Building Dispute Resolution Processes into Agreements to Minimize and Manage Potential Conflict during the Commercial Relationship Lifecycle

The IMI/CCA/Strauss Institute Mixed Mode Taskforce have just published a series of articles on mixed mode dispute resolution in the New York Dispute Resolution Lawyer. These articles are reprinted with permission. The below article was produced by Working Group 1, and authored by Kathleen Paisley, Jane Player and Thomas Stipanowich.

Commercial and corporate relationships and transactions take a variety of forms and time horizons from oneoff small transactions to major long term relationships lasting decades and everything in between. This depends, among other things, on the industry, the parties and their relationship and the nature and structure of the transaction and its value.

Many companies have formal and informal mechanisms in place internally to avoid conflict in their commercial and corporate relationships and to recognize and resolve disputes when they arise without the use of a third party. This may include joint steering committees, trigger mechanisms that require the involvement of senior management and eventually in-house legal expertise when a potential dispute starts to brew, decision trees and other dispute avoidance techniques.

In many cases such mechanisms will be adequate and will make the use of a neutral unnecessary. However, in some circumstances, companies will decide that the nature of the transaction and its importance to the business, the parties’ past and future relationship, their competitive position and relationship in the supply chain, and myriad other factors make the use of a neutral of real additional value from an early stage in the process.

Lifecycle Management

In looking at the role that a neutral can play in fostering commercial relationships and avoiding conflict, consideration should be given to the changing role that a neutral or neutrals can play during the lifecycle of a commercial relationship. For example, the role of a “mediator” or “facilitator” is different depending on the particular stage in the relationship life cycle and may involve, among other things:

  • facilitating the making or renegotiating of a deal, with renegotiation of particular importance during the current pandemic;
  • addressing issues that arise as a result of implementing a transaction;
  • assisting the parties at the outset to create a structure to try to avoid conflict and effectively working to resolve disputes during the life of the commercial relationship;
  • acting as an “in-life,” “real-time” or “standing” neutral during the course of the relationship to proactively identify a potential conflict and/or facilitate a resolution before an actual dispute arises—this can be used as either an