REUTERS | Tobias Schwarz

How to settle a dispute

Another Saturday afternoon in Panama (I’ll be permanently back in the UK at the end of October), and I am sitting on the balcony again with the ubiquitous milky coffee. But instead of staring out into the Pacific and letting my mind wander I’ve been reading Tony Blair’s book. Whether or not you are a fan I would definitely recommend it.

For me, one of the most interesting features of political autobiographies is the revelation that matters of state are subject to the same small annoyances as everyday life. For example, giving the French Ambassador a lift from Scotland to London in an official helicopter was not exactly glamorised for our former Prime Minister when the in-flight meal was “stale crisps, some forlorn old salted peanuts and a few sandwiches which would have been rejected by British Rail in its heyday.”

Being a bit of a lateral thinker I am always looking at whether experiences in one context can provide insight into another. The book sets out a number of principles for conflict resolution and I wondered whether these may be relevant to resolving disputes in our industry. One of the things that I am keen to do when I return to the UK is to restart my mediation practice. While I’m not saying that quoting from Tony Blair’s book at a tense moment in the negotiation of a final account dispute would be my favoured plan of action, the ten principles that he sets out are certainly thought-provoking.

1. At the heart of any conflict resolution must be a framework based on agreed principles

In theory, the agreed framework for our industry is the effect of the contract between the parties or, if there is no contract, the relevant provisions of the law – for example quantum meruit. But in mediation, we are told to focus on the needs of the parties as well as their entitlements. Sometimes the need is to get a deal which is “acceptable” to the parties in a broader sense than contractual entitlement. It may be that something was said (or at least understood) before the work started which, although not legally binding, is (for one party) an important point of principle that cannot easily be conceded. There may be a question of affordability. Or there may be an issue as to fairness or not overtly backing down. So asking the parties what it will take or what they need in order to settle should probably be one of the first questions.

2. Then to proceed to resolution, the conflict needs to be gripped and focused on

Although due process is indispensable in formal dispute resolution, its big disadvantage is the amount of energy that needs to be deployed on procedural matters, rather than on the core of the dispute. I always find that most interesting question in a formal dispute is why it is taking place at all. What is it (or who is it) that is really stopping the parties from resolving their dispute through commercial channels? If we are too focused on the minutiae of the procedure, that question can remain unanswered and a potential basis of settlement missed.

3. In conflict resolution small things can be big things

We have all heard stories of claims (particularly by individuals against large organisations) that were fuelled by a refusal to apologise or admit blame for an obvious failing. Sometimes one allegation (or one denial) can wind somebody up so much that their attitude to the rest of the dispute is affected. This can apply to offers to settle as well. The classic tactical “derisory” offer can sometimes become the main motivation on the other party to have their “day in court”.

4. Be creative

Easy to say, harder to do. But it does happen. I once settled a dispute about shared access to industrial premises by persuading one party (a groundworks contractor) to construct an alternative access route for their neighbour. Tony Blair gives the example of using a diamond shaped table to get over a problem about who sits where at a meeting.

5. The conflict won’t be resolved by the parties if left to themselves

This is possibly self-evident, but it raises the question of the role of the dispute resolver. Tony Blair talks about “buffers, messengers and persuaders”. The mix of techniques you might adopt will depend on the process and nature of the dispute. I was at a mediation once where the mediator asked the parties for a confidential indication of their current bottom-line positions. Rather surprisingly they were both at the same figure!

6. Realise that for both sides resolving the conflict is a journey

Rushing into numbers too quickly is a common mistake. I was in a mediation a while ago representing one of the parties. Expert evidence was key and the experts were at loggerheads. The mediator suggested that each expert make an oral presentation. Everyone agreed to this. One of the experts was very impressive. The other was not (although he had apparently been very impressive and robust beforehand). It took his clients quite a while to absorb this and re-evaluate their attitude to the dispute.

7. The path to peace will be deliberately disrupted by those who believe the conflict must continue

This is as true in commercial circles as it is in politics, albeit for different reasons. For example, I have seen people obstruct settlements because accepting an offer below the claimed amount would reduce the turnover on which their departmental bonuses were based. Sometimes all they had to do was to defer the settlement until a few months after the year end as there was no claw-back system. This is especially difficult when their colleagues are unaware of their motivations and misinterpret their actions.

8. Leaders matter

If nobody is prepared to make a difficult decision it can be impossible to resolve a dispute. Many organisations suffer from a sort of “institutional paralysis” where people are not willing to stick their neck out and make a decision, for fear of recriminations after the event. The notion of supporting (for better or worse) the “judgment call” of the person charged with dealing with a particular problem is unknown to many. As you can imagine, Tony Blair spends rather a lot of time on that particular topic!

9. The external circumstances must militate in favour of, not against, a settlement

I think for us this means external to the people responsible for the dispute. It may be the overall relationship between the parties, the affordability of settling, and business prospects generally. A busy, profitable company will be more inclined to “move on”. A company for whom the success of a claim at a particular figure is the difference between survival and insolvency is in a different position.

10. Never give up

This is perhaps more difficult in the commercial sphere, especially if you have lost and all avenues of appeal have been exhausted. However, I did come across a case once where a contractor approached a sole-source supplier in urgent need of their products and were told that they should not even consider placing an order until a long-standing (and hotly-disputed) claim had been paid in full, with interest.

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