The Commercial Mediator's Handbook

Cyril Chern

• Publisher: Informa Law from Routledge
• Year: 2014
• ISBN:
  9781317663454
• Edition: 1
• Topic: Law
• Subtopic: Law Theory & Practice
• Index: Law

Mediation as a method of dispute resolution is well known and practised worldwide, and this book provides the knowledge necessary for those actively involved in mediation work as well as for those who need to learn the process.

This is an invaluable guide on how to mediate, what forms should be used and what techniques can be applied by the mediator to obtain a successful result. It also provides essential guidance on how to deal with large, complex international commercial disputes and their effective administration.

Key features of this book include:

• In-depth discussion of both the existing and historical international case law on mediation including its history under the British Common law, European Civil law and Muslim Shari'ah law.

• Analysis of the differences between the various forms of mediation agreements with sample wording to add to or modify these forms as needed.

• In-depth discussion of the ethical requirements relating to mediation and mediators.

• Sample forms for use in commencing mediation.

• In-depth discussion of actual mediations, how they should be conducted, techniques to use and sample forms.

• General forms for use in complex international mediation, form agenda and mediation statements.

• Mediator disclosure forms, questionnaires for potential mediators and parties and comparison of mediation agreements and sample forms.

• Discussion of how to effectively use witnesses and the preparation and presentation of witness statements in mediation.

• International case studies with statements of claims and responses.

This book will be essential reading for those involved in international commercial and construction mediation.

1 The Dispute Process: Why Settle?

Commercial disputes all have their basis in money and/or power. Some are born out of contract and some arise from torts, for example, commercial slander, patent infringement, unfair competition. But the underlying basis is always money, no matter how the dispute arose. It should be noted here that this book deals with ‘commercial’ disputes, not neighbour or family disputes. The biggest difference between ‘commercial’ and ‘non-commercial’ disputes is the motivation of the parties to settle. In ‘non-commercial’ disputes the reasons for settlement are usually non-financially quantifiable as they are generally grounded in emotion and are not capable of a financially motivated solution. The neighbour’s dog barks all night and a dispute arises. The dog barks because it does not like the cat across the road. Yes, this sort of dispute can be sorted, but not as readily as most commercial disputes. Indeed, whilst similar mediation techniques can be used in most all mediations, it is far easier to settle a multi-million pound claim than it is to sort out a neighbour or a family matter dispute (e.g. disputes dealing with child custody).

But where to begin the dispute resolving process: the mediation? First, the mediator has to be selected and a contract for mediation services entered into. Indeed, one of the first areas where the mediator has the parties reach a consensus is in the mediation agreement with the mediator. There are several forms of such agreement, and they are discussed later.

After the agreement with the mediator is entered into, then it is necessary to inform the parties of the process and that, unlike arbitration or court, the mediator may be speaking with one of the parties without the presence of the other, or even without any lawyers present, and to get acknowledgement from all parties that this is acceptable. This is referred to as the ‘introductory speech’ and can be done in writing or in person. This author favours in person as it is easier to judge the temperament of the parties and it provides useful information as to how the rest of the mediation will progress. The ‘introductory speech’ is as follows (and can be modified as the needs change):

I would like to go over some basic rules that we will follow in this mediation. First, I am a mediator not a judge or an arbitrator and cannot make either of you do anything that you do not want to do. Additionally, everything you tell me is strictly confidential and I will not reveal anything that is said unless you specifically instruct me to do so during the course of this mediation. I would also like to assure both sides that I have no financial stake in this mediation other than the fees both sides have agreed to pay and my only goal is to assist you both in reaching an acceptable resolution of your dispute. Whilst we are all working together during the course of our meetings and whilst working towards an effective resolution of the issues, it may be necessary for me to meet individually with the parties, sometimes with their lawyers present and sometimes just alone, and sometimes just with one or two individuals. This may be in person, by telephone or email. The fact that I am doing so and cannot divulge what is said or written to me should not be misinterpreted by the other side and they should not draw any conclusions from that as all that I am trying to do is better understand the issues which are preventing a speedy resolution of this matter. Also, I may spend more time with one side than the other in these private meetings and again neither side is to draw any conclusions from this. Is that understood? Is that agreeable to both sides? Also, as I am here to help you both fashion an acceptable resolution of your dispute, I will not be giving you my advice at any point in time unless both sides specifically ask me for advice and then I may do so if I feel it would be constructive to the ultimate resolution. Also, I need your acknowledgement that you are both represented in this mediation and throughout the process by your own lawyers and that any advice I may give is not legal advice and you are to consult your own lawyers before making any decisions based upon what happens in this mediation. Is that understood? Is that agreeable to both sides? Good, now does either side have any questions for me? If not then thank you and I look forward to a successful mediation.

