A pandemic presenting us with an imperative to manage commercial disputes

The new normal - A pandemic presenting us with an imperative to manage commercial disputes effectively.

Appropriate, adaptive dispute resolution broadens the range of services a legal practitioner can deliver with the result that he/she can address a wider range of client’s needs. This is particularly important in this era of a ‘disrupted normal’. Reliance on legal mechanisms under these circumstances is akin to using a blunt instrument to perform delicate surgery.

With the introduction of Rule 41A, requiring all parties to consider mediation for every new matter instituted in the High Court, coupled with the prevailing circumstances, a compelling case can be made for the use of mediation and the effective, efficient and expeditious solution it offers to dispute management.

Written by Michelle Posemann, Advocate of the High Court of the Republic of South Africa, for LexisNexis South Africa.

[Durban, 01 June 2020]

Now, more than ever, is the time to explore the use of mediation as an effective mechanism to manage volatile business relationships and disputes arising from unforeseen circumstances.

The current global pandemic has disrupted business and commerce on an unprecedented scale. It is time to acknowledge that litigation and the limitations of the legal solutions it offers may be both unsatisfactory and inadequate.

‘Litigation…is the legal profession’s equivalent of surgery, to be used as a last resort when all other means of resolving the problem are inadequate or have failed. Litigation (like surgery) is by its nature risky, intrusive, painful and expensive. It can only be applied to a narrow range of problems in its field. It cannot guarantee a favorable outcome…Fortunately the law is versatile enough, and lawyers creative enough, to include alternative methods of dispute resolution in the array of tools employed to solve legal problems.’[1]

Appropriate, adaptive dispute resolution broadens the range of services a legal practitioner can deliver with the result that he/she can address a wider range of client’s needs. This is particularly important in this era of a ‘disrupted normal’. Reliance on legal mechanisms under these circumstances is akin to using a blunt instrument to perform delicate surgery.

Whereas a litigious process assigns a static legal remedy to one party based on a factual matrix of past conduct, commercial disputes often require a dynamic, forward-looking approach creating a link between commercial needs in changing circumstances and business relationships. Mediation is the only mechanism that can create a paradigm conducive to achieving this.

Mediation offers parties the opportunity to transform their dispute from one based on positional posturing to collaborative co-operation, allowing for the strategic creation of a mutually acceptable outcome. It can be conducted and concluded as soon as the parties and/or their representatives are available and can all happen via an online platform.

Fundamental to mediation is the fact that all written and/or oral disclosures made during the process are confidential and inadmissible as evidence should the dispute not resolve and proceed to litigation. Further to this, the mediator keeps no formal record of discussions and may not disclose the content thereof to anybody outside of the mediation process. This allows for the management of reputational and operational risk by limiting exposure of the dispute to the parties themselves. All discussions during the process are also non-binding until reduced to writing and signed by both parties which affords a freedom to explore varied possibilities in a non-threatening way.

The High Court of South Africa has recognized its value with the introduction of Rule 41A, requiring all parties as of 9 March 2020 to consider mediation for every new matter instituted in that forum. This, coupled with the prevailing circumstances, make a compelling case for the use of mediation and the effective, efficient and expeditious solution it offers to dispute management.

[1] C G Marnewick, Litigation Skills for South African Lawyers, Lexis Nexis 2002, at 43