DISPUTE SETTLEMENT – COMMERCIAL / BUSINESS

What’s In It For Business?

 

Both in South Africa and elsewhere (e.g. certain other parts of Africa, the UK, USA, Canada, Australia, Asia, and the EU) mediation is increasingly being used as a more effective means of resolving disputes, simply because mediation offers advantages:

  • Preservation of an on-going business relationship or termination of a relationship in a more amicable way – a mediated settlement that addresses all parties’ interests. People in conflict tend to take up rigid positions and resort to communicating with the other party via their attorneys. This often leads to misunderstandings arising due to the chain and lack of intimate knowledge of the case by the attorneys. The face-to-face meeting, which occurs at the joint session allows open communication directly between the parties that is controlled by the mediator;
  • Comprehensive and customised agreements – solutions can often be more creative and wider in scope than could normally be achieved through legal process. People who believe they are in the right, very often become self-righteous and get an inflated perception of their case. The careful analysis of the dispute, which takes place in the private meetings, serves to put the case into perspective, whereby the mediator will get the party to view the case from the other party’s point of view;
  • Greater degree of control and predictability of outcome – parties who negotiate their own settlements have more control over the outcome of their dispute and more personal empowerment in the resolution. Mediation is voluntary, and without prejudice. It also has no formal rules of procedure, so the mediator can use the process flexibly to suit the circumstances of the dispute;
  • Rapid settlements – in an era when it may take as long as a year for a case to proceed to court and multiple years if a case goes to appeal, the mediation alternative often provides a more suitable option. People do not like being in conflict. It is worrying, time consuming and a drain on both financial and management resources. Mediation sessions can be set up very quickly – within days if necessary – unlike the judicial system or arbitration. In commercial disputes it can be most important that the dispute is settled quickly in order that the normal flow of business continues;
  • Mutually satisfactory outcomes – as solutions are agreed rather than imposed by a third party decision maker;
  • A higher rate of compliance – as a result of the satisfactory outcome, parties are more likely to comply the terms of the solution ensuring that the agreement remains intact over time;
  • Huge Cost Saving – This is a fairly obvious and major advantage, because cases can be settled quickly and therefore legal and management costs are kept to a minimum.

Research in the UK revealed that roughly 60% of commercial disputes that are referred for mediation are resolved on the day of the mediation with a further 20% being resolved within two months of the mediation intervention. Those that do result in litigation are usually the ‘hard core’ cases where multiple parries are involved or a precedent is called for.

 

“Taking Care of Business”