This article has been written by Komal Shah and Vignesh Raj, from Team LawSikho.
We’re still awaiting a vaccine for Covid. And while pharma companies desperate to get the first-mover advantage keep on carrying out various tests, there’s only so much that the economy can do to limp back to normal.
It’s going to take a while for massive employment sectors like manufacturing, tourism or the restaurant and hospitality industry to gain any ground.
Contractual breaches and defaults in all kinds of payments, including salaries are already visible and are likely to worsen.
What’s notable is that most individuals and businesses neither have the time nor the money to engage in litigation and enforce contracts or chase payments, unless the stake involved is really high.
Given the spread of COVID, this condition is prevalent in many economies, not just one. Cross border contracts are, therefore, equally impacted as domestic contracts.
In such a scenario, the success of alternative dispute resolution methods like arbitration is also dependent upon how long these methods are likely to take to arrive at a resolution and how much these are likely to cost.
This is why people who are skilled in recovery by means other than litigation (re-negotiation, restructuring) are likely to be sought after.
On top of this, despite the breach and default in payment, businesses are unlikely to want to sever commercial relationships, since somewhere, there’s a thin line of hope that things will recover, and then these same business relationships will yield fruitful results. Rising customer acquisition costs can make businesses hold on to the existing customers like dear life.
Amicable methods of resolution such as negotiation and mediation, therefore, rule the roost. Mediators operate on a lot of psychological factors rather than on hardcore legal questions. And it isn’t like mediation is a new concept. Since ages we have been privy to stories where people have resorted to “wise men” for resolving their disputes. Replace these wise men by trained mediators in today’s age and the solution still holds good.
We see five main reasons why mediation is likely to be more prevalent than litigation or even arbitration:
Cost of mediation
It can cost considerably less to hire a trained mediator to resolve the dispute. The professional fees charged by mediators are often by the hour and are significantly lesser than arbitrators. Further, there are mediators who are trained in handling international disputes too. It is very likely that both parties will agree to resort to the services of such mediators as compared to, say, institutional arbitration, which may be far more expensive.
Litigation, in any event, is the last resort in such circumstances since the time and cost involved are both heavy. Litigation will also require parties to incur the cost upfront, and get the benefits of the judgement far later, by when the amount received on a favourable judgement can also lose relevance.
In cases where the disputes are personal, it is also possible for the parties to negotiate themselves, without using mediation lawyers, thus eliminating the representation cost.
Flexibility in proceedings and therefore, speed
Mediation proceedings are largely unregulated, except where mediation is being carried out under the aegis of specific authorities or institutions. Considering that there is flexibility in carrying out the mediation proceedings, these can be completely carried out online, without travel or formalities required. Since there is no imposition of any regulation, it may even become possible for a trained mediator to resolve disputes in a single meeting. Although disputes involving high stakes might need mediation lawyers and more sittings, on the whole, there are still chances of the resolution being arrived at sooner than the other methods.
Reputation is still a relevant factor
Despite the struggle to do business and generate income, businesses may still not want a whiff of this type to leak into the market that they are in a financial crunch. These kinds of news can make availability of further funding difficult for them and people may shy away from entering into certain kinds of business relationships with them. A dent in the reputation is not something that is welcome for a business and therefore, the confidentiality of negotiation/mediation will be always preferred.
For disputes within families, confidentiality may become a significant concern – people don’t like their family disputes to come out in the open.
Mediation, as a dispute resolution method, is very suitable for closed-door negotiations, which is certainly difficult in case of litigation and sometimes, in the case of arbitration too.
Higher possibility of arriving at a mutually acceptable solution
Consider this: the outcome of litigation is a judgement, something that will always be in favour of one party and against the other. The outcome of the arbitration is an award, which is also likely to favour one party over another. The outcome of mediation, however, is a settlement agreement, with terms which are mutually agreed by both the parties before a mediator. There are, therefore, high chances that both the parties find the resolution acceptable and do not carry any grudges after the settlement. They can experience closure and can then go about their businesses on a clean slate.
Can be used to precede arbitration/litigation
Once you are into an arbitration proceeding, if it doesn’t work, the only recourse is litigation. Once you are into litigation, if the judgement doesn’t work, the only recourse is further litigation before a higher authority. Mediation, on the other hand, can be tried before proceeding to arbitration – another alternative dispute resolution method. Med-arb clauses are therefore slowly gaining popularity.
Skilled mediators and mediation lawyers may see their career flourish because of the above reasons and the likelihood that the current economic situation is likely to prevail for a longer time than expected. Even if the economy recovers, if businesses have tested mediation and it has worked, they will prefer to continue with using it as a dispute resolution method, even in good times.
So how do I get an idea of how mediation works and skill myself to be a mediation lawyer or mediator?
The usual belief is that ADR methods like arbitration are the prerogative of erstwhile judges or senior lawyers or grey-haired professionals who have spent a lot of years in the dispute resolution field.
Mediation, however, just boils down to a mediator being trusted by both the parties and is skilled in negotiating and bringing the parties to the same page.
We know that it may not be sufficient to teach mediation techniques just on a theoretical basis, since the way parties react to a specific settlement proposal is definitely not something that you can anticipate exactly and therefore, not something you can put into a textbook.
This is why we put you through simulated situations on how to actually represent or carry out a mediation proceeding by interactive exercises involving role play.
Everyone has heard of learning by experience. Well, if you’re to learn from your own experience, you would have to commit blunders and mistakes and learn what is not the right way to do certain things. Trouble is, in that process, you can lose clients and jobs.
How about if you could skip the blunder part and have other people tell you of the likely blunders before you commit them, thus speeding up your learning curve since you now know where you should not go. That’s precisely how we work out our teaching methodology. Even if you commit a blunder, it’s in a safe environment. This is what our students in our Certificate Course in International Commercial Arbitration and Mediation are going to get. A simulated (yet vivid) environment where you can acquire diverse ADR skills you probably only hoped you would get with actual experience.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: