Being in business isn’t always plain sailing – sometimes, despite all your best efforts, you can end up in a dispute with a customer, a supplier, an employee or even a competitor.
Some of the most common commercial disputes include breach of contract, breach of fiduciary duty, intellectual property infringement, breach of confidentiality, non-payment or non-performance and issues with manufacturing and supply of goods.
When the other party has failed to keep their side of the agreement, this can put a strain on the relationship. However, you don’t necessarily need to get your lawyers involved immediately, as you may be able to resolve the issue through mediation.
This blog will explore what mediation is, why dispute resolution services can be a great alternative to legal claims and the role of mediation in commercial disputes.
What is Mediation for Commercial Disputes?
Mediation, also known as alternative dispute resolution, is a process entered into voluntarily by two (or more) parties to try to resolve conflicts. Alternative dispute resolution uses mediation rather than the disputing parties ending up in court. Mediation is facilitated by a mediator who is impartial with no prior connection to the people or the problems that require resolution.
What does a mediator do?
A mediator in commercial dispute resolution is a neutral third party who facilitates communication and negotiation between the conflicting parties to help them reach a mutually acceptable resolution. Mediators do not provide legal representation or advice to either party but aim to help parties to reach an agreement on the way forward.
A business dispute lawyer, on the other hand, is a legal professional who provides legal advice to the client and represents them in court. Business dispute lawyers may also act as mediators, but usually, they would not be operating in both capacities on the same dispute as this could create a conflict of interest.
Here are six ways in which a mediator can assist in commercial dispute resolution:
1. Facilitating communication
Acting as a bridge between the parties, the mediator ensures effective communication, helping to overcome any communication barriers or misunderstandings. Mediators create a safe and constructive environment for dialogue.
2. Identifying issues and interests
The mediator helps the parties identify the underlying issues and interests that are driving the dispute. This facilitates co-operation, uncovering potential areas for compromise.
3. Managing emotions and maintaining neutrality
Emotions can run high during commercial disputes. A mediator helps manage these emotions, providing a calm, reassuring and neutral presence. All parties feel heard as the mediator will maintain an impartial stance throughout the process.
4. Generating creative solutions
Mediators encourage brainstorming, assisting parties in exploring a wide range of possible solutions.
5. Facilitating negotiation and compromise
Mediators guide the negotiation process, exploring options, evaluating pros and cons, and finding common ground. They encourage compromise and assist in developing mutually acceptable agreements that meet the needs of all parties involved.
6. Drafting agreements
Once an agreement is reached, the mediator can help in drafting a formal agreement that clearly outlines the terms and conditions. This ensures that the resolution is documented and can be legally binding, providing a basis for implementation and future compliance.
The benefits of mediation in commercial disputes
Mediation offers several benefits over going to court to resolve a dispute. Some of the advantages of mediation include:
Greater control and flexibility
When you engage in mediation, you’ll have more control over when mediation sessions take place, as well as the decision-making process. You’ll actively participate in negotiations with the aim of achieving a good outcome, and you’ll find creative solutions to work towards a resolution. When you go to court, the process is much more rigid, with little room for flexibility and creativity.
Cost-effective
Mediation is often less expensive than going to court. It eliminates many of the costs, such as lawyer’s fees, court fees, and extensive legal procedures.
Time-efficient
Going to court can take months or even years, whereas mediation can be a much quicker process. You’ll have more control over the timeline, and you can work towards reaching a resolution in a matter of weeks.
Confidentiality
Your dispute will be a matter of public record if you choose to go to court. On the other hand, mediation proceedings are generally kept confidential. This can be a huge advantage for business owners who don’t want their reputations to be affected by the dispute.
Relationship preservation
As mediation focuses on collaboration and finding common ground, this can enable you to keep the relationship intact following proceedings. By encouraging open communication and understanding, mediation aims to maintain or restore positive working relationships, which is particularly valuable in commercial disputes where ongoing business interactions may be necessary.
Commitment to the agreement
When parties reach a resolution through mediation, they are more likely to comply with the agreed-upon terms. Since you actively participate in the negotiation and decision-making process, you tend to have a higher level of commitment and ownership in the outcome.
Reduced stress
Any dispute is going to be stressful, but mediation fosters a cooperative and problem-solving approach rather than an adversarial one. It focuses on understanding each party’s interests and needs rather than assigning blame or winning at the expense of the other party.
When Could You Use Mediation?
The following commercial disputes are likely to be better resolved by mediation than by going to court.
Contractual disputes
Parties can engage in open discussions, clarify misunderstandings, and explore creative solutions that may preserve the business relationship while addressing the underlying issues.
Shareholder or business partnership disputes
Mediation provides a platform for open dialogue, allowing the parties to express their concerns and find mutually agreeable resolutions, which avoids the dissolution of the relationship.
Employment disputes
Mediation is often a preferred approach for resolving employment-related conflicts, such as wrongful termination, discrimination, or contract breaches. It allows for confidential discussions, encourages understanding, and enables parties to reach settlement agreements that may include non-monetary terms like improved working conditions or training.
