LEGAL
Mediation vs. Arbitration
How to resolve disputes
and avoid litigation...
BY JACQUES JOUBERT
A
nyone involved in the building, construction
and real estate environment knows how
expensive conflict and disputes can be,
especially if the conflict is driven by anger.
A sub-contractor fails to meet a deadline and
blames the main-contractor for causing the delay.
The main-contractor reacts angrily and a cycle
of accusations and counter-accusations follows,
culminating in conflict that can be difficult to contain.
In anger they turn to their legal representatives who
advise them not to talk to each other, as this may
compromise their legal positions. The effect of this
is that parties rarely get the opportunity to resolve
the conflict themselves, and leave it to their legal
representatives to negotiate a settlement on their
behalf. The problem with this is that their legal
representatives are not trained to explore their
clients’ underlying interests and concerns, but rather
enquire as to whether their clients have winnable
cases or not.
“Parties rarely get the
opportunity to resolve the
conflict themselves.”
Settlements, in the absence of exploring
underlying interests and concerns, are however far
from ideal. They tend to produce narrow, competitive
win-lose outcomes that plant the seed for future
conflict and harm the business relationship between
the parties. Naturally, the outcome from a cost
perspective is even worse if no settlement is reached
and the matter goes to court for adjudication. But
there is now a third and more effective way to resolve
disputes in the building, construction and real estate
industries; known as commercial mediation.
www.reimag.co.za
What is Commercial Mediation?
Commercial mediation offers better outcomes for the
following reasons:
1. It creates a safe environment for the parties to
have a robust and honest dialogue with each
other.
2. It offers a structured environment for
settlement negotiations using joint and private
sessions with the parties.
3. It explores the underlying interests, fears and
concerns of the parties. Commercial mediation
often finds ways to bridge the interests and
concerns that keep the conflicted parties apart.
4. It is confidential; meaning that whatever is
disclosed at the mediation may not be disclosed
outside the mediation, and everything disclosed
in a private session may not be disclosed to the
other party without express permission.
5. It is without prejudice; meaning that any
admission, concession or proposal made
during mediation is inadmissible in a court
or arbitration, should the mediation fail to
produce a settlement.
6. It is non-binding until such time that
everything is agreed, reduced to writing and
signed by both parties. This means parties may
freely generate and share settlement options
without being held to anything, at least until
they have signed a settlement agreement.
7. Settlement outcomes reached during mediation
are more durable and final, because the parties
view it as their outcome, as one that they both
can live with.
8. Finally, mediation helps restore business
relationships by resolving the underlying anger
that may have existed between the parties.
RESOURCES
Oosthuizen & Co, Meyer de Waal Attorneys
Commercial Handbook 2016
21