Financial Times

Mediating business disputes - the way forward

A dispute resolution process which has gained international acceptance for the settlement of business disputes is mediation. It is quick, inexpensive, leads to a mutually acceptable settlement, and does not involve the ordeal associated with litigation. A mutually acceptable settlement is one that satisfies the needs and interests of the parties, based on the facts relating to a dispute. On this basis, the parties agree that the dispute should be resolved in a particular way. If one party's interests have been affected more than that of the other, any settlement will have to reflect this reality.

During mediation, employee-representatives of the parties describe the background to the dispute, identify the disputed issues, consider ways and means of resolving the issues, and endeavour to reach an agreement under the guidance of the mediator, who is a professional from the business sector. Mediation is an informal and friendly process and even the proceedings are not recorded to maintain confidentiality.

The Commercial Mediation Centre of Sri Lanka was established to conduct proceedings for the settlement of disputes by mediation. It is a joint initiative of the Ceylon Chamber of Commerce, the Ceylon National Chamber of Industries, the Federation of Chambers of Commerce and Industry of Sri Lanka, the National Chamber of Commerce and the Ministry of Justice.

The process begins with one party making an application to the Centre. It takes no more than five minutes to fill the prescribed application form. The applicant has to furnish the contact details of the parties, a brief description of the dispute in two or three lines, and the value of the subject matter in dispute.

One of the unique features of mediation is its voluntary nature. The two parties have to agree to resolve the dispute by mediation. There is no compulsion on either party to participate in the process. This is because the process requires the parties to work together to resolve their dispute. Once two parties agree of their own free will to resolve the dispute by mediation, they will adopt a cooperative problem solving approach in their negotiations.

Why should a party propose to mediate a dispute? A party involved in a dispute can choose mediation, arbitration or litigation to resolve it. Arbitration and litigation require the assistance of lawyers, are adversarial in nature, time consuming and expensive. Mediation is easy to initiate, quick, inexpensive, private and confidential, and non-adversarial in nature. It is also a process where the parties are in full control of the resolution of the dispute. In the circumstances, mediation should be the obvious choice to resolve a business dispute. In proposing to mediate a dispute, a party signals its willingness to settle the dispute through discussion and consensus.

Why should the other party agree to mediate the dispute? Mediation provides an opportunity for both parties to discuss the issues in a responsible and meaningful way, under the guidance of a neutral third party from the business sector. The mediator's business sense will enable him to ask the right questions and get to the crux of the dispute in a short time. He will then work with the parties, and guide them towards a resolution of the dispute, on their terms, without expressing any opinions of his own.

The process will reveal to each party their strengths and weaknesses in relation to the claim involved in the dispute. In many instances, the process itself shows the way forward to the parties and that is why it is necessary to accept the offer to mediate a dispute and participate in the process.

It is important to note that even if the mediation fails, each party will now know whether it can succeed in litigation or not and this will act as a deterrent to litigation. On the other hand, If the parties declined to mediate the dispute, in the first instance, one of the parties would have taken it to court, forcing both parties to spend their time and money unnecessarily until the conclusion of the case .

Therefore it is in the interest of both parties to mediate a dispute first. Parties contemplating legal action should first consider mediation, particularly in disputes involving a vast amount of documents, a series of transactions, a range of issues , complex technical issues, etc. The advantage here is that parties can directly talk to each other on matters within their knowledge, instead of relying on the costly exercise of first briefing their lawyers, filing plaint and answer, following court formalities, and attending numerous hearings etc. Even if mediation fails, the process would help to resolve some of the issues and narrow the scope of the dispute for purposes of litigation.

(Ceylon Chamber of Commerce)