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When people honor each other, there is a trust established that leads to synergy, interdependence, and deep respect. Both parties make decisions and choices based on what is right, what is best, what is valued most highly.” – Blaine Lee

Much ink has been spilt over the issue of the requirement of mediation for resolving commercial disputes. Various eminent scholars and mediators have already highlighted several benefits of mediation like it’s cost effective, time efficient, informal and flexible, satisfies interests and needs, and saves the relationship or, at least, prevents it from further damage. I don’t intend to add more to this list as my own experience and knowledge about commercial mediation is limited. But I will use this opportunity to write about how I believe that mediation, if not the best, is surely the most suitable mechanism to resolve a commercial dispute.

The Relationship Between Trust and Business:

Any relationship which involves human beings can last long if its foundations are reinforced with trust. Similarly, any commercial transaction, or for that matter any commercial relationship, cannot reach its desired end without the presence of trust between those entering into such a relationship. We have plenty of laws that require us to conduct ourselves in good faith and not break the trust which is the premise of any kind of commercial relationship created within the ambit of law. When signing a contract, the concerned parties place trust on each other that each one of them will perform their respective obligations whether that contract is for the delivery of construction material for a big housing project or to sell a pen. As law students, we have all experienced the legal requirement of trust either during our contract law, property law or company law classes. It is ‘trust’ that keeps money and opportunities flowing in the commercial world. It is the trust between two parties on the basis of which they expect a good business relation between themselves for the future. The bigger the deal is, the higher will be the requirement of trust. So, trust is directly proportional to developments in the commercial world.

When that trust breaks, it hurts, and generally people head to courts to claim damages they have suffered due to breach of that trust. But going to courts proves two things. First, that there is definitely no trust left between the parties, and secondly, it often seems as if there is no hope left to rebuild it. As I mentioned, the amount of trust is directly proportional to development in the commercial world, and if this trust suffers from a breach, there are grim chances of any growth in trade and commercial participation between the same parties at any given point in the future. Business is a risky domain. A breach of trust followed by a suit action and then a precedent creates a scope for any party in the commercial world to opt for an available option, making commercial growth even more difficult since parties will now think twice before engaging into similar transactions or similar parties. Maintaining existing commercial relationship is highly important in the business world than creating new ones’ every time. In addition, maintaining an old relationship will take fewer resources and time.

Mediation as Saviour:

If you agree with me that trust is the cornerstone of any relationship, then you will not deny the fact that the best thing to do is to somehow prevent trust from any sabotage. But once broken, the question that arises are interesting: can that trust be rebuilt once broken? can the situation be controlled? Is there any other mechanism apart from courts after trust has suffered from a breach? Rebuilding trust takes time and it needs genuine effort from all the affected parties. Court actions in the jolt of anger, and a display of your “army of lawyers” are the least of things you could possibly if your actual motivation was to resolve an existing dispute. A conflict needs interaction and dialogue, not like the one that happens in courts, but of a more positive nature, one that is constructive. There is such a place where all of this can happen, and mediation will take you there.

 Facilitated by an experienced and efficient mediator, and the participation parties in good faith, mediation has the power to unite the business community because it helps to rebuild the lost trust. It is unlike litigation that is amazingly efficient at making permanent separations. It helps parties to understand each other’s position and interests, and enables them to understand the other party behaved in the way it did. It empowers parties to generate mutually agreeable solutions to the most difficult situations. And it all happens because parties are granted with the freedom to do so. Parties can choose their mediator(s), place and time of mediation, issues to be discussed in the mediation, the degree of formality of mediation session, and last but not the least, they have the ultimate autonomy to accept or reject the final settlement offer. Due to flexibility and freedom, parties have more control over the mediation process, and a good mediator can channel parties’ control over the process into them having trust in the whole process, and ultimately, establishing trust between them. And once that happens, miracles (read as settlements) begin to happening in mediations.

My experience is only limited to India and while speaking about Indians, I can say that our culture is fundamentally a low-trust culture partly because of historical experiences; like East India Company, which initially entered India on the pretext of doing business but latter ended up attacking and making India a British colony. Rebuilding trust with Indian might be little difficult but it is not impossible as it could be built with help of verbal and non-verbal communication. For non-verbal communication, focus should be on your body language because at this moment you don’t want to unconscionably communicate something that could be taken negative. For verbal communication, asking open-ended questions, whether by mediator or by other party, could lead to re-sprouting of trust. Open ended question has the tendency to engage the most unwilling to enter into discussion because such questions give other party the opportunity to express themselves, and during this period, if the other party actively listens then I don’t think that anything could stop the revival of trust between them.


This quote of Stephen M. R. Covey, the author of the book The SPEED of Trust, aptly describes the nature of trust;

Contrary to what most people believe, trust is not some soft, illusive quality that you either have or you don’t; rather, it is a pragmatic, tangible, actionable asset that you can create.” – Stephen M. R. Covey


Sandeep Bhalothia

Sandeep Bhalothia is an In-House lawyer working with an aviation company in Dubai. He is a Member (MCIArb) with Chartered Institute of Arbitrators (CIArb, U.K.) and a law graduate with first class degree from Jindal Global Law School (India). He also studied arbitration subjects (from LLM course) at Tsinghua University… MORE >

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