Commercial Mediation: It’s just good business

“My company is often embroiled in legal battles that end in expensive litigation and drag on for many years. Legal disputes are part of our business environment, yet it would be nice if we could resolve some of these disputes faster. I’ve heard about mediation, but am not sure if this would just be delaying the inevitable litigation to follow?”

Businesses around the world are increasingly opting for mediation as a method of commercial dispute resolution. Likewise in South Africa, there is a substantial scope for mediation to become a real solution for businesses to resolve their commercial disputes. In fact, in Africa, mediation is generally a deeply rooted element of tribal community structures and it makes sense that these traditions also pervade our commercial dealings.

The structure of the commercial mediation process offers parties the opportunity of resolving their disputes as well as saving a business relationship. The parties come together to try, with the help of a skilled mediator, to resolve their differences before formal legal or arbitration proceedings are commenced. This leaves room for a viable business relationship to survive the dispute, which, once parties come to formal legal blows, is often no longer possible. 

Good corporate governance demands that company directors ensure that disputes are resolved as effectively and efficiently as possible and commercial mediation can provide options for parties generally not available through litigation or arbitration and so contribute to good governance. Likewise the new Companies Act also encourages the use of mediation by providing for alternative forms of dispute resolution in respect of company affairs, including the use of mediation.

With litigation becoming increasingly expensive and time-consuming, and arbitration results often ending back in court for review, legal practitioners are being forced to look at alternative ways of assisting clients to resolve their commercial disputes, with mediation increasingly coming up on top. 

The success of commercial mediation in countries like the USA, Canada and Australia can generally be attributed to the benefits that commercial mediation holds for parties, such as the ability to undertake the process voluntary, confidentially and without prejudice to any of the rights of the parties. It also affords parties greater control over the outcome of the proceedings. Given its voluntary nature, it is non-binding unless the parties reach a joint settlement agreement. The process allows the parties, with the help of a skilled mediator, to deal with their issues and raise their respective commercial interests to try and reach a joint resolution to their dispute. This allows the possibility of a continuing business relationship as well as an agreed solution that works for both parties. If mediation does not work, the normal remedies still remain open to the parties, but given the lower costs and risks relating to mediation, it is an option well worth considering.

Accordingly, to address you concerns regarding your company’s current litigation history, it may be worth referring a dispute to mediation and assessing the outcome thereof against your current litigious approach, costs and time in managing your commercial disputes.

October 13, 2015

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