Mediators Post

Benefits of integrating mediation into the business process for various commercial aspects

Gandha Sahu

Author’s name: Capt.Pankaj Kumar

Profile: Accredited mediator, Master Mariner

Location: Kolkata

Dated 11th June, 2020

The present pandemic situation has created havoc, and due to prolong lockdowns, the business has suffered a lot. Coronavirus has caused a slump in demand to the lowest level, and still, it is unknown when the market will improve. The need of the hour for any business entity is to survive and to take the profit graph in the upward direction. Therefore it becomes crucial to maintain strong bonding with the clients.

The organizations may have a dispute with their clients. And they will try to resolve the conflicts through commercial settlement. Or just write-off any loss, instead of engaging in money and time-consuming Litigation process.

Litigation is one of the settlement processes. And it is known for its lengthy and expensive process to reach for a solution. There is no surety in Litigation that there will be the desired outcome. But there is a surety that the relationship with other parties will be spoilt. And ultimately, it will result in the loss of commercial interests and bad publicity.

The other option can be through an alternative dispute resolution mechanism. The most preferred alternative means is Arbitration. It is well established and commonly used in the corporate sectors and shipping Arbitration is one of the prime examples. Arbitration is considered to be a quick and economic mechanism. But in reality, the fact says something else. The Arbitration Tribunal has to receive several submissions from various affected parties and then adjudicates on the matter and finally produces an award. The outcome of Arbitration is similar to Litigation, in which one party loses and other wins.

A better alternate mechanism is mediation or negotiation. Mediation can be used for two different aspects in the commercial process, namely pre-litigation mediation, and commercial deal mediation.

1) Pre-Litigation Mediation: In commercial dispute mediation the disputant parties appoint a neutral mediator. And the appointed mediator facilitates the parties to explore various possibilities for the solution, and ultimately to reach a conclusive decision by themselves by keeping their interests intact. The unique advantage is that parties retain control of the settlement. The role of a mediator is limited to guide the whole process, and not to pass any judgment like in court or arbitration cases. Rather, he facilitates identifying core issues, making the priorities crystal clear, and keeping the whole process on track. The parties tend to deviate from the set course. And mediator brings back the off-course process and steers in the right direction. During the negotiation, parties can be represented by themselves or by an expert or a lawyer. The whole mediation process works on the interests of the involved parties. Therefore it envisages a WIN-WIN result rather than a winner-loser outcome.

Pre-litigation mediation has been proven to be successful in Italy. The parties must attend one session of pre-litigation mediation and can continue to resolve their conflict. Or parties can opt for a court trial if they are not satisfied with the trial mediation process. In India, it’s still voluntary. But law professionals are increasingly becoming vocal to make the pre-litigation compulsory.

Commercial Deal Mediation: It is one of the most promising sectors and normally used for international deals by an expert. The domestic business players should be encouraged to take the service of a professional deal mediator. The neutral mediator identifies the common ground of interest between two business organizations and looks for their mutual benefits. And ultimately add values in their final transaction. This facilitated negotiation is interest-based rather than position-based, and hence it will stand in the test of time.

2) The industry has begun recognizing mediation as a better and effective option. And the mediation clause now increasingly appears in the commercial contracts, as it offers timely resolution, confidentially, and considered to be a cost-effective mechanism.

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Capt Tarique Khan

Capt Pankaj, as you correctly mentioned, litigation is time-consuming, expensive, and most importantly creates havoc on the emotions of people. ADR is here to stay and the benefits need to be portrayed on a global scale. Nice article - worth reading.

Satyam Gupta

Integrating mediation into the business in a nice concept gradually it may become common features in the business deals and for the pre-litigation process.

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