Fast and effective out-of-court conflict settlement in the world of business

There is much to be gained

So what are the direct benefits of this solution for a business, beyond the costs saved due to the lack of court fees? Heading the list has to be avoiding the time normally wasted on dispute resolution. It is not uncommon for conflicts to be settled in a few weeks instead of the several years often required for court proceedings. Mediation also yields considerable savings: according to the statistics, resolving disputes through mediation costs about ten times less than traditional litigation.

With the assistance of a professional mediator, the parties to virtually any economic dispute can work out a settlement that not only helps them resolve their dispute, but also regulates any mutual relations they may have in the future.

Experience shows that businesses that enter into mediation tend to be content enough with the settlement of the dispute that they proceed smoothly to its implementation.

‟The International Mediation Centre specialises in business mediation between Polish and foreign companies, inter-company mediation, and also mediation within the public sector. Mediation tends to be the solution of choice for very conscious businesses, aware that this mode of conflict settlements not only saves them significant time and money otherwise incurred on lawsuits, but it also improves their reputation. We hope that this form of resolving economic disputes gradually becomes an accepted norm among Polish contractors, not only with reference to disputes involving foreign companies, but also local ones as well. It is not in the interest of any company to be caught in a dispute at court lasting for several years; rather it is definitely more convenient to retain the upper hand and refer the case to a professional mediator”, says Elisabetta Caprino, Secretary General of the Italian Chamber of Commerce in Poland, co-founder of the International Mediation Centre.

Contractual clause-related matters

It is worth mentioning here that any settlement worked out during mediation can be approved by a court and take the force and effect of a judicial order. This type of approval is of a purely formal nature, and in most cases takes no more than a couple of days to arrange.

However, the parties have to declare their consent to enter into mediation, which can be expressed in virtually any contract concluded between the parties, in the form of an additional mediation clause.

Almost all mediation centres offer sample wording for this clause, which can then be simply integrated into a contract, generally somewhere in the final contractual provisions.

Below is a typical mediation clause, written in both Polish and English, as recommended by the mediation centres run by the bilateral chambers of commerce.

Case study – mediation between Polish businesses and the partners of a capital company

This case combined in-house mediation with mediation between businesses. The dispute concerned the two former partners of a capital company who, upon parting after several years of cooperation, intended to arrange matters related to the outstanding payment of an invoice in the most professional way. Their business paths had diverged some time before; nonetheless, the matter of an unpaid invoice ‟persisted”, heavily impacting their mutual relations, and posing a risk to their images in a fairly narrow industry where news travels fast.

The matter was complicated inasmuch as neither of the former business partners had entered into any formal agreement in writing with reference to the disputed payment, nor determined the conditions for payment settlement, but only acted upon oral arrangements that had operated successfully until recently. Nonetheless, as happens in life, this ceased to be applied once the relations between the former partners soured.

Both of them deemed this settlement to be a form of ‟hostage” pending the clarification and closing of all matters relating to their former company, and even though they were independent of each other in business terms this unfinished business ‟divorce” considerably hampered mutual settlements between the separate entities.

Interestingly enough, in this case the entrepreneurs and former business partners very deliberately referred the case for mediation, acting upon no external motivator such as a court referral. Their determination to follow a professional path to the settlement of the dispute was so strong that they had already participated in the first meeting at the International Mediation Centre. During this meeting the parties effectively addressed the essence of the case, actually the essence of the cases because, as it turned out, despite the initial assumption that the procedure involved two separate entities, the mediator effectively touched on the issue of their unfinished business ‟divorce” and clarified some important topics. In this way, while launching a mediation process between two businesses classified as separate entities, the topic of mediation between the partners of a yet to be dissolved company was addressed.

Both entrepreneurs fully adapted to the prevailing rules and principles of mediation, and this contributed to the rapid settlement of the procedure. Assisted by a mediator, they developed a solution in less than two hours. Not only did the settlement resolve the issue of settling accounts between these former business partners, but they also made arrangements with reference to their prospective business contacts. Accordingly, although they were each engaged in completely new business ventures with new partners, they identified an area of prospective cooperation that constituted an additional bonus.

