Overcome Deadlocks in Commercial Disputes Mediation

Dear all,

Overcome Deadlocks in Commercial Disputes Mediation

I am Natalia Cheung, a Hong Kong International Arbitration Centre (HKIAC) Accredited Mediator and a practising solicitor in Hong Kong.

I would like to share with you some information on overcoming deadlocks during mediation of commercial disputes.

The following is some common causes of deadlocks in commercial disputes, and the suggested solutions to overcome the deadlocks.

Evidential issue

Cause:

In some cases, representatives of corporate parties at mediation meeting may not be the persons who are directly involve in the dispute. They may then be unfamiliar with or may have little knowledge of the facts or background or the key evidence of the dispute.

This evidential issue may put the parties in a situation where they are not ready or are unwilling to offer or accept settlement proposals.

Solutions:

Parties may be invited to voluntarily disclose the facts and evidence relevant to the dispute during mediation.

 

If such voluntary disclosure is refused, parties can be suggested to adjourn the mediation until further facts or evidence is disclosed through the discovery process or exchange of witness statements under the rules of court.

Legal issue

Cause:

Sometimes when the parties do not have sufficient or proper understanding of their legal rights or positions, they may then become very entrenched in their legal rights and positions. E.g. Parties hold an unrealistic expectation that they would definitely recover all their costs and expenses if they win in the court case. Corporate parties may also overlook the adverse impact that court proceedings may bring to the operation and reputation of their businesses. 

Solutions:

Bring up issues for the parties to discuss with their legal representatives during waiting time.

Suggest parties to seek legal advice so as to enable them to have a more realistic assessment of their legal positions and rights before making any decision on a settlement proposal.

 

Authority issue

Cause:

It is not uncommon that the parties who attend mediation on behalf of their corporations only have limited authority or even no authority to settle the dispute.

 This is particular the case for some large and/or multinational corporations e.g. banks, large insurance companies, listed companies in which their decision making process involve complex and various procedures and personnel.

Solutions:

Ensure corporate parties to attend the mediation with proper and full authority to settle the dispute in full or in part before commencement of mediation e.g. by requesting for board resolution or authorization letter from the corporation.

Suggest parties to seek permission/authority from their corporations to consider and accept/reject a settlement proposal on the mediation spot through email or telephone.

Suggest parties to agree to continue to mediate, and to record within their limited authority to mediate or settle the dispute.

 Adjourn the mediation until the corporation has granted sufficient authority to the attendees of the mediation to mediate and settle the dispute.

Capacity issue

Cause:

Sometimes, corporate parties may have financial difficulty in complying with the settlement proposals eg. payment terms.

Solutions:

Help parties to ascertain their financial capacity and difficulties in fulfilling the settlement proposal. 

Suggest parties to reach consensus on some essential settlement terms first and then discuss the details of the settlement proposal like payment by installment or payment schedule within a reasonable timeframe.

For further information on mediation, please contact Ms. Natalia Cheung 

[(852)-6777 5767]

E-mail: natalia@plaw.hk

 

Natalia Cheung 

HKIAC Accredited Mediator & Hong Kong Solicitor

Pang Kung & Co., HK Solicitors & Notaries & Civil Celebrants of Marriages

   

 

Disclaimer: The above is for your information and reference only. The contents do not constitute legal advice or a substitute for legal advice in individual cases.