Mediation For Fair Business

Business entities perform critical role in economic growth and development in the today’s globalised world. Whether the entities are state-run or private, they often encounter conflicts in the process of their operation and expansion. Bigger the size of the corporate entities, the more likely they are prone to get involved into complex issues and conflicts. The disputes may occur with the parties both from inside and outside of the business entities.  The business firms are likely to get involved in disputes with suppliers, customers, competing business houses, or own business partners or employees and other stakeholders including regulatory authorities. Moreover, business entities have to operate and function in a tough competitive environment. They are supposed not to waste their time in being entangled in the unproductive and frivolous actions. 

Whether the business entities are big or small, they have earmarked, if not limited resources within which they are mandated to operate and carry out transactions. This means that  businesses should take wise decision with a view to ensure that they can make best use of resources and opportunities to stay robust and competitive without wasting their time and resources in conflicts of one or other kinds. 

Contentious issues

When it comes to resolving disputes and contentious issues, business entities should opt to take recourse rather to amicable mode of dispute resolution than expensive and time-consuming litigation. According to Carmelia Denicola, a business dispute resolution expert, business entities should not allow disputes to linger on and attempt to ensure that conflicts are resolved in an amicable way. Business entities need to take cognizance of the fact that disputes not only take away resources but also bring disrepute to the firms as well. 

As court litigations harm the business entities in monetary terms, they also make bad news costing on the credibility and creditworthiness of the corporate bodies. They are, therefore, advised to go for non-adversarial forum of dispute resolution in case disputes and conflicts occur. Mediation is one of such important dialogic tools for business dispute resolution because it offers gain-gain outcome to the business entities   concerned. The most important part of the mediation is that it is conducted, processed and facilitated in a safe and confidential manner. Mediators are under an obligation to maintain confidentiality and privacy and it thus offers indirect reputational benefits to the business firms. 

In fact, business mediation proceedings are largely kept confidential, which means that business or trade secrets, product pricing, employment policies, marketing strategies, and so on, will not come out in the open, as they most likely be in litigation. Needless to say, when a conflict occurs, the employees, vendors, customers, financiers, and other stakeholders are usually closely watching how the business owner handles the conflict. Choosing mediation to resolve the dispute in a collaborative manner demonstrates the maturity, commitment and focus of the business owners towards the best interests of all stakeholders and the consumers. Business entities may have to tackle such as payment related disputes, contract disputes and so on. 

Businesses entities often sell goods on credit to their customers, and payment is made once the customer has received the delivery of goods. Payment terms might include credit for certain duration. If the customer fails to repay the full or partial amount on due date, a dispute may arise. A seasoned business mediator will help both the seller and the buyer share documents and facts related to the shipment, the quantity and quality of goods, and the terms of payment. If the quality or quantity of goods is lower than what was agreed upon, the seller may offer a discount to the buyer. If the buyer has a financial difficulty in making payment, the seller may accept payment in instalments. The business mediator can help both parties explore all options to meet on some common ground and settle the dispute.

 Similarly, written or verbal contract lies at the core of any business transaction between two parties. The contract contains all the terms and conditions that both sides must fulfil once the contract has been signed. Stemming from this, when one party fails to fulfil one or more conditions, a dispute may arise. For example, in a construction business, a dispute may arise between the builder and general contractor or the contractor and sub-contractors. Similarly, a contract disputes may occur between a manufacturer and an authorised distributor or dealer (wholesaler or retailer).

Fair settlement

A knowledgeable mediator with experience in handling different types of business and commercial disputes who has a fair understanding of how these businesses work and the typical nature of disputes that occur in these industries may help resolve disputes in fair manner. The mediator can facilitate both sides to find a resolution by arriving at a compromise because the alternative of bitter litigation may be detrimental to their own business interests. A skilled and experienced business mediator can thus facilitate the process of dispute resolution   in a relatively quick and fair settlement. In a successful mediation, both parties will leave with a signed agreement, or at the minimum, a signed memorandum that spells out what the disputing parties have agreed upon.

Sometimes mediation may not immediately result in a settlement; both disputing parties would still have made progress on understanding the other side’s position. That could reduce the conflict and pave the way for further meetings, dialogue and negotiations to resolve the dispute. It will be in order to take note of the fact that the mediation act 2011 and other relevant legal instruments in Nepal intend to promote mediation to resolve, among others, commercial disputes. Likewise, Singapore mediation convention focuses particularly to help resolve cross border commercial disputes and enhance their enforcement in transborder jurisdictions. 

(The author is presently associated with Policy Research Institute (PRI) as a senior research fellow.  rijalmukti@gmail.com)