Application of Mediation in Commercial Disputes: Emphasis on Sale of Goods, Domestic &

APPLICATION OF MEDIATION IN COMMERCIAL DISPUTES: EMPHASIS ON SALE OF GOODS, DOMESTIC & INTERNATIONAL TRADE PERSPECTIVES

I think it is important to start this exercise by laying a few markers. First, I have never been a teacher or a lecturer. I have spent all my professional life as an Advocate in the Courts of Common Plea. My instincts are those of the adversarial Advocate at the Bar, not that of a Classroom teacher or tutorial master. If therefore, you find my stand and style a deviation from the orthodox pattern of classroom lectures, please understand.

Secondly, the law profession is probably the only profession which subtracts marks for original and previously unvoiced views, and awards marks for repetition of previously expressed views of others. The ideas in this paper are not necessarily original, even though they have not been credited to others in foot notes. They are products of my recall of views and thoughts which I acquired from other more learned sources.

Thirdly, I have not produced hand – outs. I forwarded the paper to my principals via e-mail as requested by them. If however, you wish to get a copy of the paper, just give your e-mail address to my learned friend, my wife, Lady. J. N. Udechukwu and it shall in due course be forwarded to you.

Fourthly, I presume that, as lawyers, my audience is basically well informed about the move towards alternative dispute resolution options which has recently become quit a race. I think it can be rightly described as the rave of the moment. In fact, the multi – door alternative dispute resolution structures are already entrenched in some jurisdictions in Nigeria, particularly, in LagosState and in the FederalCapitalTerritory, Abuja. I presume therefore, that you are conversant with the High Court (Civil Procedure) Rules of those jurisdictions where the multi – door procedures are already in place. I also expect that we are all conversant with the ground – breaking works on ADR, which have been in circulation at various workshops such as this.

Fifthly, as Counsel, we regularly adviseour clients on the out – of – Court settlement option for dispute resolution, and act for them in that regard. My focus is the relationship between the lawyer as Counsel and his client as prospective beneficiary of the mediation procedure within the multi – door Court house. I will not delve in any detail into the practice and procedure of mediation. It is all laid out in the Mediation and Arbitration Procedure Rules (2003) used at multi – door Court ADR centre at Abuja.

THE MULTI – DOOR COURT

In the bestial or primordial setting, might, was right. Disputes were settled through the notion of survival of the strongest. Disputants settled their disputes by dueling or by ordeal. As society became more civilized and the rule of law began to replace the rule of force, fighting, as a dispute resolution option began to be discouraged and indeed penalized.

Negotiation is the starting point when men in an ordered society attempt to settle their dispute by mutual agreement. The problem with negotiation is that often the parties may not be on the same position of strength or weakness. Negotiation between the weak and the strong is a charade. That is why it is said that if you want peace you prepare for war. Have you heard of the expression MAD in International relationships? It means “mutual assured destruction”. It implies that one Nation strives to maintain such a deterrent force that should discourage another nation from starting a war which wouldhave the inescapable consequence of annihilating both nations e.g. nuclear war. I am sure you have heard about the lion and the lamb at the river bank negotiating the right to clean water. The lion was up – stream but complained that the lamb down stream was fouling the water. The logical explanation by the lamb that by natural flow of water, he could not foul the source of the lion’s water did not prevent the lion from extracting retribution by eating the lamb.

The imbalance of power between negotiating parties may therefore be obviated by enlisting a third party as a mediator or facilitator. This mediator moderates the peace process between the disputants, enabling them to find a modus vivendi – a meeting point which settles their dispute, to their mutual satisfaction, usually in the spirit of give and take.

There is a statutory basis for mediation. Part II of the Arbitration and Conciliation Act, Cap. A18 Laws of the Federation 2004 is relevant. Parties to any agreement may seek amicable settlement of any dispute in relation to the agreement by conciliation under the provisions of the Act. The party who wishes to initiate conciliation, sends to the other party a written request for conciliation, stating in brief the subject of the dispute. Conciliation starts when the other party accepts the invitation to conciliate. The parties then refer their dispute to a conciliation body consisting of one or three conciliators. In the case of one conciliator, both parties shall agree. In the case of three conciliators, each party nominates one while the third conciliator is jointly appointed by the parties.

