispute resolution methods, mediation seeks to enable the parties to reach a resolution based on their respective interests. Mediation has received plaudits for being an efficient, confidential and affordable mechanism of resolving disputes while preserving and, occasionally, even improving the relationship of the parties involved.

The discipline of mediation originated from traditional community practices found in most countries around the globe. According to Chia, Lee-Partridge and Chong (2004) Vol. 21 Conflict Resolution Quarterly, these primordial mediation practices often depended on a revered community leader who would provide guidance based on community values and convince the belligerents to resolve their disputes amicably. The traditional practice of mediation has been documented in Burundi, Albania, China, Japan, the Philippines, the Republic of Korea and Singapore.

Bühring-Uhle, Kirchhoff and Scherer (2006) assert that mediation played a critical role in the development of legal systems in Rome and Anglo-Saxon England. A primitive version of judicial mediation appears to have been the preferred method of resolving civil disputes in ancient Rome. This old-fangled mediation had a significant influence on the development of civil procedure in Europe. In Anglo-Saxon England, even after delivering their judgements on the merits, the courts urged litigants to hammer out settlement agreements. The practice of mediation was relied upon in these antique legal systems to maintain ongoing relationships between litigants and to achieve amicable and lasting settlements.

In most western countries mediation services and laws were developed at the dawn of the 20th century to cater for increasing labour disputes. In his work, Labour Administration: Origins and Development (1969) Wallin says that 19th and 20th century labour confrontations were usually disruptive, expensive and violent. To rectify the problem, governments put in place labour conciliation services and statutes. Such platforms and the enabling laws facilitated the widespread use of mediation as a dispute resolution method between labour unions and employers.

This type of mediation enjoyed epic success since it provided the requisite administrative framework to settle labour disputes quickly and amicably on a scale that had not been experienced up to that point.

In modern times, mediation is a process where a neutral person called a “mediator” assists the parties to attempt to reach a mutually acceptable resolution of the dispute. The mediator’s role is not to decide the dispute but to assist the parties to communicate with a view to settling the dispute themselves. Control of the outcome is left to the parties.

To work properly, mediation requires parties to be adequately prepared for and committed to the process. A skilled mediator will also guarantee success. With these conditions present, mediation can flourish as an effective tool for resolving disputes. The process focuses on the real interests of the parties, not their contractual or legal entitlements. Mediation is not a legally-binding process. It is a voluntary process, and mediators do not have the power to impose a binding outcome on the parties. It should therefore be seen as supplementary to and not as a replacement to a binding process, such as arbitration.

The chief characteristics of mediation are discussed below.

It is non-binding

A party to mediation cannot be compelled to accept a result which it does not like. While courts and arbitral tribunals are empowered to make decisions, the mediator lacks similar clout. His ultimate role is merely to help the parties to reach a settlement.

Such is the control that parties have over mediation that even if they agree to submit to it, they are free to ditch the process at any time if they feel that its continuation does not serve their interests. In practice, however, parties are usually willing to participate in the process to its logical conclusion once it begins.

Once they decide to see the process through, the parties have the power to determine how it should be conducted.

It is interest-based

Invariably, in most dispute resolution methods, the result of a matter is determined by the facts and the applicable law. The outcome of mediation is determined by the parties’ business interests. Therefore, parties have the latitude to craft a result which primarily seeks to preserve future business relations.

When parties focus on their interests and discuss them, the result is a resolution that creates far greater value than would have been realised if the underlying dispute had not occurred.

On account of its non-binding and confidential nature, mediation involves little risk while reaping substantial gains for the parties. It has actually been claimed that mediation never fails because even if the parties do not settle the matter, they get an opportunity to define the facts and the issues. Thus failed mediation serves as a sort of pre-arbitral hearing for subsequent arbitration or as a pre-trial conference for ensuing litigation.

It is confidential

The old American saying applies, with equal force, to mediation. What happens in Vegas stays in Vegas. Confidentiality lies at the heart of the mediation procedure and plays a vital role in ensuring a successful resolution.  The parties crave the comfort of knowing that they can share sensitive information during the process if such intimate disclosure is necessary to ensure that their true needs and interests are met, without risk of subsequent exposure to their prejudice.

In mediation, the parties are not obligated to divulge information that they wish to keep confidential. The very existence of the mediation itself and the result is a confidential matter. This privacy and confidentiality inspires confidence in the parties and facilitates more liberal and productive engagement. Confidential information or admissions disclosed during arbitration cannot be divulged in subsequent court litigation or arbitration.

Conclusion

The participation of legal counsel is important in mediation; however, the emphasis is on counsel’s collaborative and communication skills rather than advocacy skills. Counsel must resist the temptation to cross examine and focus on conciliation and cooperation. The ultimate goal is to reach a mutually beneficial outcome and this requires an understanding of all the parties’ interests not just the interest of one side.

Lawyers’ presence in the mediation will defeat the entire process if their clients do not understand the mediation process and believe that their lawyer is present to advocate for them or, worse, to bludgeon the other party into submission. Counsel must resist the tendency to hijack their client’s case and argue fiercely. Equally, clients must resist the proclivity to allow counsel to commandeer their case. This is not appropriate in mediation. Once the mediation reaches the point of seeking solutions, counsel’s mastery of the law comes in handy to assist in finding mutually satisfactory and legally effective solutions.

  • Jacob Mutevedzi is a commercial lawyer and arbitration practitioner. He can be contacted on jmutevedzi@gmail.com, on Twitter @jmutevedzi_ADR and on +263775987784. He writes in his personal capacity.

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