Business mediations resolve business conflicts arising from the operations of companies and entrepreneurs.
Business mediations are employed in situations where, for various reasons, the most widely used tool in business activities, namely business negotiations, cannot be applied. Business mediations are primarily a confidential and voluntary method of resolving disputes with the assistance of a neutral and impartial mediator who upholds the principles of mediation. The mediator aids the parties in effective communication, defining interests and issues for discussion, and in finding the most advantageous agreement for all parties involved.
In business, the basis for initiating mediation is the existence of a dispute or conflict
that the parties wish to resolve. On the other hand, negotiations may or may not be prompted by a dispute. Negotiations are typically undertaken by parties when they are aware of a shared community of at least some interests or have common goals to achieve.
Business mediations are often preceded by negotiations.
They are typically conducted when previous negotiations have failed to reach an agreement. If, as a result of mediation, a settlement is not reached but communication between the parties has improved, and further discussions are possible, the parties may then finalize an agreement through negotiations, even after the conclusion of the mediation process.
The desire for further collaboration has a highly positive impact on the success of business mediations.
A crucial condition for the success of mediations is the mutual willingness between the parties to continue working together. The extent of mutual concessions is typically directly proportional to the parties’ interest in continuing their business collaboration in the future.
Below, I present examples of business circumstances in which business mediation can be particularly effective. I hope these cases will assist you in assessing whether engaging the services of a business mediator is justified.
Is your counterpart acting dishonestly, violating the principles of good cooperation?
The lack of timely delivery in accordance with the order or the failure to make timely payments are not uncommon situations in our everyday business dealings. Their cause is not always intentional misconduct by an unscrupulous partner. In today’s business environment, competition forces a fast-paced business pace. Along with this fast pace come misunderstandings, inaccuracies, mistakes, technical and logistical obstacles, etc. In such situations, when significant amounts of money are at stake, frustrated counterparts may seek a solution in court.
Initiating an attempt to find an agreement through pre-litigation business mediation can save time and costs.
Mediator will focus on resolving the following types of conflicts:
- relationship conflict – the mediator will assist the parties in conducting calm, collaborative, and substantive discussions, ensuring balance in negotiations,
- data conflict – during business mediation, both parties will have the opportunity to calmly exchange their knowledge, information, and assessment of the situation.
- conflict of interests – the mediator, together with the parties, will focus on finding common ground among opposing interests, which could serve as a starting point for constructing a future agreement,
- structural conflict – achieving an agreement usually requires a good understanding of the overall situation of the opposing party, especially its technical capabilities, available resources, organizational structure, and existing business priorities. Lack of such understanding leads to structural conflict. The mediator’s role is to facilitate better mutual understanding of the businesses conducted by the parties.
.
Do you want to exit the partnership on the most advantageous terms possible?
Entrepreneurs often describe their businesses as their children. This metaphor illustrates their emotional attachment to their entrepreneurial activities. Assuming that business collaboration in the form of a partnership also involves emotions, it must be acknowledged that these emotions can resemble a kind of “marital” relationship between partners. Partner relationships go through various stages, depending on the phases of the business’s development, and are full of “ups and downs.” The formation of a partnership is usually preceded by plans designed to bring success to all participants. However, reality sometimes challenges these plans, necessitating significant changes. Changes in plans do not always garner the support of all partners. Some may see the future of the partnership differently, and others may wish to withdraw. As a result, conflicts of interest can arise among the partners.
In such complex situations, business mediations conducted by an experienced mediator prove to be very helpful. The involvement of a mediator in negotiations between partners allows them to focus on substantive issues. A business mediator, as an external party with a so-called fresh perspective, unburdened by the disputes and debates that occur in daily collaboration, primarily aims to minimize the impact of emotional assessments that each partner inherently possesses. The mediator focuses on resolving conflicts of interest, structural conflicts, and data conflicts faced by the mediation parties. The business mediator assists the partners in finding solutions that could be acceptable to each of them while concentrating on purely business aspects, creating tangible added value in their joint business activities.
The delivered service has not been fully accepted by the client?
After completing a service, misunderstandings and the refusal to transfer the agreed-upon payment in full often occur. For the service provider, this is usually a significant surprise. They may suspect the client of dishonesty and an unfair assessment of their work. On the other hand, the client often points out specific flaws and shortcomings. In such a case, taking the matter to court typically involves a lengthy process where key decisions rest with court-appointed experts. So, why not try mediation?
During mediation, the mediator will try to determine if there is a data conflict between the parties and, in the first instance, work towards its resolution. If, after exchanging all relevant information about the disputed issues, there is still no agreement, the parties can turn to expert opinions. In mediation, the parties can jointly select an expert they trust. Seeking such expert opinion often brings the parties closer to an agreement. It primarily provides insight into what a likely court decision would be in the given case.
Has the contracting party imposed contractual penalties on your company as a result of the execution of a public procurement order?
During the execution of contracts for public procurement, delays or other reasons leading to the imposition of contractual penalties by the contracting party often occur. Accepting these penalties can be very challenging for contractors, especially because, due to the public procurement procedure, they have no opportunity to negotiate the amount of contractual penalties before signing the contract.
The most common reason for imposing contractual penalties is delays. It is typically during the process of business mediation that it becomes apparent that the causes of delays were often beyond the contractor’s control or that the contractual penalties were calculated twice due to dependencies arising from the work schedule. It may also be revealed that the contractual penalty is excessively high.
In such situations, compromises between both parties in dispute often lead to a settlement, which is then approved by the court and, upon approval, carries the force of a court judgment.
Does your company have legitimate construction claims against the contracting party?
Construction claims typically involve money or timelines. Regarding financial matters, in business mediation, parties negotiate issues related to payments for additional work not originally included in the contract. The dispute often revolves around whether the work was included in the cost estimate, whether it was necessary, whether it was approved by the client, whether additional new orders were required from the client, and so on. As for timeline issues, it usually involves delays in the work schedule due to obstacles in execution that arose without the fault of the contractor. Sometimes, these obstacles genuinely occurred on the client’s side.
Business mediation for construction claims can be supported by opinions from expert witnesses and construction experts if the parties agree. The methods for resolving disputes related to construction claims are often regulated in construction contracts. An example is the use of the FIDIC general conditions.
Did the economic conditions significantly change during the execution of the contract, which is crucial from the perspective of the original offer?
In the case of a significant change in economic conditions, the parties during mediation must agree on precisely what market changes impacted the execution of their contract and how they hindered its fulfillment. In special cases, when market changes substantially raise costs that the parties could not foresee, adjusting construction contracts may be considered. Detailed issues on this matter are discussed in the article Mediacja gospodarcza waloryzacji wynagrodzenia w umowach o zamówienia publiczne.
Are you a party to a lease agreement that has become the basis of a dispute between the tenant and the landlord?
The Covid-19 pandemic has caused numerous challenges in the commercial lease market. Months-long closures of shopping malls, suspension of trade, and restrictions on service provision have led many businesses into financial difficulties. The halt or suspension of business activities due to the pandemic has made it difficult for many tenants to meet their rent payments regularly to the landlords. In such a situation, business mediation allows the parties to present their respective situations and objectively assess them. The basis for reaching an agreement is usually the willingness to continue collaboration. If both parties are interested in continuing the lease, their readiness to make concessions often facilitates reaching a settlement through business mediation.