The Sun News

Deal mediation can save you business pains

The subject of negotiation is one that continually interests business owners and managers. This is because of its affinity with the concept and practices of commercial relationships. I agree that there are some persons who are in business for all but the right reasons. It is however now elementary, for those who care to know, that businesses are not set up primarily to make profits but to provide a service which their respective communities need.  Some unethical businesspeople, allergic to the acquisition of requisite business skills may disagree on this point. These are the kinds that would rather cut corners and do unimaginable things rather than be concerned with the values they create

The skills of negotiation are central to business as well as mediation practice. Global and international businesses pay a premium for this resource. While negotiations produce agreements that oil the engine of business, its skills set remain the critical element for the resolution of disputes referred to mediation. No contract is ever perfect. There are bound to be later developments which were unforeseen at the time parties entered into contract. These unforeseen circumstances become the triggers of disputes or contentions that threaten the continuance of the business. An opportunity to mediate a business dispute therefore is nothing but an opportunity to renegotiate terms of a contract in contention

Here is how a simple negotiation works. A businessman who for instance desires to go into the transportation business finds that he lacks sufficient capital to takeoff. He does not go to bed and wish for the funding of the shortfall in capital to drop down from the heavens. Rather he reaches out to friends and family to raise funds. He begins his search for capital by explaining to his proposed funders the nature of the business and what he requires to make a success of it. His funders will be interested to know how and when he will pay back the loan. They would raise concerns about the likelihood of business challenges that may make him incapable of repaying the loan. These and many other fears require the assurances of the loan seeker before the loan may be extended to him. These back and forth discussions with a view to reaching mutual understanding are negotiations. Negotiations take place in formal and informal settings. They may be simple negotiations, such as in face to face discussions between two or more parties or complex negotiations between large commercial organizations spread across several countries, economic zones and markets

You probably have notice that in my analogy of a simple negotiation, no mention was made of lawyers needed to moderate conversations or influence outcomes. In more sophisticated transactions however,  lawyers become relevant to assist parties knock the technicalities of the process into place; ultimate decision on whether  or not to accept the terms of negotiation still remain that of the parties. It is in due recognition of the freedom of parties to determine how they transact their business without legal pressure or directives, that mediation is suggested as preferred option of dispute resolution when  challenges occur.

Note should also be taken that in the world of business, mediation serves other useful purposes outside of dispute resolution. Mediation is handy at three points of established business transactions. These are at the inception of the contract, in the management of the contractual project and in times when dispute has arisen and the issues need to be resolved in the most painless, cost saving and fast track methods. These processes taken together are what we now know in professional parlance, as Deal Mediation.

Deal mediation is in practice broken down into three segments. These are Deal Making Mediation, Deal Managing Mediation and Deal Mending Mediation.  Jeswald W. Salacuse Professor of Law, Tufts University in his article, MEDIATION IN INTERNATIONA L BUSINESS has this to say of Deal – Making Mediation: ‘’The usual model of an international business negotiation is that of representatives of two companies from different countries sitting across a table in face-to-face discussions to shape the terms of a commercial contract. While many transactions take place in that manner, many others require the services of one or more third parties to facilitate the deal making process. These individuals are not usually referred to as “mediators.” They instead carry a variety of other labels: consultant, adviser, agent, broker, investment banker, among others. These deal-making mediators usually have some sort of a contractual arrangement with one of the parties, and in rare cases both; however, they are not formally employees of either party in the strict sense.

Although it could be argued that consultants and advisors should not be considered mediators since they are not independent of the parties, a close examination of their roles in the negotiation of an international business deal reveals that they exercise mediator’s functions, in that they assist the parties to change, affect or influence their behavior so as to manage conflicts or potential conflicts arising in the course of a negotiation…’’

What the foregoing suggests is the use of third party neutrals that can assist in assessing the contractual deal making from a detached and professional point of view. Their engagement, though an additional expense, saves you future frustrations and avoidable disputes.


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June 2018
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