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Source: Business Times
Article Date: 13 Sep 2023
As a collaborative process, mediation can be a catalyst for brand-new deals and opportunities, says the author.
By its very nature, a dispute almost universally involves ill feelings, strong disagreements, and sometimes broken promises. Relationships and negotiations break down and at some point, the parties will inevitably reach an impasse. At this point, legal action may seem necessary for resolution.
However, taking legal action also has distinct consequences for confidentiality, reputation and finances for both parties. In many cases, they also do not want to further jeopardise the relationship; they want to resolve the dispute as amicably as possible to leave the door open for future dealings.
That is where mediation can play a role. A professional mediator can help disputing parties articulate their interests, better understand each other’s positions and concerns, and guide them to achieve some common ground in settlement. In fact, mediation can even go a step further beyond just resolving disputes and repairing relationships; as a collaborative process, it can also be a catalyst for brand-new deals and opportunities post-dispute.
Dealmaking in mediation
Typically, the focus of mediation is on how to resolve the claim at hand in the dispute between parties. However, there is now the realisation that in a number of business disputes, especially those involving multinational corporations (MNCs), there lies potential to make a new business deal beneficial to both. The new deal could even extend beyond the scope of the disputed contract at hand.
To illustrate, in 2021, the Singapore International Mediation Centre (SIMC) administered a 3.5-day mediation in Seoul between US-listed FuelCell Energy and South Korea’s largest private energy producer, POSCO. Both had been in dispute over seven years across five arbitrations in Singapore, Seoul and London, as well as two court lawsuits in the US.
As part of the settlement agreement, which was signed two months after the mediation, the parties revived their joint venture and agreed to continue engaging in business, with POSCO agreeing to purchase US$66 million worth of technology from FuelCell. This was dealmaking at its best by both parties and counsel represented.
Another example comes as recently as August 2023. SIMC administered a mediation between an Indian company and a Chinese company over US$10 million for breach of contract. The matter was resolved with one company agreeing to pay the other a portion of that sum. At the mediation, the parties indicated that they were prepared to continue business.
As part of the settlement, payment was made by way of cash and a credit note for future business to be utilised by a certain date. This paved the way for a continuation of the business relationship. It was a great outcome for both parties!
Even if the parties are not inclined to carry on business, there is sometimes scope to work out a deal during mediation. For example, where two shareholders are unable to get along, one option is to get a third-party investor to purchase their shares at a higher price than if they were to sell their shares to each other.
Corporate and international support for mediation
If more companies operated along such lines, not only would legal disputes be resolved more quickly and amicably, but more beneficial partnerships would emerge too as a result.
It was therefore heartening to see over 40 MNCs and industry associations come together in August to declare their support for mediation in what has been the strongest show of corporate support in Asia for cross-border mediation yet.
Accenture, CapitaLand Investment, DBS, FuelCell Energy, Grab, Huawei, IBM, Jardine Cycle & Carriage, Jones Lang LaSalle, Lazada, LinkedIn, Marina Bay Sands, Meta, Microsoft, Mitsubishi HC Capital Asia, OCBC, PSA Corporation, Reliance Industries, Samsung C&T, Siemens, Singapore Business Federation, Tata Sons and UOB were just some of the signatory organisations at the MNCs for Mediation event.
At the event, corporates collectively signed a declaration of intent to support the use of mediation and discussed ways to forge a new approach for their companies.
Fittingly, the by-invitation event was a highlight of this year’s Singapore Convention Week, which marks the anniversary of the 2019 signing of the Singapore Convention on Mediation.
The multilateral treaty provides for the international recognition and enforcement of mediated settlement agreements.
In the same week and in the preceding month, SIMC also signed or renewed collaboration agreements with seven dispute resolution partners from China, India, Indonesia, Japan, Singapore, Turkey and Vietnam.
Of note is the renewal of the Joint Protocol with the Japan International Mediation Centre (JIMC) in Kyoto. The protocol’s hallmark is the appointment of co-mediators – one from each centre – who have, in the past, successfully facilitated negotiations and bridged language and cultural gaps. Not only does this enable deeper discussions with a view to promote settlement, but it also gives parties more confidence to explore cross-border collaboration as part of the settlement.
Make mediation your first port of call
With an international treaty giving recognition to mediated settlement agreements, cross-institutional arrangements for the benefit of disputants in many key Asian markets, and growing corporate support for the use of mediation, there is no better time to turn legal setbacks into opportunities.
Proposing mediation shows that one values the business relationship and encourages open dialogue. If parties can find common ground even in the midst of a dispute, and turn that dispute into an opportunity for mutual benefit, they would both have met their commercial objectives, and, in the process, saved a valuable business relationship which would have taken time to build.
At the end of a dispute which I successfully mediated recently, the parties decided to take a photograph together. While the photo cannot be shared for reasons of confidentiality, the picture of these previously feuding parties, and their repaired relationship now sealed by a handshake, remains forever framed in my heart. This is an example of the magic of mediation.
The next time you have a dispute, try mediation first!
The writer is chairman of the Singapore International Mediation Centre. He was president of the Law Society of Singapore between 1998 and 1999, and has mediated over 800 disputes, including cross-cultural, cross-border disputes in Singapore, Thailand, Taiwan, Maldives, South Korea, Australia and Fiji.
Source: Business Times © SPH Media Limited. Permission required for reproduction.
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