Hill & Associates
6 chemin du Port-Noir, CH-1207 Geneva, Switzerland
Tel.: + 41 22 840 1021, Fax: +41 22 840 1025
E-Mail: email@example.com http://www.hill-a.ch
Finding win-win solutions that
benefit both parties in a conflict
"That war is an evil is something that we all know,
and it would be pointless to go on cataloguing all the disadvantages involved in
it. No one is forced into war by
ignorance, nor, if he thinks he will gain from it, is kept out of it by fear.
The fact is that one side thinks that the profits to be won outweigh the
risks to be incurred, and the other side is ready to face danger rather than
accept an immediate loss." Thucydides,
circa 400 B.C.
What is Mediation?
Mediation and conciliation are voluntary, non-binding
processes using a neutral third party to guide the parties towards a mutually
beneficial resolution of their dispute. Unlike
an arbitrator, who can impose a decision, the mediator helps the parties to
decide for themselves whether to settle and on what terms. The key feature of mediation is the belief that settlements
should be brought forth from within by the parties themselves, not imposed on
them from the outside. This is akin
to Michaelangelo's approach to sculpting: he claimed to do nothing more than to
free the figure that he saw imprisoned in the block of marble, although the
situation is more dynamic in mediation and the agreement that finally emerges
may be surprisingly different from the one the parties and the mediator first
Why use Mediation?
Thucydides' words apply equally well to business disputes
that degenerate into fiercely contested, expensive, and prolonged lawsuits.
All parties know that such legal proceedings have disadvantages, but are
willing to engage in them because they believe that the ultimate outcome will
outweigh all the disadvantages. In
many cases, the parties are correct to pursue disputes to their ultimate
conclusions in court; in other cases, however, alternative dispute resolution
mechanisms, in particular mediation, may be better alternatives.
In many situations, disputing parties can find negotiated
solutions that benefit each party more than the best possible outcome of
litigation. Real business
situations are rarely zero-sum games like chess or territorial wars: by
cooperating, business partners can expand their markets and reap mutual
benefits. Imagine how many goals a
football team could score if it could persuade the other team to cooperate!
It is sometimes implied that mediation can only be used
before the beginning of court or arbitration proceedings, as a last-ditch phase
of negotiations. This is not
correct. While mediation can, at
times, help to resolve disputes before they are litigated, mediation is often
used to resolve them during the course of litigation, before the final award is
rendered. Indeed, mediation can
also be used at the early stages of arbitration to help negotiate Terms of
Reference, to resolve disputes regarding procedures, and to narrow differences
between party-appointed expert witnesses.
Parties may often feel that court proceedings are the
only solution when the dispute arises in a zero-sum situation: there is a
fixed-size "cake" to divide up, and each party would rather have a
bigger slice than a smaller slice. Such
situations arise, for example, in case of bankruptcy or in case of cancellation
of a licensing agreement. However,
it must not be forgotten that the legal fees associated with court proceedings
reduce the size of "the cake", in some cases very significantly.
So, even in a zero-sum situation, it might be better to rely on a
dispute-resolution mechanism that is less expensive than litigation or
arbitration. Mediation proceedings
typically last only a few days and costs are very small compared to the costs of
litigation or arbitration.
Mediation is eminently sensible in the following cases:
the parties can benefit by continuing to do business together after the dispute
one of the parties wishes to maintain or to enhance its public reputation as a
good business partner.
the cost of litigation or arbitration will be high.
the dispute centers around complex factual issues.
Factual issues can often be better appreciated by business people
familiar with the industry than by lawyers or judges.
neither party requires a determination of legal issues. If a determination is required, arbitration or conventional
court proceedings are appropriate. However,
in some cases, lawyers do not agree on the correct legal analysis (just as their
clients often do not agree on the factual issues) but are willing to allow a
mediator to help them find a compromise position that is mutually acceptable.
Mediation is based on the idea that, by probing for
underlying business interests and listening carefully to what the parties have
to say, the mediator can help the parties to discover creative solutions to the
dispute, often allowing all parties to find benefits unavailable through
litigation or arbitration. Parties
work together to "make the pie bigger".
What are the Characteristics of Effective Mediations?
Mediation involves people, and the interactions between
people. Like most fields that
involve people, there is no single "best" way to do things or to get
results. Just as there are many
different effective management styles, so there are many different effective
mediation styles. However, no
mediation can be effective without the following:
presence of party representatives with the authority to negotiate a settlement.
Contrast this to so-called mediation procedures where parties are
represented exclusively by external counsel.
willingness of the parties to find a solution outside the courtroom.
Sometimes, only one party is keen on mediation at the outset, and must
"sell" to the other party the benefits of mediation.
In many cases, a neutral mediation institution is in the best position to
convince the parties that mediation is worth trying.
In countries with extensive experience of mediation, the
settlement rate is about 90%, with a vast majority of settlements obtained
within thirty elapsed days, after one to three days of mediation.
In the words of one Swiss mediation center: "the mediation process
is a resounding success from the user's point of view: disputes are resolved
rapidly and at low cost."