The conciliation body acquaints itself with the details of the case and has the discretion to procure such other information as it may require for the purpose of settling the dispute. The parties may appear in person before the conciliation body and may have legal representation. After the conciliation body had examined the case and heard the parties if necessary, it shall submit its terms of settlement to the parties. If the parties agree to the terms of settlement submitted to then, the conciliation body shall draw up and sign a record of settlement. If the parties do not agree, to the terms of settlement submitted by the conciliation body, they are free to pursue their dispute either through the arbitration option or through litigation. Nothing done in connection with the conciliation proceedings shall affect the legal rights of the parties in any subsequent submission to arbitration or any litigation.

There is much similarity between conciliation and mediation. The major difference is that the mediator is merely a facilitator who as a third party neutral assists the parties to find a mutually beneficial and convenient solution to their dispute. He does not submit a judgment in the nature of terms of settlement to the parties. He merely assists then by creating the enabling environment for them to reach their own terms. It is only when the parties have reached their own terms that a mediated agreement can arise, signed by the parties themselves.

When parties to a dispute are so distrustful of each other or so entrenched in their self interests that they are unable to benefit from the subtle prodding of the mediator, one of them may suspect that the other one may renege from any mediated solution unfavourable to that one. Insincerity, perfidy or plain greed may be the source of fear militating against effective and binding mediation. In such a case, the option may well be something short of the real thing – arbitration. By choosing to arbitrate, the disputants undertake to be bound by an enforceable award by an arbitrator. Bound in the sense that they are not permitted in subsequent proceedings or dealings to renege from the decision of the arbitrator.

Sometimes, the issues are so intricate or the disputants have taken such bellicose and irreconcilable postures or positions that nothing short of a full blown litigation in Court would settle their dispute. The Court then imposes a judicial solution which the disputants are bound to respect on pain of judicial sanction.

What should be noted is that whether by bilateral negotiation or through third party mediation or through arbitration, the aim is to reach a binding settlement which can be enforced as consent judgment if any of the parties in feature decide to walk away from such a binding settlement. Once therefore, a settlement is reached and signed, none of the parties may in principle be permitted to repudiate it. The converse is also the case.Before a settlement is agreed upon and signed, any party may walk away from the settlement process; in that case the dispute goes to Court.The baseline is that which ever way it goes, the parties may still need to go to Court either to enforce a settlement agreement or to have a settlement imposed by the Court.

THE MEDIATION DOOR

Let us examine the mediation option further. Put simply, mediation is a negotiation carried out with the assistance of a neutral third party at the instance of disputing persons, corporate or communal entities. The disputants usually voluntarily submit their dispute to a negotiated settlement through the good offices of a facilitator who acts as a mediator, creating the atmosphere needed to enable the parties find or agree on a mutually acceptable solution to their dispute. When the parties reach a settlement, they sign a Mediated Agreement which become binding and judicially enforceable.

What is to be understood for our purpose is that mediation is different from negotiation, arbitration or litigation in the sense that:

(a)It involves a third party, who facilitates the effort of the disputants to find a mutually satisfying solution to their dispute, usually by making concessions to each other.

(b)The third party is not a judge or arbitrator and can not impose his view or decisions on the disputants. He does not even hand down a decision. He merely creates a forum and atmosphere in which the disputants are comfortable and confident enough to discuss their dispute in and find a solution convenient to both parties.

(c)The third party, not being a judge or arbiter, the efficacy of the outcome of his mediation lies in the mutual acceptance of it by the disputing parties and their willingness to sign a Mediated Agreement.

(d)It is an option to be considered only when the disputing parties in good faith are disposed to sincerely find a mutually beneficial and agreeable solution to their dispute but needed external influence of some sort to help them break down the barriers of irreconcilability.

WHO CAN MEDIATE

Any person can facilitate mediation as a mediator and mediation can take place at any level of society, be it within the family, within the community, inter – parties in business setting or even on State, National and International settings. When however, a specialized system of mediation within the justice delivery system is activated, mediation becomes a part of the Civil Court system. Here again, what is important for our purpose, is to note that:

(a)Even though any person can mediate, it is not every person that can, or is qualified to mediate particular disputes.

(b)The capacity and ability to mediate in specific cases is a factor of the skill, training and experience of the mediator in that sphere of human affairs. For example, matrimonial disputes may be mediated by anybody who enjoys the confidence of the married couple, but it is advisable to use the good offices of a trained and experienced marriage counselor who hopefully is conversant with the relevant statutes in force and applicable as well as the dynamics of the Marriage Institution and Status itself.

(c)A mediator is at his best when he or she understands the human nature sufficiently to be in a position to deal with the foibles and temperaments of the disputants. These knowledge is certainly going to become crucial in dealing with the embedded or entrenchedprejudices and fears of each party to the dispute. A respectable knowledge of human psychology is therefore an asset to a mediator.