The applied mediation method, based on the ‟U” model supported under MCM, proved to be a highly effective working tool. This case also illustrates the very deliberate and professional approach to out-of-court dispute resolution methods.

It acts both as negotiator and mediator, while disseminating and extensively applying business mediation, facilitating out-of-court, cost-effective and timely resolution of disputes between entrepreneurs.

Out-of-court conflict settlement

Task 1. Key phrases.

Read the text carefully and study the vocabulary. Translate the selected key words from the text into English:

1. po przyjacielsku:......................
2. wnosić (np. sprawę do sądu): ......................
3. środki ostrożności: ......................
4. wewnętrzny: ......................
5. rozejść się: ......................
6. tryb: ......................
7. dwustronny: ......................
8. rodzić (np. plony): ......................
9. rozstrzygnąć (np. spór): ......................
10. przeważający:......................

Task 2. Words in context.

Use the words from task 1 in correct forms to complete the sentences below:

1. In response to employees’ needs and enquiries, the board has finally approved the budget for ........................ trainings, including soft skills courses and foreign language workshops.
2. Although there seem to exist numerous strategies for handling and ............. even the toughest conflicts at the workplace, but only a few of them have proved really effective.
3. The ultimate goal of a ........................ trade agreement, signed between two nations, is to increase each country’s economic growth by giving them both an expanded access to their markets.
4. Environmentally friendly consumers find it compulsory to put their household equipment into a “stand-by” ...................... whenever it is not used for a longer period of time.
5. Judging by the scale of resources used and the amount of investment made, the project should ............. at least billions of dollars within 10 years from now.
6. After several years of fierce court battles, last week, the two parties reached an ........... agreement which finally terminated their long-term business relationship.
7. Due to frequent legislative changes implemented by the current government in key social areas, the ........................ mood of public opinion remained hostile.
8. Every necessary ....................... needs to be made to conserve our nature and protect endangered species from utter extinction.
9. According to the most recent research findings, global growth rates .................................. markedly because of harsh conditions of leading market economies.
10. It is said that, in order to prevent the plan from taking effect, next week, the leading party opponents ...................... a petition which was signed by nearly 45 000 citizens.

Task 3. Comprehension check.

Decide whether the sentences below are true (T) or false (F) according to the text:

1. Disagreements arising from the changing business environment inevitably lead to serious conflicts. .........................
2. In the world of business, conflicts are predominantly resolved by courts not by mediators. ........................
3. Out-of-court conflict settlement through professional mediation is a long term process which hardly ever brings satisfactory outcomes. .........................
4. Both private and public sectors cooperating with foreign companies may improve their reputation if they solve their disputes by means of mediation. .........................
5. The International Mediation Center advocates tapping into mediation instead of costly court proceedings. .........................
6. Bilingual mediation clauses although strongly recommended by chambers of commerce bear no legal force in Poland. .........................
7. In the case study presented in the article, the lack of a written contractual clause determined the time span of an outstanding payment dispute. .........................
8. Apart from settling current conflicts, successful mediation offers the chance to address other issues between two business partners. .........................
9. The two former entrepreneurs mentioned in the text were unable to clarify the matters or come to conclusions even within a few days of intense talks. .........................
10. The approach presented in the case backs up the overall statement, that highly professional mediation can be both cost-effective and time-saving. .........................

KEY to exercises.

Task 1

1. amicably
2. (to) file
3. precautions
4. in-house
5. (to) diverge
6. mode
7. bilateral
8. (to) yield
9. (to) settle
10. prevailing

Task 2

1. in-house
2. settling
3. bilateral
4. mode
5. yield
6. amicable
7. prevailing
8. precaution
9. are diverging
10. will file

Task 3

F
F
F
T
T
F
T
T
F
T