Mediation is generally very well suited to address joint venture or partnership disputes, for a number of reasons. The mediation process is voluntary, so there is some desire from the parties to resolve their issues in a practical way and they are usually invested in exploring solutions. The process of mediation is also without prejudice, so any offers, concessions, thoughts or demands can be made in the knowledge that parties are not held to anything until everything is agreed, reduced in writing to a settlement agreement and this remains the only record of the mediation.
Partnership disputes are about the breakdown of commercial relationships. As in any relationship breakdown difficult messages are likely to have been conveyed between the parties and there may be a high degree of mistrust and negative feeling affecting the parties’ ability to communicate with one another. The mediator is neutral and neither takes sides nor offers advice (the parties are free to take legal advice to inform their positions, at the mediation). The mediator “shuttles” between the parties, in their private rooms, to convey offers or demands. This facilitates a commercial discussion of all the presenting issues, with both parties compromising their positions to a degree, which in the majority of cases leads to a comprehensive settlement at the mediation.
Mediation can help re-calibrate relationships and restore trust where negative assumptions may have led to distrust or angry feelings. It is much easier to use the mediator to convey difficult messages and explore misunderstandings, than for the parties to do so face to face. The mediator shares information – always with the parties’ consent – in a strategic manner so as to find common ground and build consensus.
Finally, mediation is a practical and business-friendly process. Bringing a legal claim through the court process is expensive and takes up vast amounts of management time. In contrast, mediation offers the parties the opportunity to do a deal on the day. This saves on legal fees (including their risk of paying some of the other side’s costs in litigation) but also frees the parties up to go back to business and look forward in a constructive manner. Partnership disputes often involve a number of parties and the cost and management time of litigating such disputes can become a disproportionate burden for the parties, with attendant risk.
In mediation, the parties retain control of the outcome of any settlement agreement they are able to reach on the day. They are not confined to litigation pleadings and can bring in wider commercial considerations, which can create value without necessarily requiring one person or organisation “putting their hand in their pocket”. Mediation is therefore a sensible, safe and relatively quick way of resolving even the more intractable disputes, without necessarily losing the commercial relationship or continued course of dealing between the parties. Given that most mediations settle, there is little to lose in attempting mediation early on and before relationships break down irretrievably, in partnership disputes.
Eve Pienaar, LCAM Mediator