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<xTITLE>To ‘Unlock’ the Disputes Post the Lockdown, Use Mediation as ‘The Key’</xTITLE>

To ‘Unlock’ the Disputes Post the Lockdown, Use Mediation as ‘The Key’

by Sanjeev Ahuja
December 2020 Sanjeev Ahuja

There could not have been a shock like the current corona pandemic which has shaken the very roots of the wheels of the economy. In absence of a precedence in place, it has practically made it impossible for any stakeholder to say with confidence as to what would be a panacea to treat the uncertainties unfolding with this situation. The impact is across: horizontally, and vertically. There is going to be a structural shift in the way we used to think and transact, and more importantly the way we used to perceive the business relationships as we have to move on in life with our routines, the routines which would require a new definition, a new perspective and a new mindset. There might be a new routine with trust deficit, with uncertain foreseeable future and may be with an element of fear in it.

There is something which has hit us all together at once. In this scenario, any differences, or disputes, between various stakeholders across the business chain/relationships will necessarily require a fresh look. First, what has hit you has hit me. All the interdependencies would come to fore. But the biggest take away would have to be to reset the priorities right and priorities cannot be anything else but plan to ‘survive’ and then ‘revive’ so that we can eventually ‘thrive’. And survival would be only possible with collaboration and not otherwise and the businesses may not be able to afford an adversarial process for resolving disputes. The trials and litigation (including arbitration) can be long drawn process, uncertain, costly, and possibly dangerous to relationships. At a time when collaboration would be the need of the hour, the last thought on the mind of the promoter/businessmen/entrepreneur would be to fight out the battles in courts. The USP of the current situation being that the parties in dispute would be all on the same side of the fence and expecting one party to be proven right over another (where the cause of action is ‘force majeure’ having hit all sides equally) would be a tough call. It is difficult to comprehend the types of arguments and defence that would need to be made to prove one side right over another. The need of the hour would be not to prove who is right but what is right. And this is exactly what Mediation is geared to achieve, an apt tool generally to resolve disputes, but very apt in the current scenario. When humans interact with each other, there are bound to be differences and disagreements. Similarly, when there are business transactions, disputes and disagreements do occur. It makes it imperative that we ensure that business relationships co-exist with this potential of disputes and disagreements. These disputes and differences can never be and should never be allowed to be so big ever that they have the power to destroy or damage the same very relationships and trusts on which the entire business depends. People who value relationships do understand the deep meaning in this statement. The ones who do not value, would not understand. 

I have been suggested that the existence or absence of the ‘force-majeure’ clause in commercial contracts would suddenly be relevant. To me the real challenge would be the application of law(s) and an effective interpretation of this term to provide a solution to the parties in dispute, especially when something has hit everyone together and the cause of action for all the parties is going to be non-performance (due to the same cause of action leading to chain effect due to interdependency). It is tough to imagine what kind of solution from the court would make the parties comfortable (as while resolving the disputes, the focus in a trial is generally on ‘who is right’) A deluge of cases and strain on infrastructure apart from the pendency of cases, all in all, makes it tough the very possibility of resolution to the satisfaction of the parties. 

Hence, the million dollar question: Once the lockdown is fully relaxed and we start limping to the new normal, would we be able to unlock the locks in our business relationships due to the disputes (which would have arisen due to non-performance as a result of covid)? Can Mediation be that key which either prevents those locks or atleast helps to unlock some /most of them? 

The application or use of the Mediation techniques has been relevant all through, just that there are some  trigger moments when suddenly there is a shift (or a requirement to make a shift) in the way we used to think about and treat few concepts. Covid throws up one such turning moments in history which would clearly show the relevance and importance of maintaining the relationships and collaborations and that would only mean that any disputes/disagreements would need to be solved and resolved amicably without taking any adversarial positions. Going to trials/courts and then waiting forever (almost) for the result (which may or may not be to your satisfaction and for sure you might have ruined your relationship because of that) may not be an option anymore.

So, here it is very important to bring to fore the option and hence the benefits of Mediation, the ‘untried or forgotten ADR’ (Alternate Dispute Resolution). Due to lack of awareness there have been umpteen questions from the stakeholders which either have not been answered correctly or atleast not to their satisfaction and it has become the first impediment to its acceptance in its entirety. People still consider ADR and Arbitration as synonyms. Mediation largely continues to be treated as court annexed mediation process primarily used by courts, in matters primarily relating to family disputes etc. But the concept of Mediation has come much further than that and world over, many jurisdictions have used this ADR tool for resolving commercial matters and that too very effectively. The acceptance is so much now a days that this is being termed as the Appropriate / Amicable Dispute Resolution mechanism. The Author maintains that the actual interests and needs and the connected solutions are best known to the parties in dispute (more than anyone else) and in such a scenario, why not be in control of the solution to the problem rather than relying on a third party allowing it to thrust his/her view on either /both of you. This becomes more relevant when the parties in dispute are on the same side of the fence and probably none of them is wrong. The entire adversarial system that we are victims of, works on the premise of proving one party right and the other wrong, where in many scenarios that may not be the case. Here the debate would need to go to ‘what is right’ so that both the sides can bridge the gap of disagreement and work towards an amicable solution with the required assistance from a neutral, a third party who is not invested in the solution. The Neutral’s  job is just to coordinate and steer the process and ensure a full party autonomy to assist parties themselves to come out with the solution which is arrived as a consensual agreement, with a bit of give and take and to the satisfaction of both sides. This on one side avoids ‘winner takes all’ or ‘all or nothing’ approach and on the other, can have a hybrid solution which is a combination of both monetary and non-monetary aspects to the same issue. 

