Litigation? No, thanks – I’ll mediate instead

In these unusual times, new problems are developing apace in the business world. With the ‘stay at home’ lockdown preventing face-to-face discussions between retailer and supplier, bank and customer, employer and employee and so on, problems will quickly morph into disputes. And without careful handling, those disputes might become damaging litigation. Financial pressures give urgency to resolving many of the difficult commercial issues that the pandemic has thrown up – so what can be done during COVID-19?

A question of contract?

There is much uncertainty, of course, and questions to be asked. In the building industry, will developers have claims for liquidated damages, or will contractors be due extensions of time? Will the site be closed down, or can some work continue subject to proper distancing and other health and safety concerns? Much may depend on the terms of the contract – for example, will force majeure apply? Using another industry example – will an airline with all its aircraft grounded be able to renegotiate a contract for the purchase of new aircraft when there is no way of knowing if it can even survive a long period of closure? As for companies – will they find themselves at odds with shareholders and/or employees over their handling of reaction to the pandemic?

Negotiation, not blame

Given the right tools, solutions should be capable of being found during the ‘We’re all in this together’ phase of Covid-19. Landlords, for example, may acknowledge that the inability to pay rent is hardly the consequence of a feckless tenant when the tenant’s business has been stopped in its tracks.

Indeed, the Government has explicitly recognised the need for contractual parties to “act responsibly and fairly” in order to support the response to Covid-19 and protect jobs and the economy.  In their guidance note issued on 7 May they urge:

This is certainly not a time for ultimatums and threats. ‘The letter of the contract will be enforced’ isn’t a realistic position when both parties might end up as losers. There was never more urgent need than there is at present for parties to come together quickly to discuss, debate and negotiate a way through their difficulties. Mediation offers that opportunity.

Finding solutions – fast

As mediators, our daily fare is to help parties negotiate outcomes to quite well-defined disputes, often when there’s a breakdown of a relationship and a consequent inability to communicate except in the context of a system where the Court is the final destination.

We mediators are inclined to think in terms of mediation as an event – one or two days to find a solution – rather than a process working over a longer time period, dealing with complex, evolving events. Take, for example, a major construction project. Everyone involved wants to keep things moving but there will be exceptionally difficult issues around rescheduling whilst complying with the Government pandemic controls. There will be different views and interests at play around how the works might be re-planned.

Remote mediation and ‘facilitation rooms’

Mediators can help parties to manage difficult conversations. How? Rather than confrontation, there needs to be acknowledgement of the other’s point of view, recognition of how the situation impacts the other, engagement in exploration of all the possible alternative ways through the difficulty and careful explanation by each party of its point of view. The joy of remote mediation is that all this can be achieved while face-to-face conversations aren’t possible.

Many mediators have quickly become adept at hosting virtual meetings by video conferencing on platforms that allow breakout rooms for private conversations and main rooms for parties to ‘get round the table’. So why not set up project facilitation rooms, hosted online by a facilitating mediator? As issues arise, they can be brought to the facilitation rooms and dealt with quickly as a means of bringing the project back on track. In some cases a full day might be scheduled, in others, a series of shorter meetings over a number of days might be more suitable, boxing off the most pressing issues, then moving on to the next as facts and interests become better understood.

With remote mediation, there really is no need to wait for commercial problems relating to the pandemic to escalate into full-blown litigation.