Mediator resolves three-year shareholder dispute in half a day
A dispute arose between the plaintiff, the managing director of a local partnership and the defendant, a former director of the same firm, over shares in the firm and monies allegedly owed to the firm.
When the defendant joined the firm, she was allocated a block of the firm’s share. Two years later, the defendant left the firm. Among other things, the plaintiff suspected that the defendant was siphoning business from the partnership with the intention of setting up a rival business. Claiming that the firm owed her unpaid salaries, commission and her director’s fee, she refused to transfer the shares back to the plaintiff.
The mediation process
The dispute had been going on for three years. Both parties attempted informal negotiation but were unsuccessful. Going to court was not an option as they did not want the glare of publicity to damage their professional reputation.
During the mediation conducted at SMC, the mediator reviewed the claims from both parties, spoke to both sides together and separately, and guided them in exploring the strengths and weaknesses of their respective cases. He was careful not to take sides, focusing instead on asking questions about the points they put across rather than giving his opinion.
The mediator said: “Initially, when the mediation began, both sides were aggressive and confrontational when they presented their respective cases. I encouraged them to address their statements to me rather than each other when speaking. I also asked them to speak in turn without interjecting when the other party was speaking.
“These approaches toned down the confrontational nature of the proceedings and enabled parties to focus more on the issues and facts rather than on their personal angst and emotions. The parties were then better able to assess their respective interests should the dispute proceed further.
“SMC practises interests-based mediation. This is a principle I practise as parties need to focus on their interests, rather than their emotions, reputations or personal agendas, when deciding to come to a settlement or proceed to litigation in court.”
He noted that disputing parties often want an opportunity to ventilate their grievances against the other party to a third party. Given this, it is important for a mediator to be scrupulously neutral and also maintain a correct temperament when mediating. This enables trust to be built with the parties and enables the mediator to be an effective conduit for information between the parties, helping them to explore the merits or otherwise of their case, and also the merits or otherwise of the other party’s case.
Additionally, as in this case, the mediator provided information on regulatory requirements as well as the processes of litigation in the courts which enabled the parties to have a better appreciation of their interests.
Thanks to the efforts of the skilled mediator, the mediation concluded successfully and a settlement was reached within half a day. The defendant agreed to drop all claims and transfer the shares back to the plaintiff while the plaintiff agreed to drop all counterclaims against the defendant. The parties agreed that each should bear their own costs.