WHY BUSINESS NEED MEDIATION? dr. sc. Srđan Šimac

1. WHY BUSINESS NEED MEDIATION? dr. sc. Srđan Šimac Judge of the High Commercial Court of the Republic of Croatia and President of Croatian Mediation Association

3. Conflictwill always be part of society but methods used to manage that conflict are constantly evolving.

4. What is the main cause of conflict?

6. Difference

8. 8

10. Why is it so important to be right? • Human natural need is „to be right” - generator od conflicts and disputes • The need „to be right” increases itself during conflict. • Understanding nature of the conflicthelp us that „to be right” is mostly unimportant for any relationship, especially business one!

11. Can we take control over conflicts(problems) instead of they controlled us?

13. What should we do?

14. Use the right to choose! • Consumershave become accustomed to choosing among a wide variety of options when shopping or selecting products or services. • Disputantsas consumers have choice, too!

15. Dispute resolution methods • Negotiation • Mediation • Arbitration • Litigation • …

16. Negotiation

17. Mediation

20. Litigation

21. Courts and litigation are crucial parts of our systems!

22. Where the obsession by the courts and litigation come from?

24. Litigation • Deals with facts and the law. • Exclusively with the past. • Decides about who right / who is wrong? • Who did make mistake? • Who is responsible? • Imposesolution!

25. Litigation (legal) arena • „Civilized equivalent of the battle to death”. • Everything is aimed on confrontation. • There is always winner and loser. • Burdened, expensive and timely exhausting. • Outcome is uncertain. • Parties have secondary role. • The law is invisible barrier between parties.

26. Why business need mediation?

27. The main purpose of business is to make a business, not disputing • It is difficult for companies to continue to do business while they are suing each other and with intention of harming the opponent. • Imagine doctor trying to make well one person at the expense of another!?

28. Litigation as a business failure • Breach of contract is considered as a business failure! • Litigation is considered as a business failure! • Business doesn't make money during litigation– unproductive time and effort • Courts are not sensitive to the needs of business.

29. Litigation lottery • Litigation reduces businesspeople control. • Litigation is more risky than regular business risk. • Litigation represents uncertainty (time, costs, outcome) • „Every time I go to courtroom, I may be well prepared (to lose)...” • Risk out of control! (of losing dispute, face, reputation, money, time, business partner, opportunity or expecting gain)

30. Winningis not very good way to do business. • Winning in litigation often means a defeat in life or business. • Broken business relationship is very hard to transform to cooperation in litigation environment of mutual confrontation and blaming • Searching for the new business partner is 6 times expensive then to hold the old one.

31. Avoidance of litigation as a the first option has become synonymous for reasonable business affairs.

32. Every war ends with peace! Why don’t we start with peace first?

33. Reasons for business mediation • Exceptional speed • Significantly lower costs (direct and indirect) • Efficiency • Confidentiality • Personal involvement • Simplicity of procedure and understandable (business) language • Establishing bridge for broken communication within safe negotiation environment • Control over the procedure and the outcome • Exclusionof risk to lose • Focus on interests and needs not legal positions

34. No complaints, no enforcement, agreement is voluntarily executed • Preservation of business relationship • Orientation toward future • Creative, own and long-term solution • Anticipation and prevention of internal and external disputes • Managerial tool to ensure a pleasant working environment • Creates confidence among business partners • Keeps business reputation • Adds a new value to the companies

35. Obstacles in using mediation in commercial disputes • Ignorance of mediation and its benefits • Mistrust of the new procedure • Psychological delay– “If I can’t solve, no one can!” • Avoidance of taking responsibility for the outcome (It is better to have a court decision than to take responsibility)

36. Opposite interests between the parties and their attorneys • Preoccupation with victory - “macho” culture of fighting • Fear of disclosure of “all cards” to another party • Why another case? Additional cost and time? • Proposal for mediation asa sign of weakness?

37. Mediator

38. WhyADR – mediation?

39. ADR • Alternative Dispute Resolution (ADR) • Appropriate Dispute Resolution (ADR) • Amicable Dispute Resolution (ADR) • Effective Dispute Resolution (EDR). • Better dispute resolution (BDR) • Improved dispute resolution (IDR) • Flexible dispute resolution (FDR) • Complementary dispute resolution (CDR) • Peacefuldispute resolution (PDR)

40. Consider the decision on how to resolve a dispute as any other business decision! • Choose mediation, leave the previous habits and transform your disputes into business opportunities! • Today, nobody can’t afford to ignore mediation existence any more!

41. THANK YOU! Srđan Šimac, Ph.D. srdan.simac@gmail.com