Intellectual property disputes
Mediation can be an effective tool when it comes to intellectual property conflicts, such as copyright or trademark disputes. Rather than suing, you could explore licensing opportunities or usage rights that protect your interests while enabling a mutually beneficial arrangement.
Supplier or customer disputes
When disagreements arise between suppliers and customers regarding contractual obligations, quality issues, or payment disputes, mediation can help facilitate negotiations and find resolutions that preserve the business relationship.
How Mediation Can Solve Commercial Disputes
Mediation is a valuable tool for resolving commercial disputes through facilitated negotiation and open communication. In a neutral and collaborative environment, mediators help parties identify common interests, explore creative solutions, and reach mutually acceptable agreements.
Communication
Open and honest communication is vital for resolving disputes. The mediation process is facilitated by a trained mediator who is skilled in creating a neutral safe space for both parties to be heard. Mediators will actively listen to each side, demonstrating empathy and understanding for each position which helps build trust.
A key skill of mediators is their ability to clarify and reframe what is being said to promote better understanding between the parties. Mediators are skilled at managing the power dynamics to enable each voice to be heard equally.
By setting ground rules and guidelines for the mediation session, a mediator can encourage constructive dialogue to move the parties closer to an agreement.
Collaboration
When you enter mediation, you’re taking a positive step towards resolving your conflict. You’re choosing a collaborative approach rather than a combative one.
Mediation empowers parties to actively participate in the decision-making process. Instead of relying on a judge or arbitrator to impose a solution, you’ll have a say in shaping the outcome. This shared decision-making approach fosters collaboration and a sense of ownership over the resolution.
By focusing on underlying interests and needs, mediators encourage parties to look for common ground rather than adhering rigidly to their positions. This shift from positional bargaining to interest-based problem-solving promotes collaboration.
When you brainstorm solutions together, you’re collaborating to develop creative alternatives that result in a win-win for both sides. Mutually acceptable outcomes mean you leave the process with respect and your relationship in a better place to rebuild.
Customisation
Mediation can be tailored to meet the needs of each party involved in the dispute by considering their specific circumstances, concerns, and preferences. Here are some ways in which mediation can be customised:
In certain situations, individual sessions can be conducted where the mediator meets with each party separately. This allows you to express your thoughts, concerns, and interests confidentially, providing an opportunity for personalized attention and tailored assistance. For example, in employment disputes, where there may be a significant power imbalance, it may be helpful for the mediator to meet with the employee on an individual basis.
In cross-cultural disputes, mediators can be mindful of cultural differences and adapt their approach to respect and accommodate diverse perspectives. This may involve providing language interpretation services, addressing cultural norms, or employing mediation techniques that resonate with different cultural backgrounds. An example of where this could be useful might be global franchise disputes where the franchisee and franchisor disagree about how the business should be run.
Mediation allows for flexibility in how the process is structured and conducted. The mediator can adapt the timing, location, and format of the sessions to accommodate the parties’ schedules and preferences. For instance, if you require additional breaks or prefer virtual sessions, the mediator can accommodate these requests.
Tips for Successful Mediation
Business owners entering mediation need to be open, honest, respectful, willing to listen, willing to compromise and actively looking for a resolution. Before you go into the mediation session, be prepared with all the facts. Answer the following questions (which can be found on page 6 of Dispute Resolution, Mediation and Facilitation guide)
- What issues are in dispute, including the facts and sources of conflict?
- What is important to you to resolve the dispute? What do you really want? And why?
- How can you communicate this information, both to the mediator and the other participant?
- What will you say at the start of the mediation to help identify the key issues and create an agenda?
- What do you think the other participant wants? How might they see the issues?
- What are some ways that the issues that concern you could be resolved? What could you ask them to do? What could you offer to do?
- What is the reality of your situation? What has the dispute cost you already? What will it cost you if it isn’t resolved? What would it cost if you can’t sort it out in mediation and have to go to court?
- What are the possible outcomes if you did go to court?
Mediation in Australia
Although there is no legal requirement for mediators in Australia to be accredited, many mediators do seek accreditation through the National Mediator Accreditation System (NMAS). Alternatively, the Dispute Resolution Training and Membership Specialists also offer an accreditation system. Mediators must pass a ‘good character’ test, have a relationship with a recognised mediator-accredited body and provide evidence of competence.
The Mediation Standards Board is responsible for the ongoing development of NMAS.
In Australia, alternative dispute resolution is often required before you can bring a case to court. You’ll need to show that you have actively participated in efforts to resolve the conflict outside the courtroom.
Using a Mediator in Your Dispute
Before you incur the expense and stress of a court case, stop to think about whether you could instead use mediation as an alternative dispute resolution option. Using a mediation professional who is an expert in facilitating mutually beneficial outcomes can save you time, money and frustration. Contact me for flexible, confidential assistance to resolve your commercial dispute on 0448 000 010, message me on LinkedIn or email me at eddie@eddiesentore.com
Read more about mediation.