Once this is done, then the actual work of the mediation can commence. This ‘work’ can be broken down into phases of which there are usually only five. The five phases of any successful commercial mediation are as follows:

1. investigative phase;

2. trust-building phase;

3. issue-narrowing phase;

4. concession phase;

5. settlement phase.

1. The investigative phase

In commercial disputes a typical scenario would be as follows: the ABC Widget Company enters into a contract with Jackson Enterprises Ltd. Jackson has agreed to purchase 1,000 fine quality widgets for the sum of £10,000 to be delivered to London by the end of the month. The end of the month comes and the widgets have not arrived. They arrive a week late and Jackson takes the widgets, but refuses to pay the £10,000 claiming that the contract has been breached. As the mediator, do you first sit down with the parties and lecture them on contract law? No. Their lawyers have already done so. Do you just sit and listen to what the dispute is about? No. And this is surprising to most new mediators. In fact, discussing the dispute at all is just about the last thing you want to do. Not in the early stages, and maybe not even till the very end of your discussions. What you should do and why is what makes mediation the intriguing field that it is, for the goal of the mediator is to get the parties to settle, on their own, or to at least think they have settled on their own. To arrive at this point, the mediator first has to know who the parties are, how they got to this point in time – the dispute – who the key players leading up to the dispute were and are, and what are the dynamics of the situation at the point in time when the first meeting with both sides occurs.

In the scenario above, the mediator should first ascertain what led up to the purchase. Did Jackson urgently need the widgets? Who are other suppliers? What is the price range for widgets in the marketplace? Who was the salesperson for the widgets, what is their background, have they sold to Jackson before and to whom at Jackson? Then, the mediator needs to know all about the buyer. Who it was? Have they bought from ABC before? How has the relationship been? Were they satisfied with both the product and the service in the past? Do the salesperson and the buyer know each other socially, have they ever had a meal together or a drink? All of this before the mediator even gets around to asking about the dispute itself and the details. This is the first phase: asking questions and listening to the answers. The most important aspect being listening to the answers; not commenting, but listening. This phase can be loosely called the ‘investigation phase’, and it serves several purposes.

Experienced mediators understand that carefully planning and executing the investigation phase is what sets the stage for the rest of the mediation. It establishes a rapport with the parties and, most importantly, gives the mediator vital information that can be used later during the mediation sessions to move the parties in one direction or another. In the scenario above imagine that Jackson had told you that the widgets were needed as a component for a large project it was involved in, and if they did not get them by the specific date they would lose that project. Compare this with you being told that they chose the date for delivery because the project manager was going on vacation and wanted the widgets for storage in the warehouse before he left on a two-week holiday. In the first case, any delay was a critical factor, in the second case, the delay was not a critical element of anything but was just something the buyer wanted. Lawyers spend hours arguing over whether such a situation results in a major breach of contract which extinguishes the contract or is only a minor breach of contract leading to damages for the delay alone. The mediator should not get pulled into this sort of discussion as parties tend to stop relating to the mediator when legal discussion comes to mind. How to deal with these situations is dealt with later in this book, but for now it is sufficient to note that such legal comments are usually best directed to counsel for the parties to answer rather than for the mediator to opine upon.

It is intriguing to see how much ‘pre-information’ can be obtained from the parties as part of the investigation phase. For example, ABC needs to talk about its product and how it is manufactured. In this scenario, it would be important to know if the widgets were a special order which required new tooling or whether they already had a large supply on hand and that there was nothing special about the product. The mediator also needs to know if getting the product back would be a problem or could these items be resold. Another line of questions would have to do with what research ABC did about Jackson before selling the widgets. Did they check Jackson’s credit history? Had they done business with Jackson in the past? Do they want to do business with them in the future? This is all very vital information, and is best obtained even before the formal mediation process begins as it gives the mediator vital information that can later be used to help the parties either fashion a settlement or to cajole them into a settlement they all can live with.