Welcome to the magical world of Mediation. All that is remaining now between you and Mediation is the first step of taking a resolve that Mediation be the first step to resolve a dispute and only on its failure, do I go to the next step of arbitration or litigation. Yes, the option of arbitration and/or court do not go anywhere, they are just the options you earlier had and can be used in case of a failed Mediation. After all, till the point of writing this article, the author has not come across any side effects of using this noble and effective tool of Mediation (which is akin to a homeopathic medicine as some say, which means, either you are benefitted or the process remains harmless)

The secret of this tool and technique is simple and it better be shared with all. All that, which is missing most of the times is, an effective communication channel and this is what is bridged by the neutral or the mediator. This marks the attempt by parties to resolve their own disputes amongst themselves primarily to: save their business/working relationships, have a consensual settlement without any third party thrusting his opinion on them, not losing to make the other side win, seeking a solution which is hybrid (monetary and non-monetary) and based on needs and interests of the parties concerned, adopting a flexible and confidential process, doing away with the need of an enforcement akin to an arbitral award or a court decree (as the settlement is a result of both the parties agreeing to the same) and finally having a control on the time and cost and of course making the entire process certain by the very intent of both the parties. This in a nutshell is Mediation process driven by the parties with the assistance of a third party called a neutral. The neutral being just an enabler, facilitator, and a catalyst. All these have been the regular features of this process, just that they need to be explained properly and they need to be understood properly. Since it is a voluntary exercise, no kind of pressure would work, and any such influence would make this a non-starter. Both the sides need to be convinced about it and should by default come forward to make this ADR tool as the first choice for all their disputes irrespective the type of dispute. Initiative for trying out Mediation does not make the party weak; it just helps resolve the dispute for the benefit of both sides and saving the relationship. Any such attempt is purely harmless and the friends in legal profession would also need to contribute to this cause by making it the first option. (as a Mediation Advocate, the legal community has an especially important role to play here, giving confidence to their clients)

Some apprehensions in this regard;;- the contracts do not have clauses for mediation, there is no statute to enforce, no one known has done it before, we have not tried it earlier, etc. All these have just one answer. It is a voluntary exercise. Even in absence of the clause to Mediate, it can always be initiated provided both the parties agree. No court or law in part of the world can punish you to have tried to resolve your disputes amongst yourselves. Enforcement may not be a discussion point, due to the very concept of it being a consent settlement, so backing out would be a bleak possibility. Still, till the time we do not have the statute in India (which is a work in progress), one can use an award under Section 74 under Arbitration & Conciliation Act 1996 which would have the power of a court decree. 

Finally, seeing the benefits enumerated, one will have to get started and change the way the disputes are resolved. By the way, the rest of the world has already started and is enjoying the fruits for their citizens/stakeholders. Afterall, anything which helps you and would benefit your stakeholders can never be and should not be deferred. After all that would be the first step from you for this noble cause.

Biography


Sanjeev Ahuja focuses on:

  • Relationship Management and Conflict Resolution
  • Critical Observation, Analysis & bringing in a 'Fresh Perspective'
  • Being a Facilitator / Enabler / Catalyst.
  • Focus on Strategic Planning & Pre-emption (think thru')
  • Balancing of Macro & Micro

He is a Certified Mediator, an ADR (Alternate Dispute Resolution) Professional and a Resolution Professional (under Insolvency & Bankruptcy Law 2016; IBC) helping stakeholders’ turnaround Stressed Assets. He is also an active Arbitrator and an Advisor for Strategic Planning to Promoters / Corporates.

He is a member of Management Committee of PHDCCI and the Chair of IBC Committee. He is on respective Committees of Insolvency Professional Agencies and contributes towards the efficacy and efficiency of the Profession of IBC. He is an Associate Member of CIArb UK and Arbitrator on Panel of DIAC/ICA/ICADR/IIAM/AICADR/SCOPE and is Joint Secy @ SCL, India. He is a Certified Mediator by ICADR and Empanelled Expert with IICA.



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