(d)When mediation is through the facilities of the multi – door structures of the Court, little problem may arise since the institution takes special care to short list mediators specially qualified and sufficiently knowledgeable about the rules of mediation.

WHEN TO MEDIATE

Mediation becomes the viable option of choice, when the disputing parties:

(a)Are emancipated enough and civilized enough (not necessarily educated) to appreciate and benefit from mediation.

(b)Have explored negotiation and found it impossible to agree, either because of lack of adequate knowledge of the laws rules and regulations impacting on their quarrel, or because due to no fault of their own, they are unable to resolve their differences due to deep seated prejudices and fears.

(c)Recognize that they need a facilitator to assist them in their search for mutually beneficial consensus while avoiding the relatively more costly and time consuming adventure in litigation or arbitration.

(d)Are desirous of saving their relationship after the dispute or at least minimizing the strain which a Court verdict or arbitral award may place on their future relationships.

(e)Are sincere and in good faith disposed to drop posturing to embrace a solution mutually beneficial on the basis of genuine give and take.

(f)Upon a considered legal opinion, the client perceives that mediation serves his best interest in the circumstance.

WHO INITIATES MEDIATION

At times, the contract documents may contain a mediation clause. In that case, the parties are bound to mediate first. There can also be a Court – ordered mediation in which case the parties may submit to mediation and the mediated agreement if reached and signed is filed in Court to be made the judgment of the Court. If however, mediation fails the parties return to litigation. It makes no difference that mediation was primarily ordered by the Court. The parties themselves may on their own or with the encouragement of their lawyers agree to try mediation. It is hoped that the frequency of resort to mediation on the prompting of Counsel would increase.

MEDIATION AND THE LAWYER

The legal practitioner in Nigeria is the product of an adversarial or accusatory system of dispute resolution. In a criminal trial, Counsel represents either a Complainantor an Accused. In a civil trial, Counsel either represents a Claimant or a Defendant. There is always the divide and this divide is often hostile territory. The practitioner is cast in the mold of a surrogate gladiatorwhose objective is to vanquish his client’s adversary by means which include a whirly jig of technicalities.

Neither the client nor his Counsel is altruistically interested in justice for the sake of justice. To both Counsel and client justice is an abstraction. Vindication or victory at the dispute arena is the tangible measure of the worth of the lawyer. The client is interested in legal vindication or victory and so is the lawyer. The story was once told of an oppressor who instructed Counsel to file a suit which he believed to have only one aim – to teach the oppressed a lesson. Having paid his lawyer, the rich man went on a cruse. Judgment was eventually entered for the rich man based on his lawyer’s superior manipulation of legal principles and technicalities. The lawyer sent a telegram to the oppressive client as follows:

“Justice prevailed today”

The rich man, who did not expect justice to smile at him, fired back by return telegram as follows:

“Appeal at once”

Bye and large, in spite of the warnings by the Courts, litigation is still a fencing game and the lawyers still strive to out smart each other on behalf of their clients in a whirly jig of technicalities and the end as far as the client is concerned justifies the means. Recently, a very perceptive litigant told me that the only good lawyer he knows is the one who wins his case for him. The multi-door system has not altered the perception of a lawyer in the mind of his client, nor has it, nor should it alter the focus of the lawyer in the service of his client.

The lawyer is retained by his client to offer such skill to the client in the management of the client’s disputation in such a manner and to the same effect and degree as the client would have himself managed that disputation if the client had the skill, training and experience of the lawyer. It therefore remains the function of the lawyer to offer such advice to his client as to enable the client obtain a bargain most convenient for him at a mediation, just as it is also the duty of Counsel to obtain the best judgment for his client from a litigation. Best means the one which would procure for his client the settlement most advantageous to his client, having regard to all the circumstances of the case.

The practice of law is dynamic because the law itself is dynamic. The practitioner therefore must keep abreast with current development in the practice. Exploration of alternative dispute resolution scenarios is an innovation which hopefully has come to stay. The multi – door structure for dispute resolution is gradually taking root in Nigeria and it is the duty of all practitioners of law to update themselves in other to remain relevant but above all, it is necessary to update so that the practitioner may better serve his client.

The essential aspects of this re-branding of the legal practitioner include the following imperatives:

(a)The lawyer must as a duty critically review his client’s case and dispassionately advise the client as to the most efficacious dispute resolution option available for dealing with his client’s case. In this regard, the lawyer must make a holistic appraisal of the case including a consideration of the relevant laws and defences both technical and substantive.