Business-to-Business Mediation
It's Not as Difficult as You Think!
We can easily imagine a scenario when two companies have been engaged in a business relationship for a few years-- Company A supplies essential components to Company B to create their product. Company B could be producing anything from craft beer to paperback books. Most businesses face similar problems today with supply chain disruptions. In this example, Company A encountered production delays, impeding delivery to Company B. This setback disrupted Company B's production schedule, leading to financial losses.
Company B has a few ways to respond. They could suspend the relationship with Company A. However, they may not be able to find another supplier, particularly with the history of reliability from Company A. Another option for Company B would be to file a lawsuit against Company A and attempt to recoup their losses.
However, business-to-business (B2B) mediation may produce the best results. During mediation, the two businesses explore several outcomes. Agreements could include:
A revised delivery schedule.
Penalties for future delays.
Improved communication protocols.
Any customized resolution to meet the needs of these businesses.
Once reached, the mediator would draft a formal written agreement that outlined their agreement. Both parties' legal counsel might review an agreement to ensure its legality and enforceability. Mediation permits the business relationship to be retained, provides a way to address both the current delivery issues and long-term solutions, and avoids a costly and time-consuming legal process.
B2B mediation is often beneficial in contract and payment disputes. Regardless of how carefully contracts are drafted, it is not uncommon for a dispute regarding a term to arise. Mediation can often be quickly convened and terms addressed before the parties rely on their independent interpretations. And, of course, when negotiation fails to resolve payment disputes, mediation between businesses often creates opportunities for mutually satisfactory resolutions.
Here are a few key factors about mediation that are particularly important in business mediation:
Neutral Third Party: A mediator is an impartial and trained professional who facilitates the mediation process. They do not make decisions but help the parties in conflict communicate effectively and work toward a mutually acceptable solution.
Confidentiality: B2B mediation typically operates under strict confidentiality rules. The parties may discuss sensitive issues openly without fear of information being used against them in the future.
Voluntary Process: Participation in B2B mediation is usually voluntary. Both parties agree to engage in the process and may withdraw anytime.
Informal Setting: Mediation often occurs in an informal setting, such as a conference room. Parties may speak openly and directly.
Control over Outcome: Unlike litigation or arbitration, mediation gives the parties control over the outcome, working together to reach an agreement that meets their needs and interests.
Cost-Effective: B2B mediation is generally more cost-effective and quicker than going through the court system.
Preservation of Relationships: Mediation can help businesses preserve ongoing relationships. This is particularly important in B2B contexts where parties continue doing business with each other after the dispute is resolved.
Wide Range of Disputes: B2B mediation can resolve various disputes, including contracts, partnerships, intellectual property, and employment.
Legal and Non-Legal Issues: Mediation can address both legal and non-legal issues. It's not limited to purely legal matters and can help parties find creative solutions to complex problems.
Enforceability: Once an agreement is reached in mediation, it can be legally binding if the parties choose to formalize it through contracts or other legal means.
Mediator's Role: The mediator facilitates communication, manages the process, and helps the parties explore their interests and options. They do not offer legal advice or make judgments.
International B2B Mediation: In some cases, B2B disputes involve parties from different countries.
Businesses interested in working with a B2B mediator may want to see one trained in conflict resolution skills, communication, negotiation, and mediation techniques. It may be helpful if the mediator has experience with the subject matter related to the dispute. Mediators may also be certified, although not required. A mediator with a business or contract law background can also be advantageous in navigating legal issues.