Resolving disputes between businesses through mediation

Mediation in disputes between businesses is intended to provide an efficient and convenient solution when parties to a business relationship cannot agree on a substantive professional issue, and their disagreement burdens the business or their relationship.

Differences and disagreements are familiar in business. Sometimes the issue is simple, such as a dispute over share value or whether a transaction with a third party is worthwhile. A simple disagreement that is not resolved quickly can grow into a large, troublesome conflict with dangerous consequences. Business mediation can address that escalation.

A dispute between partners or businesses is common and often complex, usually accompanied by intense emotions and considerable unpleasantness. In more serious cases, it can end the business relationship and cause damage on both sides.

The emotional burdens accompanying business disputes have many causes: fear of damage to image and reputation if clients and suppliers learn of the dispute; fear of losing investments built up over many years; hurt at the feeling that someone close has betrayed a relationship of trust; and more.

Business mediation has become increasingly popular in recent years as it has become accessible to the public and the business community. There is growing recognition that it is not merely an alternative to litigation but the first choice before going to court, because it offers substantial advantages to businesses, not only to social or family matters such as divorce, as was once thought.

A business dispute may be brought to mediation on the parties’ own initiative or on the recommendation of a court.

What are the advantages of resolving business disputes through mediation?

Resolving disputes between businesses through mediation offers an attractive alternative to litigation for settling disagreements between a business and a supplier, a business and a customer, or partners in a business.

Mediation is conducted with an experienced mediator, sometimes a team of mediators, through mutual communication, respectful dialogue and a shared effort to reach agreement. This avoids the complexity, antagonism and financial cost of managing the dispute through the judicial system.

In many cases, mediation can prevent escalation and spare all parties the distress caused by a rupture in the business relationship. Sometimes simply avoiding damaging litigation is enough to lower tensions and help the parties reach an agreed solution.

In court, parties concentrate on legal arguments and accusations against the other side in order to “win.” In mediation, they resume talking to one another and, with the mediator’s help, rebuild trust and develop creative solutions that sometimes surprise even themselves because of their win-win advantages. Since a dispute can often end with a return to new business, sometimes together, mediation is regarded as one of the most effective and productive ways to resolve business conflicts.

How does mediation of a business dispute work?

Mediation between businesses takes place with a mediator or a team of mediators through intensive rounds of meetings.

The first stage is a joint meeting attended by the mediator and representatives of the businesses involved. Each side presents its position and its arguments against the other.

The second stage consists of separate discussions between the mediator and each business’s representatives. The mediator hears the parties’ arguments again, while allowing them to say things they do not wish to raise in front of the other side. This is an excellent opportunity for each party to examine its position with the mediator, focus on its legitimate interests and let go of arguments that obstruct a solution.

At the third stage, another meeting is held with the mediator, in which the parties work on developing several solutions and identifying the best one. They set aside the question of “who is right” and respect the other side’s positions. This increases the chance of bridging their differences and resolving the dispute in a way acceptable to everyone.

If agreement is reached, the mediator records it in a mediation agreement detailing all understandings and conditions for settlement. All parties sign it, and it is then submitted to the court to obtain legal effect.