The basic information the mediator should obtain, immediately after entering into an agreement with the parties for the mediator’s fees, is based upon who brought the initial claim. For ease of discussion this person/entity can be referred to as the claimant and the ‘non-paying’ party as the respondent. As to the claimant, the information needed in the first round of the investigation phase is as follows:

Claimant Information

• Names, job titles and descriptions of all the claimant’s people who were involved in the transaction that gave rise to the dispute.

• A brief (500-word maximum) chronology and history of the dispute.

• A description of the respondent and any prior history the claimant had with the respondent and how that worked, or not.

• If it is a product, then what is the product and its place in the marketplace as of the time of the initial dispute.

• If the dispute revolves around a service not a product, then a description of what the service is a0nd how that service is ranked amongst its peers – the most typical service includes the work of engineers, architects, lawyers, contractors and similar professions and trades.

• A list of with who else the claimant has dealt in the five years preceding the dispute for the same product or service.

• What has the claimant done to date to resolve the dispute and what the cost has been to date?

Respondent Information

• Names, job titles and descriptions of all the respondent’s people who were involved in the transaction that gave rise to the dispute.

• A brief (500-word maximum) chronology and history of the dispute.

• A description of the claimant and any prior history the respondent had with the claimant and how that worked, or not.

• If it is a product, then what is the product and its place in the marketplace as of the time of the initial dispute.

• If the dispute revolves around a service not a product, then a description of what the service is and how that service is ranked amongst its peers – the most typical service includes the work of engineers, architects, lawyers, contractors and similar professions and trades.

• A list of with who else the respondent has dealt in the five years preceding the dispute for the same product or service.

• What has the respondent done to date to resolve the dispute and what the cost has been to date.

• Why waste time with mediation? (This may seem harsh, but that is the intent, because, as will be discussed later, it is non-productive to start any mediation unless both sides are willing to take the time in hope of reaching a settlement. This question is also only asked of the party that is being asked to pay money, for if they do not want to spend the time, then any attempt at settlement will be worthless.)

• Who has to approve any settlement that may be reached, for example, the president of the company, the company managing director, the board of directors, whom?

These questions are sent individually to the parties, with neither party having any idea of what is being asked of the other. These ‘questionnaires’ also serve two other purposes: to create mediator ‘presence’ and to help the parties focus their efforts.

Mediator Presence

By mediator ‘presence’ I am referring to what is also known as ‘command presence’. This is an old military concept, but is quite applicable to mediators and the mediation process. The parties are looking to the mediator as being the one person who will help them sort out their problem, and to fulfil this goal the mediator needs to command respect from the start. As soon as you are chosen as the mediator, the parties begin to judge you and assess what kind of mediator you are. Most people will form an impression of you within the first few nanoseconds, and these initial judgements are based on the mediator’s initial actions in the early communication stages before meeting and then when meeting from how the mediator looks and acts.

During the early 1970s, when mediation was just beginning to gain strength, I had the opportunity to participate, on a client’s behalf, in a mediation conducted in Toronto. At that time mediation was still in its infancy and was not a subject that was taught, but rather was one that people, usually lawyers, acquired through osmosis rather than the various methods we use today to teach the subject and train mediators in effective techniques.

At that time, both my counterpart and myself were faced with selecting a mediator. No Internet Google searches to help, very little printed information, and hardly any reference materials on the subject. Ultimately, we reached a decision to hire an individual who had been a lawyer, but who had become a full-time mediator with an international practice. A few telephone calls and letters later we learned that this individual had a sterling reputation for swift and decisive action, the ability to get the parties to see their faults and, ultimately, to reach an agreeable compromise to whatever the dispute concerned. I could hardly wait to get the mediation started and to meet this legendary figure and observe ‘mediator presence’ in action.

The appointed day for the mediation arrived and both sides were fully prepared to discuss all the attributes and possible difficulties they would face should the matter proceed to trial. This was a very complex construction dispute involving a substantial amount of money. To make matters worse, the actual parties themselves had built up a hatred of each other that made it difficult to get any sensible discussion or negotiation started. Indeed, this hatred was so intense that as we all sat there in the great mediator’s waiting room the parties would not even look at each other and, worse, would make snide remarks under their breath at each other. Finally, before a fight broke out, we were ushered into the room where the great one sat at the end of a large conference table. The room had all the curtains drawn and was a bit on the dark side. Each sid...