Conflict Rollercoaster - Who Controls Outcome?

No one likes to lose. No wonder that when we get into a conflict situation, all our efforts are aimed at victory. Our opponent in the dispute takes the similar position. The dispute turns into a contest of positions, which is expressed in exchange of claims and, if none of the parties gives up, in initiated judicial proceedings or a fight with no rules and procedures.

◊   Reality of legal proceedings

In the course of court proceedings, business faces the fact that decisions taken by the court are formal as compared to real interests of the parties standing behind the positions. Positions of the parties are focused on their substantiation for the purposes of the law. Moreover, legal proceedings may last for months, and sometimes even for years, therefore, their result may lose its relevance. In practice, business processes are much more dynamic than legal procedures. Unfortunately, in most cases judicial decision does not end the conflict itself. The situation is aggravated by the fact that during the legal proceedings a court determines winning and losing party, and the parties do not control which of these two positions they will end up at.

◊   Alternative ways of dispute settlement

In business practice, especially in such countries as the USA, Germany and England, mediation is an extremely popular alternative way of dispute settlement. Mediation is based on the principle of self-determination of parties, which means that the decision taken by the parties should meet interests of all parties to the dispute. Accordingly, result achieved through mediation allows all parties to the conflict to win. In a broad sense, mediation is a negotiation process where a neutral intermediary-mediator assists the parties to achieve settlement based on their own interests and needs. When studying interests, the parties get an opportunity to create broader grounds for future agreements and get creative options for settlement. In the process a mediator paves the way for taking balanced and thought through decisions – assists the parties to understand existing differences and successfully overcome them, monitors the balance of power in the process. In practice decisions taken by the parties during mediation usually go beyond legal arguments that the parties have in the beginning.

◊   Are the decisions achieved in mediation legally binding?

As a result of the mediation process, the parties may enter into a mediation agreement that will be binding in terms of Ukrainian legislation.

Also, the parties have the opportunity to implement the agreements reached into the existing contracts between them.

In the process of mediation, the parties may engage legal counsels and other consultants to assist in taking informed decisions.

It's worth noting that in practice, the parties voluntarily and in an agreed manner follow the decisions taken during the mediation process. This is due to the fact that such decisions meet their interests and are balanced.

◊   Is mediation always an alternative?

Mediation is almost a universal tool and is suitable for all kinds of disputes in business.

However, in business practice, it happens that the negotiation process is difficult to implement, because parties to the conflict do not have a zone of possible agreement. For example, this may happen if a debtor ceases its operations, leaves the market and does not plan to continue its activities in the future. In this case, the debtor may not be interested in the settlement and thus the parties lack a zone of possible agreement.

Sometimes it is important for business to hold a judgment that establishes a legal precedent, for example in disputes with fiscal authorities. In this case legal proceedings make more sense.

Conclusions:

1.   Interests of the parties are much wider than their positions in court. In the course of a judicial proceeding only one party wins.

2.   In mediation, the parties have the opportunity to take decisions independently, based on interests and needs. By studying interests, the parties create broader grounds for future agreements.

3.   Mediation is a modern and creative tool for resolving business disputes, regardless of the area of their origin.

4.   Upon the parties’ discretion, mediation results may become binding.